Possible Postponement of the Reporting Obligation Deadlines in Relation to Cross-border Arrangements (DAC VI)

Based on the sixth amendment to the Directive on administrative cooperation in the field of taxation (the so called DAC VI), taxpayers in the EU Member States, including the Czech Republic, will be required to report to the tax authorities certain cross border transactions and other arrangements, so that the tax administrator would obtain a better understanding of tax compliance and aggressive tax planning.

The reporting obligation should concern all transactions with certain characteristic features (so called hallmarks), even those realised already after 25 June 2018. The reporting process is to be launched from 1 July 2020 and the first automatic exchange of these notifications among tax administrators should take place before 31 October 2020. For more detailed information on this topic see our article DAC 6: New Obligation to Report Certain Transactions to Taxation Authorities in Advance.

However, considering the current situation, the European Committee proposed changes to the DAC VI Directive in order to postpone certain deadlines (in principle by 3 months) for filing and exchanging information in the field of taxation due to the COVID‑19 pandemic.

Specifically, the draft includes the following:

  • Change of the deadline from 31 August 2020 to 30 November 2020 for filing information on cross-border arrangements that are to be reported and that started to be implemented in the period from 25 June 2018 to 30 June 2020.
  • Change of the start of the 30-day deadline from 1 July 2020 to 1 October 2020 for the reporting of cross‑border arrangements that are to be reported and that will be available/implemented in the period from 1 July to 30 September 2020.
  • Postponement of the deadline for the realisation of the first automatic exchange of information from 31 October 2020 to 31 January 2021.

The proposal also allows the European Committee to approve an extension of the postponement by 3 additional months in case of persisting serious risks to the public health as a result of the COVID‑19 pandemic and the necessary restricting measures adopted by the EU Member States.

The process of implementing the DAC VI Directive is still underway in the Czech Republic; the related draft of a law passed its second reading in the Chamber of Deputies. We will continue to inform you about the development of the situation and the prospective postponement of the deadlines both, in the EU and the Czech Republic.

A technical guide describing mandatory fields and the structure of the report on the cross-border arrangement issued by the European Commission to unify and facilitate the information exchange between the member states was published on the web page of the tax authorities. Besides the identification of the taxpayer concerned, the description of the arrangement and the hallmarks met, the notification should also include the identification of the intermediaries involved. A specific proposal of the electronic form, which should be possible to submit via the tax authorities’ portal, has not yet been made public.

DAC 6 dReport newsletter

Information of the General Financial Directorate on transfer pricing in financial transactions

On 9 August 2021, the General Financial Directorate issued information on the guidance on transfer pricing in financial transactions (the “Information”) in which the General Financial Directorate refers to Transfer Pricing Guidance on Financial Transactions (the “Guidance”) published by the Organisation for Economic Cooperation and Development (the “OECD”) in February 2020. Together with the Information, the General Financial Directorate published an unofficial translation of the Guidance into Czech. 

20. 10. 2021

Reintroduction of exemption of non-residents’ interest income from so-called Eurobonds

On 30 September 2021, an amendment to the Banking Act was published in the Collection of Laws, which was altered during the legislative process to also include an amendment to the Income Tax Act. This amendment reintroduces the exemption of non-residents’ interest income from so-called Eurobonds, i.e. bonds issued abroad by taxpayers with registered seat in the Czech Republic effective from 1 January 2022. 

20. 10. 2021

OECD: Implementation plan of a two-pillar solution

The OECD kept its promise and issued a Statement on 8 October 2021 involving a draft implementation plan of the two-pillar solution to address the tax challenges arising from the digitalisation and globalisation of the economy. An information brochure including answers to frequently asked questions was issued along with the Statement. The global convention was subsequently endorsed by the G20 representatives during their summit. 

20. 10. 2021