August 13, 2020
Portugal postpones MDR reporting deadlines for six months
On 11 August 2020, the Portuguese Government enacted legislation postponing for six months the reporting deadlines under the domestic law that implements the European Union (EU) Directive on the mandatory disclosure and exchange of cross-border tax arrangements (referred to as DAC6 or the Directive).
This provision has been enacted in the context of the transposition into Portuguese law of the EU Directive 2020/876, of 24 June, which enables Member States to defer, up to six months, the time limits for the filing and exchange of information on cross-border arrangements foreseen in DAC6.
Under DAC6, taxpayers and intermediaries are required to report cross-border arrangements from 1 July 2020 onwards. However, DAC6 also applies retrospectively to cover arrangements where the first step of implementation occurred between 25 June 2018 and 1 July 2020.1
On 24 June 2020, the Council of the EU amended the Directive 2011/16 in order to provide Member States with an option to defer, for up to six months, the time limits for the filing and exchange of information on cross-border arrangements under DAC6. The amendments also provide the possibility of one further extension for a maximum additional three months, by unanimous decision of the Council, depending on the evolution of the pandemic.2
In this context, the Portuguese Government enacted the Decree-Law nr. 53/2020, of 11 August, to transpose the six-month deferral into Portuguese law.
The reporting deadlines under the new Portuguese Mandatory Disclosure Rules (MDR) framework are as follows:
The Decree-Law also creates a DAC6 Forum that should be used to monitor the implementation of the Portuguese Law nr. 26/2020, of 21 July, that transposed DAC6, with the purpose of assisting its application and clarifying doubts, taking into account the experience of application in other Member States. The DAC6 Forum and respective functioning rules should be determined by instructions to be issued by the Minister of Finance.
Determining if there is a reportable cross-border arrangement raises complex technical and procedural issues for taxpayers and intermediaries. Taxpayers and intermediaries who have operations in Portugal should review their policies and strategies for logging and reporting tax arrangements so that they are fully prepared for meeting these obligations.
1. See EY Global Tax Alert, EU publishes Directive on new mandatory transparency rules for intermediaries and taxpayers, dated 5 June 2018.
2. See EY Global Tax Alert, Council of the EU adopts amendments for deferral of MDR filing deadlines, dated 24 June 2020.
For additional information with respect to this Alert, please contact the following:
Ernst & Young, S.A., Lisbon
Ernst & Young LLP (United States), Portuguese Tax Desk, New York