UK narrows DAC6 reporting requirements post-Brexit

Deloitte Malta Tax Alert

7 January 2021

Following the conclusion of negotiations between the UK and the EU on a free trade agreement in December, the UK tax authorities have confirmed that new regulations will amend the current DAC6 regulations as from 31 December 2020 with the key impact being the removal of four out of five reporting hallmarks from the original legislation. This is a much narrower implementation than previously envisaged and one that was not expected.

The only remaining reporting hallmark in the UK shall be hallmark D until the UK eventually replaces DAC6 and transitions to international rules based on OECD principles during the course of 2020. Hallmark D is concerned with the circumvention of reporting under the OECD Common Reporting Standard and/or obscuring beneficial ownership. Given the activities covered are generally prohibited under other existing laws, it is not one that is expected to arise widely.

DAC6 aims to provide Member States’ tax authorities with additional information in order to assist them to more rapidly close perceived loopholes in tax legislation and harmful tax practices. Taxpayers and intermediaries entering into or advising on cross-border arrangements involving EU jurisdictions will need to monitor where reporting will be required and disclose as necessary. Following the transposition of DAC6 into Maltese law through Legal Notice 342 of 2019, Malta effectively extended the first DAC6 reporting deadlines because of the COVID-19 pandemic by 6 months through Legal Notice 315 of 2020.

The online registration process may be accessed here.

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