On-demand webinar: DAC6 reporting solution – Feature updates

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Wednesday, 29 July, 12pm UK time

In March, we hosted a live demo of our reporting solution where we covered the core features of our DAC6 reporting software. Since then, the system has evolved to help businesses solve all the challenges presented by the complex Directive. Even if you have seen a demo of the product in the past, now is the time to get up-to-date with the implementation process.

Here are just some of the updates we have made:

  • Enhanced workflow with country-by-country guidance
  • Ability to report in multiple jurisdictions
  • New graphical customisable dashboards

In this webinar, we covered the core features of our software, new features that have recently been added and give guidance on how businesses can use it to report transactions. This webinar is suitable for both those who have attended previous demos and those who are less familiar with our system.

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DAC6: Germany’s unique approach to legal professional privilege (LPP)

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Bundestag

No reporting delay in Germany

Germany recently made the shock announcement that it would not be deferring DAC6 implementation, despite an optional 6 months delay awarded to EU member states by the EU Commission. As a result of this announcement, intermediaries, including accounting firms, law firms, and other tax advisors in multiple industries have begun the process of identifying DAC6 reportable arrangements.

German XML schema released

Many tax authorities, including HMRC, have already produced xml schemas stipulating their DAC6 reporting requirements, and the German schema is closely aligned to these. The German Federal Ministry of Finance (Bundeszentralamt für Steuern) have decided on a unique approach to legal professional privilege.

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Which countries are deferring DAC6 and how? Downloadable deferral chart

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DAC6 deferral chart screenshot
Our DAC6 deferral chart provides up-to-date guidance on how each EU member state has decided to defer DAC6

DAC6 is a European Directive aimed at tackling tax avoidance and strengthening tax transparency, as well as improving information sharing between EU member states. The Directive imposes mandatory reporting on lawyers, accountants, tax advisers, bankers, and other so-called “intermediaries”.

On 3 June, 2020, Member State representatives reached an agreement to allow an optional six-month deferral of reporting deadlines for DAC6.

On 19 June 2020, the European Parliament voted in favour of the EU Commission’s proposed deferral and on 24th June the European Union Council approved the postponement. 21 member states have postponed, most for the full six months. Notably, Germany, Austria and Finland have not.

We have created a downloadable chart presenting an up-to-date guide to how each country has decided to defer DAC6.

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DAC6 compliance – Why should taxpayers care?

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DAC6 is a European Directive aimed at tackling tax avoidance and strengthening tax transparency, as well as improving information sharing between EU member states. The Directive imposes mandatory reporting on lawyers, accountants, tax advisers, bankers, and other so-called “intermediaries”.

Are taxpayers required to report DAC6 arrangements in addition to annual tax filings?

As a taxpayer, DAC6 will affect you. While the primary reporting obligation is on intermediaries, there are some cases where the reporting onus will be on the taxpayer. These include the following situations:

  • When there is no intermediary involved in an arrangement
  • When the only intermediary involved does not have a presence in the European Union (or the UK)
  • When legal professional privilege applies to the sole intermediary representing you, and you chose not to waive privilege
  • When a company within your group acts as an intermediary for arrangements within the group 
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Germany and Finland do not postpone DAC6 reporting

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The deadline for initial reports is 31st July 2020.

In June, the European Union Council approved an optional six-month deferral of DAC6 reporting requirements due to COVID-19. 22 member states have availed themselves of that deferral but two, Germany and Finland, have not.

On 6 July 2020, Kristina Wogatzki, a spokesperson for the German Finance Ministry announced at a press conference that “Germany will not postpone the deadline, the reporting obligation begins on July 1”. Wogatzki stated that the Finance Ministry’s reporting systems are ready and can accept reports. She dismissed deferment by saying that since it was only tabled in June, she expects most firms to have prepared for 1 July implementation. She added that this deadline only affects firms that have a reporting obligation in Germany.

