EU Vote Paves Way for Extending Cross-Border Reporting Deadline

A European Parliament vote paved the way for EU countries to agree on a six-month extension of deadlines for companies and tax advisors to report on their cross-border tax arrangements.

The vote on tax reporting rules known as DAC 6 could be a step forward in giving companies some breathing space to review their arrangements in the context of the difficulties imposed by coronavirus. EU lawmakers June 19 supported an extension of deadlines by 500 votes to 152, with 13 abstentions.

The parliament’s vote is advisory, but under EU procedural rules was required before EU countries can take a definitive decision on the extension. Countries are likely to do so by the end of June, an EU official told Bloomberg Tax.

An extension “would be welcomed by businesses who are grappling with the rules and configuring new software to cater for often complex facts,” said Laura Hoyland, a partner with White & Case LLP in London, in an email.

Under the DAC6 law, finalized in 2018, tax advisors and companies were supposed to start tracking certain tax arrangements in July, which they will report to authorities on a 30-day rolling basis, along with a report due in August of two years’ worth of historic arrangements. EU countries will then share the information. The rules are intended as a check on aggressive tax planning.

Business suspensions and difficulties associated with coronavirus prompted the European Commission, the EU’s executive arm, to propose in June a postponement of reporting deadlines.

The commission initially proposed three-month deadline extensions, but EU countries have already agreed in principle on six months and would likely formalize that by the end of June, the EU official said.

However, it would be optional for countries to allow the six-month extension, and there is little clarity so far on which countries will and which won’t, the official said.

Companies would welcome a six-month extension but “for multi-jurisdictional businesses, it will bring complexity too if some member states choose to apply the extension but others don’t,” Hoyland said.