Latest Update on the Reporting Obligation for Cross-Border Arrangements (DAC VI)

Based on the Directive on Administrative Cooperation in the Field of Taxation (“DAC VI”), EU member states, including the Czech Republic, should introduce the obligation of economic entities to report to taxation authorities certain cross-border transactions and other arrangements, so that tax administrators gain a better understanding of the use of tax regulations and of aggressive tax planning. The reporting process was supposed to be launched on 1 July 2020; with regard to the current situation, however, the original date might be postponed. However, no specific proposal has been put forth so far.

The European Commission’s original proposal to move the deadlines by three months, of which we informed you in our May article, was not discussed by the member states by the end of May, as planned. At the moment, the European Commission should be working on the preparation of a new proposal which would provide the possibility of postponing the original deadlines for reporting until early 2021 (based on the adopted Directive, the new obligation would be effective from 1 July 2020). This means that deadlines may also be postponed for the reporting obligation on cross-border arrangements that have “characteristic attributes” – and the question is how individual member states will approach the situation. Some EU member states, such as Poland, have already passed the relevant legislation and the new reporting obligation is already in place. The new proposal should give member states the possibility to choose to postpone the deadlines. This could create situations in which some member states will start applying the reporting obligation from 1 July 2020, while others will allow for the deadlines to be postponed until early 2021.

Implementation in the Czech Republic

In the Czech Republic, the relevant legislation has not been passed yet (the directive is implemented by means of an amendment to the Act on international cooperation in the field of tax administration; the bill was passed by the Chamber of Deputies as part of the “implementation package” in the third reading, on 5 June 2020). However, as part of the “Crisis Package” (currently sent back to the Chamber of Deputies by the Senate, with motions to amend), the Government is proposing an amendment to the Act on international cooperation in the field of tax administration. Specifically, they have proposed introducing the possibility of an extraordinary postponing of the deadline based on a governmental decree. According to the explanatory memorandum, this would allow a flexible reaction to a possible proposal from the European Commission.

The Czech financial administration announced that following the approval of the draft amendment to DAC VI at the EU level (to be discussed and approved by the end of June), the Czech Republic would extend the reporting deadlines based on a government decree as follows:

  • For cross-border arrangements whose first step was made between 25 June 2018 and 30 June 2020 (inclusive), until 28 February 2021;
  • For cross-border arrangements that were made available or ready for implementation or whose first step was made between 1 July 2020 and 31 December 2020 (inclusive), until 30 January 2021;
  • For cross border-arrangements that were made available or ready for implementation or whose first step was made on or after 1 January 2021, within 30 days of this key event.

We will keep you posted on further developments both at the European and the Czech levels. However, at this moment, we recommend that you verify to what extent this new obligation will affect your company and consider taking any necessary measures / setting up internal processes.

DAC 6 Direct Taxes dReport newsletter

Upcoming events

Seminars, webcasts, business breakfasts and other events organized by Deloitte.

    Show morearrow-right