Newsflash Luxembourg – Postponement of tax reporting deadlines under DAC6, CRS and FATCA

In the context of the crisis related to COVID-19, a draft law relating to the postponement of tax reporting deadlines under DAC6, CRS and FATCA was filed with the Luxembourg Chamber of Deputies (bill number 7625, hereafter referred to as “the Bill”) on 6 July 2020.

The Bill followed the Council of the European Union’s sanctioning of an update to the Directive on Administrative Cooperation (DAC), dated 24 June 2020, which gave EU member states the chance to postpone the deadline related to automatic information exchange under CRS (DAC 2) and for the organisation and exchange of information under DAC6.

The EU Official Journal dated 26 June 2020 published the above-mentioned amendment on 26 June 2020, and it was put into practice as of 27 June 2020. This followed the announcement made by the Luxembourg government on the 4 June 2020, which stated its will to go ahead with such a deferral.

The Bill was approved by the Luxembourg Parliament on 22 July 2020 (the “Law”) with no material amendments to the initial text filed with the Luxembourg Chamber of Deputies.

The Law includes a 6-month deferral of the DAC 6 previous deadline, which was 1 July 2020, to 1 January 2021 and it also applies to the provisions triggering reporting obligation between 1 July 2020 and 31 December 2020. There is no change to reporting deadline for reportable arrangements triggering the reporting obligation as from 1 January 2021.

28 February 2021 is the new deadline for reporting arrangements effectuated between the dates of 25 June 2018 and 30 June 2020. There is still a possibility for intermediaries and relevant taxpayers to provide necessary information to the tax authorities before 28 February 2021.

EU Tax Authorities now have until 20 April 2021 for the first exchange of information related to reportable cross-border arrangements to take place. This is also the deadline for the first periodic report on marketable arrangements.

There is also a 6-month extension to the starting date of the 10-day notification period for intermediaries covered by legal professional privilege. The new deadline is 1 January 2021 and relates to any cross-border arrangements triggered by the reporting between 1 July 2020 and 31 December 2020.

The EU Common Reporting Standard (“CRS”) and the Foreign Account and Tax Compliance Act (“FATCA”) state that information on “reportable financial accounts” must be provided by Luxembourg financial institutions to the Administration des Contributions Directes (“ACD”). Tax information related to the previous calendar year must be submitted annually on 30 June. 30 September of the same calendar year is the deadline for the ACD to exchange such information with other relevant authorities, other CRS reportable jurisdictions and/or the U.S. Internal Revenue Service (“IRS”).

The Law initiates a 3-month extension to the deadlines, commensurate with both the amendment to the DAC 2 effected on 24 June 2020 and the extension to the FATCA reporting deadline provided by the IRS for tax year 2019.

30 September 2020 is the new deadline for Luxembourg financial institutions (a three-month extension to the previous deadline) for the year 2019, and the ACD now has until 31 December 2020 to exchange the information they receive (again a 3-month extension).

In the event that information is transmitted late, the sanctions defined in the initial laws will not be actioned until the new deadlines come into effect. This is commensurate with the announcement made by the Luxembourg government on 4 June 2020.

Luxembourg, August 2020