On 25 May 2018, the EU Council adopted the Directive on
Administrative Cooperation (DAC6), which introduced an obligation
to disclose information on cross-border arrangements that meet
certain criteria for EU-linked intermediaries and, under certain
circumstances, information on the taxpayers.
On 24 June 2020, the EU Council adopted an amendment to the
Directive, inserting Articles 27a and 27b. The effect of the
amendment is to allow EU Member States an option to defer, by up to
six months, the time limits for the filing and exchange of the
reportable arrangements.
Optional deferral of the reporting and deadlines:
Assuming that the optional deferral for extending the time frames
within which intermediaries and relevant taxpayers would be
required to disclose information under CRS and DAC6, will be
adopted by Cyprus, the implementation effects of Article 27a will
result in the following changes to current deadlines:
" With reference to reportable cross-border arrangements,
where the first step of which was to have been implemented between
25 June 2018 and 1 July 2020, this information will now have to be
filed by, at the latest, 28 February 2021.
" The effective date from which the 30-day reporting period (and the related notification period) will start is amended to 1 January 2021 for:
o Associated
reportable cross-border arrangements made available for
implementation, or, ready for implementation, or, when the first
step in the implementation has been made between 01 July 2020 and
31 December; or
o Intermediaries who,
within the meaning of the second paragraph of point 21 of Article
3, provide, directly or by means of other persons, aid, assistance
or advice between 1 July 2020 and 31 December 2020.
" The first periodic report in respect of "marketable" arrangements should now be submitted by the intermediary on, or before, 30 April 2021.
Provision for extension of period of deferral
Article 27b provides for the possibility of the EU Council introducing a further three month extension to these new deadlines in the event that severe risks to public health, hindrances, and economic disturbance caused by the COVID-19 pandemic continue to exist and, Member States apply lockdown measures. For this to happen the EU Council, must act unanimously on a proposal from the Commission which is to be submitted at least one month before the expiry of the relevant deadline.
The EU Council's announcement was an initiative in response
to the severe disruption of the activities of individuals,
businesses, financial institutions and government departments
caused by the COVID-19 pandemic and the associated practical
difficulties of complying with the original DAC6 deadlines. Its
intention in extending compliance time limits is to give further
time to financial institutions, tax advisors, businesses and
national tax administrations, to enable them to collect, organise
and collate, the information required from them as part of their
obligations under DAC6. The amendments do not disrupt the structure
established by, or the functioning of, DAC6.
It remains to be seen whether Cyprus will opt for a deferral to the
current deadlines. The Cyprus Tax Authority is expected to release
further guidance on the deferral period and on the application of
the Cyprus DAC6 rules in practice.
Originally published July 8, 2020.
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