EU allows delay of up to six months for DAC6 reporting

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

Is there an option for a further extension?

Yes. In light of the current uncertainty about the evolution of the COVID-19 pandemic, and given that the circumstances that justify this deferral may last some time, there is the possibility of one optional 3 month extension of the period of the deferral. This will be reviewed one month before the end of the newly proposed deadlines.

How did the postponement happen?

Requests to postpone DAC6 reporting were received by tax authorities in many EU Member States. Stakeholders and industry groups lobbied together to try to push for a delay for DAC6 reports which are due to begin from July 2020 of this year.

The European Commission also received multiple requests for an extension. It was been reported that they are considering “a possible adjustment”, however, the same report quotes the EU Commission stating that “any postponement should thus be of a limited duration and will not affect the start of application of the directive [on July 1, 2020]” .

Who wanted the DAC6 deferral?

There have been several groups of organisations who wrote to tax authorities, including HMRC, asking for a deferment of DAC6 reporting. This includes both law firms and industry trade groups.

The Law Society recently wrote to HMRC asking whether they would consider deferring the commencement dates of DAC6 together with the Trust Registration Service rules in the UK. They cited “the burden they’ll place on both private and public sectors, including law firms”.

In late April ten industry trade groups wrote to the European Commission asking them to suspend DAC6 until 2021. One organisation also demanded the suspension of a separate requirement for reporting bank account information. They note the vast impact the pandemic has had on the finance sector, with staff having less time to ensure implementation. These groups feel that DAC6 was already a very complicated piece of legislation and the pandemic has made it almost impossible to reach full compliance before the current deadline.

CFE Tax Advisers Europe, the Brussels-based association representing European tax advisers, have written a statement to the EU Commission requesting leniency with regards to enforcing penalties for non-compliance. They say that deferring DAC6 will help “mitigate the challenges faced by intermediaries in such circumstances”.

Who was against postponement?

There are also movements against delaying DAC6 coming into force. Some feel that DAC6 will help identify large-scale corporate tax avoidance and delaying it means those cases will continue to go unpunished. They suggest that the unpaid tax income is needed to finance health care and that stopping corporate tax avoidance is now more vital than ever.

Opinions from the Tax Justice Network also disagree with the motion to delay DAC6. Their view is that the finance sector should be prioritizing its ability to ensure governments have the necessary information on the financial holdings of their own residents.

What should we do now?

Regardless of the postponement, DAC6 is not going away. Many firms that we have been speaking to see this period as a time to get their reporting procedures and staff training in place. VinciWorks has consulted tax experts across Europe and brought together over 100 international law and accounting firms to develop best-practice for DAC6. The result is an end-to-end compliance solution for DAC6 that not only fulfils firms’ reporting and training needs, but includes guides, webinars and regular DAC6-focussed newsletters.

VinciWorks’ Country-by-county Guide will keep you updated with all deferral notifications, legislative changes and guidance updates from all 27 EU Member States.