Delay to DAC6 exchange of information
11 May: European Commission (EC) proposes three-month postponement of the exchange of information under the Directive on Administrative Cooperation (DAC6) due to the coronavirus.
The EC has published proposals deferring certain deadlines for filing and sharing of information under DAC6 by three months. This has followed significant representations from financial and professional bodies for such a deferral and further transitional measures.
ICAEW has also made such representations within the UK, stressing that implementing such complex rules amidst the COVID-19 pandemic will be exceptionally difficult for stakeholders to navigate.
The lack of clarity around the IT systems required to facilitate compliant reporting is also a key area of concern and it is hoped that further time will help affected parties to prepare for the new rules appropriately.
The EC has been clear that the rules will come into force as planned on 1 July 2020 and this is simply a deferral. What this means in practice is that all transactions which should have been reported will still need reporting, albeit at a later date.
All key reporting dates are to be deferred by three months and any arrangements made during the postponement period will have to reported by the end of the deferral period. Effectively, this results in the following amendments.
- Changing the date for the beginning of the 30-day period for reporting cross-border arrangements from 1 July 2020 to 1 October 2020.
- Changing the date for the reporting of cross-border arrangements that became reportable from 25 June 2018 to 30 June 2020 (the so-called ‘“historical’” arrangements) from 31 August 2020 to 30 November 2020.
- Changing the date for the first exchange of information on reportable cross-border arrangements from 31 October 2020 to 31 January 2021.
Given the uncertainty around how the coronavirus pandemic will develop and impact the EU, the EC has included in the proposal the possibility of extending the reporting deadlines for a further three months.
ICAEW welcomes this measure as feedback from members has indicated that the compliance burden on businesses to comply with these rules is onerous and many aspects are still not clear.
While a three month deferral is welcome, it may not be sufficient in the current climate to ensure that implementation runs as effectively as possible, particularly given the large back log of reports which will be required regarding ‘historical’ transactions.