The process of reporting cross-border arrangements was supposed to start on 1 July 2020. However, the Council of the European Union has currently approved a proposal to provide EU member states with an option to postpone the deadlines by six months, which is going to be used by the Czech Republic according to the Czech financial administration.
Pursuant to the sixth amendment to the Directive on administrative cooperation in the field of taxation (DAC VI), an obligation should be introduced in the EU member states including the Czech Republic to report certain cross-border transactions and other arrangements to financial authorities so that the tax administrator would obtain a better understanding of tax compliance and aggressive tax planning. We have already informed you of this issue in more detail in our article DAC 6: New Obligation to Report Certain Transactions to Taxation Authorities in Advance.
Based on the Directive, the new obligation should have been effective from 1 July 2020. However, the Council of the European Union has finally approved a proposed amendment allowing EU member states to postpone the first reporting deadlines to early 2021. It is up to individual states whether they will use the postponement option or not.
The Czech financial administration announced that following the approval of the draft amendment to DAC VI at the EU level, 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; and
- 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 from this key event.
We recommend that you verify to what extent this new obligation may affect your company (both in the Czech Republic and in other EU member states) and consider taking any necessary measures and setting up internal processes. If you have any questions relating to the above issue, please, do not hesitate to contact us.