Covid-19 impact causes European Commission to postpone new tax measures.


On 8 May 2020, the European Commission (EC) announced its decision to postpone the entry into force of two EU taxation measures. The postponements are a recognition of the difficulties which Member States and businesses are currently encountering because of the Covid-19 pandemic.  The postponements relate to the new VAT e-commerce package and the Directive on Administrative Cooperation (DAC).

  1. The VAT e-commerce package

The VAT e-commerce package is the second half of a package of measures which is aimed at simplifying VAT obligations for companies carrying out cross-border sales of goods or services (mainly online) to final consumers and, at ensuring that VAT on such supplies is paid correctly to the Member State of the customer. It includes new rules for distance sales of goods and services supplied to final customers in the EU.  These rules were originally to apply from 1 January 2021.   This start date is now postponed by 6 months to 1 July 2021 to allow Member States and businesses adequate time to properly prepare for their implementation.  It is an acknowledgement that implementation will require both the adaption of existing IT systems and the setting up of new systems by Member States.

  1. DAC

The EC has proposed a Council Directive amending DAC.  Its key features are as follows:

  • An alteration of the time limit (under DAC2), for Member States’ exchanges of information on reportable financial accounts, from 30 September 2020 to 31 December 2020;
  • A change in the date for the first exchange of information between Member States on reportable cross-border arrangements (required under DAC6). The original date of 31 October 2020 would be pushed back to 31 January 2021;
  • A change in the date for the start of a 30-day period given to intermediaries (or taxpayers) to declare reportable cross-border arrangements (required under DAC6). It is suggested that this be revised from 1 July 2020 to 1 October 2020;
  • A change in the reporting date for historical reportable cross-border arrangements which were in place 25 June 2018 to 30 June 2020. This would be revised from 31 August 2020 to 30 November 2020;
  • A change in the start date for production of periodic reports, by intermediaries, of marketable reportable cross-border arrangements (required under DAC6). This would move from 31 October 2020 to 31 January 2021;
  • The provision for a possible further deferral of all above deadlines, for a maximum 3-month period, depending upon the evolution of the pandemic.

The proposed directive will need to follow usual EU decision making procedures for tax procedures. Thus, it sets an ambitious 31 May 2020 target for its provisions to be transposed into the national laws of Member States.


It is important to note that whilst the introduction of VAT e-commerce rules has been delayed, the introduction of DAC6 has not.  The start date for the application of DAC6 remains 1 July 2020, the proposed postponements only delay the deadlines for complying with DAC2 and DAC6 reporting obligations.  Any reportable arrangements made during the deferral period must be reported before the end of the deferral period.  Taxpayers operating in the EU should, therefore, still ensure that fully understand the implications of and, their obligations under DAC so that they are able to ensure compliance on, and after, 1 July 2020.

For more information on this topic please contact Elena Christodoulou, our Covid-19 Taskforce [email protected] or speak with your usual contact at Elias Neocleous & Co LLC.