On 25 May 2018, the EU Council adopted the Directive on Administrative Cooperation (DAC6), which introduced an obligation to disclose information on cross-border arrangements that meet certain criteria for EU-linked intermediaries and, under certain circumstances, information on the taxpayers.
On 24 June 2020, the EU Council adopted an amendment to the Directive, inserting Articles 27a and 27b. The effect of the amendment is 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.
Optional deferral of the reporting and deadlines:
Assuming that the optional deferral for extending the time frames within which intermediaries and relevant taxpayers would be required to disclose information under CRS and DAC6, will be adopted by Cyprus, the implementation effects of Article 27a will result in the following changes to current deadlines:
" With reference to reportable cross-border arrangements, where the first step of which was to have been implemented between 25 June 2018 and 1 July 2020, this information will now have to be filed by, at the latest, 28 February 2021.

" The effective date from which the 30-day reporting period (and the related notification period) will start is amended to 1 January 2021 for:

             o Associated reportable cross-border arrangements made available  for implementation, or, ready for implementation, or, when the first step in the implementation has been made between 01 July 2020 and 31 December; or
            o Intermediaries who, within the meaning of the second paragraph of point 21 of Article 3, provide, directly or by means of other persons, aid, assistance or advice between 1 July 2020 and 31 December 2020.

" The first periodic report in respect of "marketable" arrangements should now be submitted by the intermediary on, or before, 30 April 2021.

Provision for extension of period of deferral

Article 27b provides for the possibility of the EU Council introducing a further three month extension to these new deadlines in the event that severe risks to public health, hindrances, and economic disturbance caused by the COVID-19 pandemic continue to exist and, Member States apply lockdown measures. For this to happen the EU Council, must act unanimously on a proposal from the Commission which is to be submitted at least one month before the expiry of the relevant deadline.

The EU Council's 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. Its intention in extending compliance time limits is to give further time to financial institutions, tax advisors, businesses and national tax administrations, to enable them to collect, organise and collate, the information required from them as part of their obligations under DAC6. The amendments do not disrupt the structure established by, or the functioning of, DAC6.
It remains to be seen whether Cyprus will opt for a deferral to the current deadlines. The Cyprus Tax Authority is expected to release further guidance on the deferral period and on the application of the Cyprus DAC6 rules in practice.

Originally published July 8, 2020.

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