On 8 May 2020, the European Commission published a proposal to amend Directive 2011/16 of 15 February 2011 on administrative cooperation in the field of taxation in order to defer certain time limits for the filing and exchange of information in the field of taxation due to the COVID-19 pandemic.
On 3 June 2020, the Member States came to a political agreement to extend these deadlines.
The extension concerns two deadlines in particular. First, the obligation for Member States to exchange information on reportable financial accounts under Directive (EU) 2014/107 (“DAC2”) has been deferred for 3 months (i.e. until 31 December 2020). As a reminder, under DAC 2, Member States must automatically exchange information regarding financial accounts including information on interest, dividends or other income generated by financial accounts, gross proceeds from sales and account balances. Second, the Member States decided to extend reporting obligations under Directive (EU) 2018/822 (“DAC6”) by 6 months. In practice:
- reportable cross-border arrangements which were implemented between 25 June 2018 and 30 June 2020 must now be reported under DAC 6 by 28 February 2021 (instead of 31 August 2020);
- the date for the beginning of the period of 30 days for reporting cross-border arrangements which are included in Hallmarks listed in Annex IV of the DAC 6 and which were implemented between 1 July 2020 and 31 December 2020 is now 1 January 2021.
In a press release, the Luxembourg Finance Ministry confirmed this approach and announced it would also be introducing laws in order to extend reporting deadlines under Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”).
Under CRS, financial institutions must annually transmit to the Luxembourg tax authority information concerning the identity, account, account balance and related financial income of each person who is a tax resident in another participating jurisdiction. The deadline for financial institutions to communicate this information is delayed by 3 months (i.e. until 30 September 2020 for the previous year).
Under FATCA, financial institutions and certain other non-financial foreign entities must annually report information concerning U.S. account holders, including foreign assets held by U.S. account holders to the Luxembourg tax authority which shares this information with the U.S. tax authority. The deadline to provide this information has been deferred for 3 months until 1 October 2020 (for the previous fiscal year).
Finally, the Luxembourg Finance Ministry announced that pending the adoption of these laws, the penalties for late transmission of the information required under DAC 2, DAC 6, CRS and FATCA would not be applied.