On 24 June 2020, the EU Council adopted an amendment to the Directive on Administrative Cooperation (DAC6), inserting Articles 27a and 27b. The effect of the amendment was to allow EU Member States an option to defer, by up to six months, the time limits for the filing and exchange of the reportable arrangements. On 27 July 2020 the Cyprus Tax Department (‘CTD’) issued a circular confirming that it will be adopting the optional deferral and extending the time frames within which intermediaries and relevant taxpayers will be required to disclose information under Common Reporting Standards and DAC6.
In practice this will mean the following:
- The deadline for the reporting of historical cross-border arrangements which were implemented between 25 June 2018 and 30 June 2020 is extended from 31 August 2020 to 28 February 2021.
- The beginning of the 30-day period for reporting cross-border arrangements will now commence on 1 January 2021 where:
- a reportable cross-border arrangement is made available for implementation or, is ready for implementation, or where the first step in its implementation has been made between 1 July 2020 and 31 December 2020; or (although not explicitly stated in the CTD circular),
- intermediaries within the meaning of the second paragraph of point 21 of Article 3 of DAC6 provide, directly or by means of other persons, aid, assistance or advice between 1 July 2020 and 31 December 2020.
- The new deadline for the first periodic report on marketable arrangements to be made by the intermediary, will be 30 April, 2021.
The EU Council’s original announcement was an initiative in response to the severe disruption of the activities of individuals, businesses, financial institutions and government departments caused by the COVID-19 pandemic and the associated practical difficulties of complying with the original DAC6 deadlines. It is important to note that the beginning of application of DAC 6 will remain 01 July 2020 and thus, reportable arrangements made during the postponement period will have to be reported by the time the deferral has terminated. Equally, the information on financial accounts to be exchanged under DAC 2 during that period will have to be reported by the time the deferral has ended.
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