As mentioned in our previous article, the EU Directive 2018/822/EU on Administrative Cooperation (DAC6) is designed to encourage the exchange of information regarding reportable cross-border arrangements in the field of taxation within the EU. The main focal point of these rules is to mandate disclosure of information to tax authorities from intermediaries, including law firms, service providers, accountants, and auditors regarding tax arrangements with their clients.
The deadline for DAC6’s transposition in national law was set for the 31 December 2019; however, Cyprus has yet to implement DAC6 domestically. Local authorities have launched a draft bill (which can be accessed here, albeit in Greek) that was circulated for public consultation back in October 2019. Although it was anticipated to be ratified and adopted by early 2020, the law remains to be enacted.
It is important to highlight that the official effective date of DAC6 in all Member States remains the 1 July 2020 despite its retrospective enforceability on reportable cross-border tax arrangements carried out since 25 June 2018. Due to the economic struggles of the current pandemic, the European Commission has decided to defer certain reporting and filing deadlines and proposed to allow Member States, intermediaries and taxpayers three additional months on their reporting obligations, namely on the exchange of information on reportable financial accounts of which the beneficiaries are tax residents in another Member State and certain cross-border tax planning arrangements.
Depending on how Covid-19 will evolve within the near future, the Commission has expressed the possibility of further extending the deferral period, for a maximum period of three more months if the necessity arises. This proposal was submitted to the EU Parliament and EU Council for consultation on 8 May 2020, the adoption of which shall significantly provide legal certainty to all stakeholders.
The author of the article is Anastasia Sarkisian.
Anastasia is a legal consultant at Royal Pine & Associates. She is qualified lawyer with experience in the corporate field and admitted member at the Cyprus Bar Association.
* This publication has been prepared as a general guide and for information purposes only. It does not purport to be comprehensive or to render legal advice.
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