Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

June 24, 2020
2020-5916

Council of the EU adopts amendments for deferral of MDR filing deadlines

Executive summary

On 24 June 2020, the Council of the European Union (EU) announced that it adopted amendments to the EU Directive 2011/16 allowing Member States an option to defer by up to six months the time limits for the filing and exchange of information on cross-border arrangements under Directive 2018/822 (DAC6 or Directive) due to the COVID-19 pandemic.

The amendments also provide the possibility of one further extension for a maximum additional three months by means of a unanimous decision of the Council depending on the evolution of the pandemic.

Detailed discussion

Background

DAC6 entered into force on 25 June 2018.1 The Directive requires intermediaries (including EU-based tax consultants, banks and lawyers) and in some situations, taxpayers, to report certain cross-border arrangements (reportable arrangements) to the relevant EU member state tax authority.

This disclosure regime applies to all taxes except value-added tax (VAT), customs duties, excise duties and compulsory social security contributions.2 Cross-border arrangements will be reportable if they contain certain features (known as hallmarks). For more background, see EY Global Tax Alert, Council of the EU reaches an agreement on new mandatory transparency rules for intermediaries and taxpayers, dated 14 March 2018.

The original deferral proposal

On 8 May 2020, the European Commission proposed a three-month extension to the deadlines for filing and exchanging information on cross-border arrangements under the EU Directive 2011/16 due to the COVID-19 pandemic.3 The proposal also provided for the possibility of one further extension for filing and exchanging information for a maximum additional three months. The Member States did not reach an agreement on this original proposal.

Council adopts amendments to DAC6 reporting deadlines

The Council has now agreed to an amendment that will give each Member State the option to defer the reporting dates to file:

  • By 28 February 2021, the reporting of the ”historical” cross-border arrangements (i.e., arrangements that became reportable from 25 June 2018 to 30 June 2020).
  • With respect to arrangements targeted by DAC6 starting 1 July 2020, where a reportable cross-border arrangement is made available for implementation, or is ready for implementation, or where the first step in its implementation has been made between 1 July 2020 and 31 December 2020, the period of 30 days for filing information shall begin by 1 January 2021.

In the Member States where the option is exercised, the amendment changes the date for the first exchange of information on reportable cross-border arrangements to occur by 30 April 2021.

The amendments also provide for the possibility of one further extension for a maximum additional three months, but only if there is a unanimous Council implementing decision.

The amendments merely extend the deadline for complying with the obligation to report and exchange information under DAC6, while still ensuring that no information remains without eventually being exchanged. The deferral is of limited duration and proportionate to the practical difficulties caused by the temporary lockdown aimed at containing the COVID-19 pandemic.

Next steps

The amendments to DAC6 shall enter into force on the day following that of its publication in the Official Journal of the European Union, which is expected to happen soon.

Member States are expected to implement the deferred timeline into their domestic law as soon as possible if they intend to use the option provided by the Directive.

Implications

Given the optional character of the amended proposal, each Member State will have to make a formal decision on whether to apply the deferral. If the Member State fails to respond, the original timelines will apply.

Taxpayers and intermediaries are advised to monitor the country developments related to this topic.

Endnotes

1. See EY Global Tax Alert, EU publishes Directive on new mandatory transparency rules for intermediaries and taxpayers, dated 5 June 2018.

2. DAC6 sets out a minimum standard. Member States can take further measures; for example, (i) introduce reporting obligations for purely domestic arrangements; (ii) extend the scope of taxes covered; (iii) bring forward the start date for reporting.

3. See EY Global Tax Alert, European Commission proposes deferral for certain filing deadlines under the Mandatory Disclosure Rules, dated 8 May 2020.

_____________________________________________________________________________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young Belastingadviseurs LLP, Rotterdam
Ernst & Young LLP (United States), Global Tax Desk Network, New York

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more