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EU allows delay of up to six months for DAC6 reporting

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Updated 8 July 2020

Important update: Germany, Austria and Finland opt to not postone.

On 3 June, 2020, Member State representatives reached an agreement to allow an optional six-month deferral of reporting deadlines for DAC6.

On 19 June 2020, the European Parliament voted in favour of the EU Commission’s proposed deferral and on 24 June the European Union Council approved the postponement.

21 member states have postponed, most for the full six months. Notably, Germany, Austria and Finland have not.

What is the new DAC6 timeline?

  • Historical arrangements where first steps were implemented between 25 June 2018 and 30 June 2020: Optional deferral until 28 February 2021
  • First transfer of information between EU Member States: 30 April 2021
  • New arrangements where the reporting triggers are met between 1 July 2020 and 31 December 2020: The 30 day filing period begins 1 January 2021
  • Marketable Arrangements: First periodic report expected by 30 April 2021

Countries deferring DAC6

21 EU countries have opted to postpone to varying degrees. Germany, Austria and Finland have not. Here is a partial list of postponements:

  • Belgium has postponed reporting by six months
  • Luxembourg intends to postpone
  • UK‘s HMRC has postponed DAC6 reporting by six months
  • Ireland has postponed by six months
  • The Netherlands have postponed by six months
  • Sweden and Hungary plan to postpone with more guidance forthcoming
  • France plans to postpone by six months
  • Poland has postponed as for intermediaries until 31 December 2020, for taxpayers until 31 January 2021 and for service providers until 28 February 2021
  • Romania has postponed the reporting deadlines by six months. The postponement was adopted through an Emergency Ordinance amending the initial law transposing DAC6, published in the Official Journal, no. 579, Part I, on 1 July, 2020
  • Latvia has postponed by six months
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HMRC publishes guidance on how DAC6 will work

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HMRC has published its ‘final guidance’ on how DAC6 will operate in the UK. It includes details on the interpretation of the hallmarks, penalties and reasonable excuses.

Click here to download HMRC’s DAC6 guidance

This guidance is an update to the draft that HMRC published in March 2020. Although the guidance is ‘final’, HMRC have noted that “there are still a small number of updates to this guidance which are pending and will be made in the coming weeks”.

If you are familiar with the guidance from March, you can download a comparison between the draft and final DAC6 guidance.

DAC6 training updated to reflect EU Commission’s reporting delay

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DAC6 is a European regulation aimed at tackling tax avoidance and tax evasion, strengthening tax transparency and improving information sharing between EU Member States. The Directive requires lawyers, accountants, tax advisers, bankers and other “intermediaries” to report certain aggressive cross-border arrangements. 

VinciWorks’ DAC6 training is recommended in order to understand the intricacies of these hallmarks and to determine which transactions must be reported.

Due to the Covid-19 pandemic, the European Commission has confirmed an optional deferral of the implementation of DAC6 by six months. Each member state will now decide whether they will avail themselves of the optional deferral. Most countries are set to defer reporting, with several, including the UK, Ireland and France already having announced their intentions to defer reporting. We will continue to update this blog as more countries decide on whether and how to implement the new timeline.

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Is DAC6 the next target for HMRC’s Corporate Criminal Offence (CCO) audits?

HMRC has stepped up their Corporate Criminal Offence (CCO) investigations. HMRC recently responded to a Freedom of Information request that showed that on 31 December 2019, HMRC had 9 live investigations and 21 further opportunities under review in various industry sectors. The results of these audits will be made public as soon as appropriate to do so. 

What is a Corporate Criminal Offence (CCO) audit?

The Corporate Criminal Offences (CCO) for the failure to prevent the facilitation of tax evasion were introduced by Part 3 of the Criminal Finances Act 2017. HMRC has made government guidance available. The UK government also plans to create a new Anti-Tax Evasion Unit within HMRC to step up the investigations for Corporate Criminal Offences.

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