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Extension of 6 months in relation to DAC 6, CRS, FATCA: Luxembourg confirms its willingness to follow EU proposals.

05/06/20

In Brief

Due to the COVID-19 turmoil, the European Commission has proposed to Member States an extension of the reporting deadlines under CRS and DAC 6. Initially suggested to be reported by 3 months, the DAC 6 deadlines are now expected to be postponed by 6 months. The similar extension given by the IRS for FATCA reporting, and by the OECD for CRS reporting purposes should however remain limited to 3 months. The Luxembourg government confirmed, through a press release on its website, its willingness to follow such proposals and to issue a draft bill once a final agreement is reached at EU level.

In detail

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 deadline extensions in relation to DAC 6 and CRS (DAC 2). 

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.

Please refer to our prior Flash News for further details in this respect.  

What’s next?

Following the European Commission’s proposals to defer deadlines for automatic exchange of information regimes and an agreement reached on 3 June 2020 at the level of the Permanent Representatives Committee, the Luxembourg government has confirmed the possibility for the Member States to post-pone the DAC 6 deadlines by 6 months (as mentioned above, only a 3 months delay was initially envisaged at the time of our previous communication).

The Luxembourg government has also confirmed that, in accordance with this possibility and to the extent it is also agreed at the level of the ECOFIN, a draft law should be shortly introduced in order to formally enact this postponement.

https://mfin.gouvernement.lu/fr/actualites.gouvernement%2Bfr%2Bactualites%2Btoutes_actualites%2Bcommuniques%2B2020%2B06-juin%2B04-delais-dac2-dac6.html

Although not explicitly confirmed, we expect that the Luxembourg law will provide for a postponement of 6 months (and not of a shorter period) as far as DAC 6 is concerned meaning that:

  • the final deadline for filing arrangements linked to the transition period would be postponed to 28 February 2021 ;
  • the date for the beginning of the period of 30 days for reporting on reportable cross-border arrangements by intermediaries (or taxpayers) would be changed from 1 July 2020 to 1 January 2021. 

Our understanding is that the entry into force of the DAC 6 provisions remains 1 July 2020 meaning that the specific rules applicable to the transition period will only relate to transactions whose first step of implementation occurred between 25 June 2018 and 30 June 2020 (i.e. no extension of the transition period).

It is expected that the Luxembourg law will not be formally voted before 1 July 2020, which is the date of entry into force of the DAC 6 law as noted above. The Luxembourg government already confirmed that no penalties will apply as from 1 July 2020 due to the fact that the new deadlines are not yet effective.

The Luxembourg bill will also extend CRS and FATCA deadlines by 3 months for the 2019 reports.

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.

PwC remains committed to assisting you during these difficult times. 

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Contact us

Murielle Filipucci

Partner, PwC Luxembourg

Tel: +352 49 48 48 3118

Kerstin Thinnes

Tax Partner, PwC Luxembourg

Tel: +352 49 48 48 3177

Géraud de Borman

Tax Partner, PwC Luxembourg

Tel: +352 49 48 48 3161

Oliver Weber

Partner, PwC Luxembourg

Tel: +352 49 48 48 3175

Pierre Kirsch

Tax Partner, PwC Luxembourg

Tel: +352 49 48 48 4031

Iryna Sansonnet-Matsukevich

Tax Partner, PwC Luxembourg

Tel: +352 49 48 48 3185

Sami Douénias

Tax Partner, PwC Luxembourg

Tel: +352 49 48 48 3060

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