Delayed implementation of an EU directive aimed at discouraging aggressive cross-border tax arrangements may be allowed for some member states, following mounting pressure from financial intermediaries.
A European Commission spokesperson confirmed April 24 that the commission would discuss “a possible adjustment” of the reporting deadline mandated by a directive on administrative cooperation (Council Directive (EU) 2018/822) that introduced new mandatory tax reporting rules for some cross-border arrangements. The directive, known as DAC6 and adopted May 2018, required EU nations to transpose the reporting rules into national legislation by the end of 2019. The rules were to be implemented beginning July 1.
The rules give financial intermediaries — including lawyers, tax advisers, asset managers, banks, insurance companies, and others who participate in tax planning — until August 31 to make their first report on cross-border arrangements of their clients. DAC6 applies to reportable cross-border arrangements for which the first step of implementation took place on or after June 25, 2018.
“Any postponement should thus be of a limited duration and will not affect the start of application of the directive [on July 1, 2020],” the spokesperson said. “It follows that cross-border reportable arrangements made during any agreed deferral period would in any case have to be reported once the deferral period is terminated.”
The leaders of 10 major financial associations drafted a letter to EU Tax Commissioner Paolo Gentiloni on April 20 calling for the commission to recommend the deferral of DAC6 reporting obligations because of challenges stemming from the coronavirus pandemic.
"This wasn't really a choice — COVID-19 means the majority of member states won't have implemented DAC6 by the August 31 reporting deadline. Expecting tax authorities to prioritize DAC6 in the current environment is not realistic,” Dan Neidle, tax partner with Clifford Chance in London, told Tax Notes.
The commission spokesperson said that despite the challenges EU member states face from the coronavirus, the commission remains committed to the fight against tax evasion and avoidance.