On 6 July 2020, the Luxembourg government issued bill of law N°7625 implementing into domestic law Council Directive (EU) 2020/876 of 24 June 2020, which amends Directive 2011/16/EU ("DAC 6") to address the urgent need to defer certain time limits for the filing and exchange of information in the field of taxation because of the COVID-19 pandemic (the "DAC 6 amendment").
In line with the DAC 6 amendment, the bill provides for an extension of the reporting deadlines for the purposes of DAC 6 and Common Reporting Standards ("CRS").
In addition, as announced by the Luxembourg government in early June, the FATCA law should be modified to extend its reporting deadline for the year 2019.
DAC 6 reporting obligations starting as from 1 January 2021
The deadlines for the communication and exchange of information provided for in the law of 25 March 2020 (the "DAC 6 law"), which implements the provisions of DAC 6 into domestic law, should be extended by 6 months. In practice, this means that:
- information on reportable cross-border arrangements from the period 25 June 2018 – 30 June 2020 should be reported by 28 February 2021 (instead of 31 August 2020);
- the 30-day reporting period for cross-border arrangements that become reportable on or after 1 July 2020 should begin on 1 January 2021; and
- the first automatic exchange of information between Member States should take place on 30 April 2021 (instead of 31 October 2020).
The notification obligations incumbent upon intermediaries covered by legal professional privilege (i.e. lawyers, chartered accountants and auditors) should also start as from 1 January 2021.
CRS and FATCA reporting deadlines extended by 3 months
The bill introduces provisions amending the law of 18 December 2015 on common reporting standards (the "CRS law") and the law of 24 July 2015 related to FATCA (the "FATCA law"). Due to these amendments, the deadlines in the CRS law and FATCA law for the communication of data for the year 2019 should be extended by 3 months (i.e. this information should be reported by 30 September 2020).
Entry into force
The bill provides for a retrospective entry into force of the proposed provisions on 30 June 2020. As a result, no penalties for late disclosure should apply while the entry into force of these legislative amendments is still pending.
The bill is a fair implementation of the DAC 6 amendment that will give intermediaries and taxpayers precious time to further determine their precise reporting obligations under the law, which may still be uncertain in some instances – in particular given the lack of detailed guidance provided by the authorities to date. It will also give them more time to finalise the rollout of internal reporting processes.
The bill should now follow the normal legislative process. The final vote on the law is expected to be held in the coming months.
How can we help?
The partners and your usual contacts at Arendt & Medernach are at your disposal to further assess and advise on your reporting obligations under the DAC 6 Law, and to ensure that your operating processes are aligned with these obligations.
Originally published 07 July, 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.