Briefly on the reporting obligation under DAC VI

On 1 January 2021, a new obligation was introduced to notify tax authorities of certain cross-border transactions and other arrangements that meet characteristics defined by law. Due to a lack of clarity on this issue, either in terms of the actual meaning of the terminology used, situations that may be subject to reporting, or the procedures, we try to address this issue in our dReport on a regular basis. We have come up with a brief summary of the latest development and news for you.

• The introduction of the reporting obligation was postponed to early 2021 by a regulation introduced by the Government of the Czech Republic. The standard reporting deadline is within thirty days from the date on which the arrangement was made available, ready for implementation or when its first step was implemented (whichever occurs first). For the so-called historical arrangements, the deadline for meeting the reporting obligation was set to 31 January or 28 February 2021 – depending on the period when the first step was implemented, when the arrangement was introduced or made available for implementation (more detailed information can be found in our previous article Reporting obligation of cross-border arrangements under DAC VI from 1 January 2021).

• The reporting obligation is based on the transposition of the EU DAC VI directive into the Czech legislation through the Act on International Cooperation in Tax Administration – the information stated in the form is then shared among EU tax administrations within the automatic exchange of information. The first exchange of information took place by 30 April 2021.

• According to the information presented by representatives of the Financial Administration at the beginning of May, 134 submissions were made by Czech taxable entities. Within the automatic exchange, the Financial Administration received information on about 300 arrangements from other EU countries (i.e. arrangements where the Czech Republic was listed as a country concerned).

• Expert discussions and comments are currently underway on the next version of the FAQ document regarding DAC VI and alternatively on another document that would further define the so-called hallmarks (i.e. attributes the meeting of which is crucial for further evaluation whether the arrangement is reportable or not). It is expected that these “interpretative” documents should be published in the foreseeable future.

• In other member states, too, there is a relatively intense discussion at the level of the professional public – recently, foreign tax administrations (lately e.g. in Germany, France, Hungary, etc.) have published other various local interpretations and guidelines on the issue of DAC VI. Discussions to clarify the deadlines and coordinate the approach also take place at the EU level (the first request for a preliminary ruling from a Belgian court has already reached the Court of Justice of the EU).

We will keep you informed of further developments.

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