As published on news.bloombergtax.com/daily-tax-report, Friday 8 May, 2020.
The European Commission wants to give countries, companies, and tax advisers more time to comply with an EU directive on reporting cross-border tax arrangements as they deal with the pandemic.
The European Union directive known as DAC6 requires tax advisers and companies to report some of those arrangements to tax authorities in EU member states. Countries would then exchange the information to spot problematic tax arrangements more quickly.
Under the proposed extension announced Friday, DAC6 would still apply as of July 1, but other reporting deadlines for companies and deadlines for information exchange for countries would be deferred three months, according to the proposed directive. For example, information about historical cross-border arrangements would be due Nov. 30, instead of Aug. 31.
Countries, companies, and tax advisers had requested the deferrals, concerned that the pandemic meant they wouldn’t be ready in time to meet the deadlines, the Commission said.
“Many hoped, however, that the deferral would be one year, which is far more than the 3 months suggested by the Commission,” Daniel Gutmann, a partner at CMS in Paris, said in an email.
But a three-month extension will still help companies that haven’t had time to work on their DAC6 reports because they’ve been so focused on responding to the pandemic, said Robert Van der Jagt, chairman of KPMG’s EU tax center in Amsterdam.
“They are in a survival mode,” said Van der Jagt, during a phone interview. “They’re devoting all their resources to other emergency priorities at the moment.”
Companies should still work to finish their reporting, Mounia Benabdallah, a partner at Baker McKenzie, said in an email.
“While an extension would be very welcome, I would strongly recommend companies to still press ahead with their DAC6 preparations,” she said.
The Commission also proposed a three-month extension on an EU directive that requires member states to exchange information on financial accounts when the beneficiaries are in a different state. Delaying the deadline on the financial account information exchange would let member states adjust filing deadlines, the directive said.
Another proposal from the Commission is a six-month postponement for new value-added tax rules for e-commerce. The VAT package would apply as of July 1, 2021, instead of Jan. 1.
The Commission has informed the European Parliament and Council about the deferral proposals and “counts on both institutions to adopt these proposals as soon as possible in order to provide legal certainty to all stakeholders,” it said Friday.
“It is now important that the European Parliament and the Council move quickly,” Gutmann said.
The Commission would likely have made this proposal after earning the support of member states, so there’s good reason to be hopeful it will be approved, Van der Jagt said.