On 8 May 2020, the European Commission officially proposed to Member States an amendment to Council Directive 2011/16/EU of 15 February 2011 as amended (Directive on Administrative Cooperation (DAC)), to implement the following deadline extensions:
Exchange of information relating to the calendar year 2019 between MSs under DAC 2 (i.e. the Directive implementing CRS within the EU), would occur at the latest by 31 December 2020 (instead of 30 September 2020).
While the formal date of application of DAC 6 would remain 1 July 2020, the start date of the 30-day deadline for the reporting of information would be postponed from 1 July 2020 to 1 October 2020. Any arrangements that become reportable during this “postponement period” would need to be reported by 30 October 2020 at the latest.
The deadline for the reporting of the “historical arrangements under DAC 6 (i.e. reportable arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020) would be set as 30 November 2020 (instead of 31 August 2020).
Exchanges of information between MSs under DAC 6 would first occur by 31 January 2021 (instead of 31 October 2020).
The US Internal Revenue Service (IRS) has already communicated that the deadline for tax authorities to exchange 2019 FATCA reports is to be postponed to 31 December 2020 (instead of 30 September 2020). The OECD has also recommended the same coordinated extension of the CRS information exchange deadline between tax authorities.
These Commission proposals will now need to follow the normal EU decision-making process for tax proposals (ECOFIN Council decides by unanimous vote, EU Parliament is consulted). The timeline for this process cannot currently be outlined with any certainty.
In any case, Luxembourg taxpayers qualifying as Intermediaries under DAC 6, or having secondary reporting obligations (e.g. because there is no Intermediary involved or the Intermediaries involved are subject to legal privilege), should continue to prepare for the application of the DAC 6 measures, and should already start to review their “historical” arrangements, notably based on the result of their impact assessments.
Similarly, the Luxembourg tax authorities have yet to communicate on a similar extension of the FATCA and CRS internal reporting deadlines (i.e. the deadlines to file with the Luxembourg tax authorities), currently set at 30 June 2020. The Luxembourg tax authorities are in the meantime processing the 2019 reports that a number of Financial Institutions have already filed. Therefore, if reporting has not already been done, and the relevant financial data is already finalised and human resources are available to handle the process, we would recommend to file FATCA and CRS reports as soon as is practicable, in order to free resources for more critical projects once the crisis is over.
PwC remains committed to assisting you during these difficult times.
1. PwC Luxembourg (www.pwc.lu) is the largest professional services firm in Luxembourg with 2,870 people employed from 76 different countries. PwC Luxembourg provides audit, tax and advisory services including management consulting, transaction, financing and regulatory advice. The firm provides advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. The firm helps its clients create the value they are looking for by contributing to the smooth operation of the capital markets and providing advice through an industry-focused approach.
2. The PwC global network is the largest provider of professional services in the audit, tax and management consultancy sectors. We are a network of independent firms based in 158 countries and employing over 250,000 people. Talk to us about your concerns and find out more by visiting us at www.pwc.com and www.pwc.lu.
Tax Partner, FS Banking, PwC Luxembourg
Tel: +352 49 48 48 3118
Partner, Tax Information Reporting, PwC Luxembourg
Tel: +352 49 48 48 3177
Géraud de Borman
Tax Partner, Insurance, PwC Luxembourg
Tel: +352 49 48 48 3161
Partner, Asset and Wealth Management Leader, PwC Luxembourg
Tel: +352 49 48 48 3175
Managing Director, Tax Information Reporting, PwC Luxembourg
Tel: +352 49 48 48 4031
Tax Partner, Alternative Investments, PwC Luxembourg
Tel: +352 49 48 48 3185
Tax Partner, International Tax, PwC Luxembourg
Tel: +352 49 48 48 3060