The European Commission proposed new transparency rules on June 21, 2017, for EU intermediaries (including accountants, banks, lawyers and tax advisers) designing and promoting cross-border tax planning arrangements. The aim of the Commission was to tackle aggressive cross-border tax planning arrangements by the:
EU Directive 2018/882/EU entered into force on June 25, 2018. Under the directive (known as "DAC6"), an intermediary supplying a reportable cross-border arrangement bearing one or more specified characteristics, or "hallmarks", must disclose the scheme to the intermediary's tax authority within a 30-day turnaround period. The date of application of the directive is July 1, 2020. The directive contains a number of changes from the proposed rules.
Incorporation into domestic law
Member states need to adopt and publish domestic laws satisfying the requirements of the directive by December 31, 2019, and apply them from July 1, 2020. Despite Brexit, potential intermediaries and their clients should proceed on the basis that DAC6 will be implemented into U.K. law. The U.K. Government intends on giving HM Treasury powers in the Finance Act 2019 to enact the necessary regulations, and will consult on these in 2019.
A retrospective "catch-up" provision exists for reportable cross-border arrangements entered into between June 25, 2018, and July 1, 2020. Information on these cross-border arrangements must be disclosed to the tax authority by August 31, 2020.
Automatic exchange of information
Member states are required to automatically exchange reported information with all other member states, via a centralized database, within one month of the end of the quarter in which the information was filed. The first information is to be exchanged by October 31, 2020, and will include those arrangements caught retrospectively.
Advisers should now review cross-border arrangements implemented from June 25, 2018, against the hallmarks set out in DAC6 to determine whether they are reportable, and also assess what systems are required to ensure compliance with the directive going forward.
It is important to note that failure by a tax administration to react to a reportable cross-border arrangement does not imply any acceptance of the validity or tax treatment of that arrangement.
By Robert Walker, Technical Editor, Bloomberg Tax
For further in-depth analysis and expertise, request a free trial of Bloomberg Tax.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)