EC proposes temporary postponement of taxation rules due to COVID-19

Deloitte Malta tax alert

13 May 2020

On 8 May 2020, the European Commission proposed the postponement of two EU taxation measures due to the Coronavirus pandemic in order to alleviate the difficulties faced by businesses and Member States due to the crisis.

i. VAT e-commerce rules entry into force

The Commission has proposed a six month delay with respect to the entry into force of the VAT e-commerce package. Therefore, if the Commission’s proposal is adopted, the rules introduced by the VAT e-commerce package will be applicable as of 1 July 2021, instead of 1 January 2021 as originally stipulated.

ii. Directive on Administrative Cooperation (DAC) deadlines

The Commission has proposed the following changes to certain deadlines regarding the filing and exchanging of information i.e. reporting obligations, under the Directive on Administrative Cooperation (DAC):

  1. To defer the time limit for exchanges of information on reportable financial accounts in terms of the Common reporting Standard (DAC 2) by 3 months, i.e. until 31 December 2020;
  2. To change the date for the first exchange of information on reportable cross-border arrangements (DAC 6) from 31 October 2020 to 31 January 2021;
  3. To change the date for the beginning of the period of 30 days for reporting ‘new’ reportable cross-border arrangements in terms of DAC 6 from 1 July 2020 to 1 October 2020; and
  4. To change the date for the reporting of the ‘historical’ reportable cross-border arrangements (i.e. arrangements that became reportable from 25 June 2018 to 30 June 2020) in terms of DAC 6 from 31 August 2020 to 30 November 2020.

Furthermore, according to ongoing development regarding the Coronavirus pandemic, the Commission has proposed the possibility of extending such deferral periods once for a maximum of three additional months.

Despite the above proposed changes, the Commission has affirmed that DAC 6 will remain applicable as of 1 July 2020.

Next steps

The Commission has reported that both the European Parliament and the Council have been informed about the proposals. The Council may, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, adopt these proposals in terms of articles 113 and 115 of the Treaty on the Functioning of the European Union respectively.

The full text of the proposals may be found via this link.

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