After Common Reporting Standards (CRS) which change dramatically the financial system allowing the exchange of information of taxpayers among the world the European Union (and more specific the EU Economic and financial Affairs-ECOFIM) aiming to enhance transparency and prevent aggressive cross-border tax planning, in March 2018 concluded to the final draft of the Council Directive which amends the Directive 2011/16/EU on administrative cooperation in the field of taxation in relation to reportable cross-border arrangements (commonly referred to as DAC6).
EU Member States, including Cyprus, must transpose DAC6 into their national laws and regulations by 31 December 2019. This become challenging since in some important details of the directive each EU member has the discretionary right to implement and adopt DAC6 into national legislation in a different way from other EU member leading to inconsistencies among the others.
DAC6 reporting affects any person who is involved on cross border tax planning arrangements and includes but not limited to tax advisors, accountants, banks, lawyers that are resident in the EU. (“intermediary”)
Such a persons are required to report the tax authorities under certain criteria, based on DAC, cross boarder tax planning arrangements will be reportable if they fall within one of a number of “hallmarks”. (Hallmarks are given based on Annex IV on Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements). In case of failure of reporting (if applicable) penalties will be imposed for non-compliance.
Although as mentioned above each member state will impose DAC into national legislation the information on the arrangement is expected to include , identification of intermediaries and relevant taxpayers, including their names, dates and place of birth, residence for tax purposes and Tax numbers as well associates enterprises where is applicable , details of the arrangement (value , summary, date, description of business activities), details of the hallmarks that make the cross-border arrangement reportable , identification of member states are likely affected by the arrangement etc.
Below is presented the table with important KEY dates of implementation of DAC6.
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