Update on the reporting obligation in cross-border arrangements (DAC VI) [August 2020]
Based on the 6th amendment to the Directive on administrative cooperation in the field of taxation (“DAC VI”), EU member states (including the Czech Republic) should introduce an obligation for businesses to report selected cross-border transactions and other arrangements to taxation authorities in advance. The objective is for the tax administrator to gain better insight into the use of tax regulations and prevent aggressive tax planning.
We have already informed you about the topic in the article DAC 6: New Obligation to Report Certain Transactions to Taxation Authorities in Advance. In the Czech Republic, the Directive was implemented as part of an implementation package – Parliamentary Document No. 572 that was published on 14 August 2020 in the Collection of Laws and that will come into effect on 1 September 2020.
Following the forthcoming effective date of the law, the Ministry of Finance issued a press release on 19 August 2020, confirming its intention to use the EU-allowed possibility to extend the reporting deadlines by a government decree. The Ministry of Finance has already submitted its proposal to the government for discussion. It is expected that the government decree will come into effect in September.
According to the proposed government decree, the deadlines should be as follows:
- Cross-border arrangements whose first step was carried out between 25 June 2018 and 30 June 2020 (inclusive) – by 28 February 2021 the latest;
- Cross-border arrangements that were made available or ready for implementation or whose first step was already carried out; between 1 July 2020 and 31 December 2020 (inclusive) – by 30 January 2021 the latest;
- Cross-border arrangements that were made available or ready for implementation or whose first step was already carried out; from 1 January 2021 – within 30 days from such key event.
We recommend checking whether your company is subject to the new obligation, and if needed, considering the necessary measures and set up of internal processes.