Luxembourg releases the draft law implementing the EU directive (DAC 6) requiring the disclosure of certain cross-border tax arrangements

On 8 August 2019, the draft law that would implement the EU directive 2018/822, commonly referred to as DAC 6, was introduced to the Luxembourg parliament.

DAC 6, which broadly reflects the elements of action 12 of the OECD BEPS project on the mandatory disclosure of potentially aggressive tax planning, is the fifth amendment to the 2011/16/EU directive on administrative cooperation in the field of taxation.

DAC 6 introduces an obligation to disclose to the tax authorities information on cross-border arrangements that meet certain criteria. It also regulates the subsequent exchange of the information by and between tax administrations of EU member states on a regular basis.

Some of the key elements of the draft law are summarized here concerning, among others, its scope of application, persons who would have to report, reporting deadlines, content of the reporting and potential penalty amounts to be imposed on intermediaries and taxpayers that do not comply with the transparency measures.

 

Timing of the reporting and information to be reported

The mandatory reporting to the tax authorities would be required as from 1 July 2020. As a transitional rule, intermediaries and relevant taxpayers would also be required to disclose information on reportable cross-border arrangements, the first step of which was implemented between 25 June 2018 and 1 July 2020. This information would have to be filed by 31 August 2020.

Penalties

The proposed penalty, in line with those already applicable in the context of exchange of information, would amount to up to EUR 250,000. A penalty would apply for failure to report, late reporting, incomplete or inaccurate reporting, as well as a breach of the information duty imposed on lawyers to timely notify other intermediaries or relevant taxpayers.

As indicated in the commentary to the draft law, the intentional nature of an infraction would be taken into account at the time of setting the amount of the penalty. 

Comments and next steps

Even though the draft law provides some interpretative comments, more clarity on its key concepts, as well as some practical implementation guidelines, would be welcome. In any event, businesses should already begin to identify transactions potentially affected by DAC 6, as the first reporting should be filed in the summer of 2020.

The draft law now will be debated in the Luxembourg parliament, opined upon by the professional chambers and the Council of State, and possibly amended. A final vote is expected by the end of the year. We will keep you informed on future developments in connection with this draft legislation.

 

Source: DELOITTE| Luxembourg Tax Alert |

 

 

 

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