On 26 June 2020, the Irish Revenue Commissioners (the “Irish Revenue”) announced that the first filings of DAC6 returns, which were originally scheduled to be made by 31 August 2020, will be deferred by up to six months. DAC6 is the new EU Mandatory Disclosure Regime of certain cross border transactions which are considered to involve potentially aggressive tax planning arrangements. Also, on 18 June 2020, the Irish Revenue published an eBrief which set out that the CRS and FATCA returns in respect of the 2019 reporting period have been deferred until 30 September 2020. CRS is the OECD Common Reporting Standard regime and FATCA is the US Foreign Account Tax Compliance Act reporting regime.
On 4 June 2020, the Luxembourg Ministry of Finance announced that it will introduce legislative amendments deferring the reporting deadlines by up to six months for DAC6 (Directive 2018/822/EU) and certain reporting obligations under CRS and FATCA by up to three months.
These developments come in the wake of ongoing negotiations at EU level on the COVID-19 impact on various reporting obligations related to CRS and the EU Directives on Administrative Cooperation Directive 2014/107/EU DAC2 and DAC6.
The EU, Irish and Luxembourg Legislative Measures
Due to the COVID-19 pandemic, on 8 May 2020, the EU Commission proposed extending the DAC6 mandatory disclosure deadlines by up to three months. However, by 3 June 2020, EU Member State representatives on the Permanent Representative Committee (“COREPER”) reached a compromise agreement for an optional six month deferral for both reporting and information exchange deadlines under DAC6. Council Directive (EU) 2020/876 is the EU legislative measure which now provides for the deferral of DAC6 at the option of Member States for a period up to six months. Accordingly, Ireland and Luxembourg should be introducing amended draft laws which will include the six month deferral of deadlines for DAC6 in line with the announcements from the two respective Revenue authorities.
How is DAC6 Reporting Impacted?
DAC6 requires intermediaries, and in some cases taxpayers (if there is no intermediary or if the intermediary is bound by legal privilege or professional confidentiality obligations), to report certain cross border arrangements which are considered to involve potentially aggressive tax planning to their local tax authority. This information is then shared with all EU tax authorities by way of a central registry.
The anticipated draft laws in Ireland and Luxembourg should provide updated DAC6 reporting deadlines as follows (the text is not yet published):
- Reportable cross border arrangements implemented between 25 June 2018 and 30 June 2020 should now be reported by 28 February 2021 (i.e. up to six months after the original deadline of 31 August 2020).
- Reportable cross border arrangements occurring between 1 July 2020 and 31 December 2020 should now be disclosed within 30 days from 1 January 2021.
- The 30 day time period for the reporting of new cross border arrangements occurring on or after 1 January 2021 will commence with effect from 1 January 2021.
How can the Maples Group help you?
We are currently working with many clients with regard to the impact of DAC6 on their cross border structures, particularly in respect of investment fund, securitisation and multinational structures. In particular, we are advising on international structures involving the US and the Cayman Islands. We are also advising on questions of legal privilege as it may apply to clients and also representing clients as a "neutral adviser" on DAC6 where a client may already be advised on a potentially reportable transaction by other advisers.
For further information as to how the Maples Group can assist with your DAC6, FATCA and CRS obligations, please see our previous Ireland1 and Luxembourg2 client updates on DAC6.
For assistance on any of the above matters, please liaise with your usual Maples Group contact or any of the contacts below.
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1 Irish Finance Act 2019 - Enactment of the EU Mandatory Disclosure of Cross-Border Arrangements Directive (DAC6)
2 Luxembourg Publishes Draft Law on DAC6