Council Directive (EU) 2018/822 of 25 May 2018 has been published in the Official Journal of the EU. The Directive provides for the reporting of potentially aggressive cross-border tax-planning arrangements.
The reporting obligation generally applies to intermediaries that design, market, organize, or manage the implementation of a reportable cross-border arrangement, such as accountants, tax advisors, notaries, banks, etc. However, the reporting obligation may be shifted to a taxpayer in cases where an intermediary is prevented by law from reporting the info (legal professional privilege) or where there is no intermediary because, for instance, the taxpayer designs and implements a scheme in-house.
Intermediaries (or taxpayers) are required to report information on reportable cross-border arrangements within 30 days after the reportable cross-border arrangement is made available for implementation, or is ready for implementation, or when the first step in its implementation has been made, whichever occurs first. Reportable information includes the identification of intermediaries and relevant taxpayers, a summary of the reportable arrangement and the date of the first step of implementation, the relevant national law provisions, the value of the reportable arrangement, and the identification of the Member State of the relevant taxpayer and any other Member States or persons that are likely to be concerned by the reportable arrangement. Information reported in a Member State is then automatically exchanged with other Member States within one month following the end of the quarter in which the information was reported.
For the purpose of the Directive, "cross-border arrangement" means an arrangement concerning either more than one Member State or a Member State and a third country where at least one of the following conditions is met:
A "reportable cross-border arrangement" means any cross-border arrangement that contains at least one of the hallmarks set out in Annex IV of the Directive. Certain hallmarks only apply when a main benefit test is fulfilled, which includes cases where it can be established that the main benefit or one of the main benefits which, having regard to all relevant facts and circumstances, a person may reasonably expect to derive from an arrangement is the obtaining of a tax advantage. Hallmarks subject to meeting the main benefit test include:
The above specific cross-border hallmarks cannot be taken as the sole reason for concluding that an arrangement satisfies the main benefit test.
Additional hallmarks where fulfilling the main benefit test is not required include:
Member States have until 31 December 2019 to transpose the laws, regulations, and administrative provisions necessary to comply with Directive and must apply the provisions from 1 July 2020. The information to be first reported, however, includes information on any reportable transaction where the first step of implementation occurred between the date of entry into force of the Directive (20 days after it was published) and the date of application. This first information should be reported by 31 August 2020.
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