(Last updated: 07 July 2020)
In Germany, intermediaries and users are required to report relevant cross-border tax arrangements electronically to the Federal Tax Office (BZSt), starting from 1 July 2020. Currently the Directive and German transposition law require compliance with the following time limits when submitting these reports:
- "Historical" cases: cross-border tax arrangements whose first step was implemented after 24 June 2018 (entry into force of DAC 6) and before 1 July 2020 must be notified to the Federal Tax Office by 31 August 2020.
- "New" cases: cross-border tax arrangements implemented from 1 July 2020 onwards must be notified to the Federal Tax Office within 30 days after the end of the "event day" within the meaning of section 138f (2) nos. 1 to 3 of the Fiscal Code (Abgabenordnung – AO).
In order to provide relief to parties affected by the disclosure requirements during the coronavirus crisis, the European Commission published a 总裁大还是董事长大proposal for a council directive on 8 May 2020. Its main aim was to defer the disclosure time limits for cross-border tax arrangements by three months (initially). The European Commission also proposed that, given the uncertainty about the 总裁大还是董事长大development of the COVID-19 pandemic总裁大还是董事长大, it could be authorised to extend the deferral period for submission and exchange of information once by a period of three months. It was not possible to reach a quick political agreement on this Commission proposal, despite the considerable time pressure on the Member States.
A compromise was nonetheless achieved on 3 June 2020 at the meeting of the Committee of Permanent Representatives of the Member States (COREPER II) on the amended draft proposal for a directive dated 28 May 2020. The proposal was approved on 19 June 2020 by the EU Parliament and finally agreed on 24 June 2020 by the Council. As such, the Member States are being given the option to defer the DAC 6 disclosure time limits for six months, as follows:
- "Historical" cases: the time limit for disclosing cross-border tax arrangements relating to the period from 25 June 2018 to 30 June 2020 has been deferred from 31 August 2020 to February 2021.
- "New" cases: the 30-day time limit for disclosing cross-border tax arrangements starting from 1 July 2020 will begin on 1 January 2021.
- First-time quarterly disclosure concerning marketable arrangements within the meaning of section 138h AO of the German transposition law is to be submitted by April 2021.
- The first exchange of information between EU Member States relating to cross-border tax arrangements has been deferred from 31 October to April 2021.
It is important to note that this Directive only extends the time limit for meeting the disclosure requirements; the date on which the regulations begin to apply remains 1 July 2020. Cross-border tax arrangements implemented during the deferral period must be disclosed at the end of the moratorium.
The process initiated in Germany in 2018 to implement DAC 6 reached the finishing line in December 2019: on Thursday, 12 December 2019, the Bundestag approved the federal government bill introducing a requirement to disclose cross-border tax arrangements in the version as amended by the Finance Committee on 11 December 2019.
The law of 21 December 2019 was promulgated in the Federal Law Gazette Part I 2019 No. 52 on 30 December 2019 and entered into force on 1 January 2020.
In March 2020, the Federal Ministry of Finance also published a consultation draft on application of the provisions relating to the requirements to disclose cross-border tax arrangements, which is currently being revised by the relevant bodies. The final BMF circular is expected to be published soon. It is currently still open whether Germany makes use of the Union law option to extend the deadline. There are current indications that this may not be the case. In this case, the old deadlines would remain the same for old and new cases.
Previous history of the legislative process: Back in September 2018, the Federal Ministry of Finance drew up an internal consultation draft on transposing DAC 6. On 30 January 2019, a first (unpublished) draft bill was distributed for interministerial consultation. Unlike the working draft, the draft bill provided for an extension of the disclosure requirements to cover purely national tax arrangements. The Federal Ministry of Finance and legislators backed away from this again in the official draft bill of 26 September 2019 and in the government draft of 9 October 2019 that directly followed it. The version of the law that was passed by the Bundestag, which dates from 11 December 2019, and the transposition law then promulgated on 30 December 2019 likewise do not provide for any disclosure requirement in relation to national tax arrangements. However, it remains to be seen whether the Federal Ministry of Finance will take up the issue of a disclosure requirement for national arrangements again in future draft legislation.
The following overview summarises what will change for taxpayers and their advisors as a result of DAC 6 and the German transposition law.
The material scope of the disclosure requirements essentially includes specific types of tax, the cross-border arrangement, and certain hallmarks of the arrangement.
总裁大还是董事长大Type of tax covered总裁大还是董事长大
The disclosure requirement for cross-border tax arrangements includes income tax, corporation tax, trade tax, inheritance tax, gift tax and real estate transfer tax, for example. It does not cover (import) VAT, customs duties and harmonised excise duties (such as taxes on energy, electricity, spirits and tobacco), social security contributions and fees.
总裁大还是董事长大Cross-border nature of the arrangement总裁大还是董事长大
DAC 6 stipulates that arrangements are subject to disclosure if certain cross-border criteria are met, such as more than one EU Member State being involved or, under certain circumstances, at least one Member State and one or more third country.
总裁大还是董事长大Hallmarks of the arrangement – overview总裁大还是董事长大
A cross-border arrangement is reportable if it includes at least one specific hallmark within the meaning of DAC 6. With regard to the hallmarks of an arrangement, a distinction must be made between hallmarks which are subject to disclosure irrespective of any tax advantage provided by the arrangement, and hallmarks which only apply if the “main benefit” test is satisfied. This relevance test is regarded as largely satisfied if the expected main advantage or one of the main advantages of the arrangement is the obtaining of a tax benefit.
According to section 138d (3) of the Fiscal Code (Abgabenordnung – AO) as amended by the German transposition law, a tax benefit of this nature exists in particular if the tax arrangement is intended to obtain a tax refund, grant or increase tax rebates, or eliminate or reduce tax that is due. A tax benefit also exists if it is expected to arise outside the scope of the German law. However, the transposition law also provides that the Federal Ministry of Finance (BMF), together with the federal states, can make it clear in BMF circulars when no tax benefit within the meaning of the law is to be assumed, in particular because the tax benefit is effective in Germany alone and is provided for by law ("white list").
In particular, the list is intended to clarify when the main benefit test is considered not satisfied and there is consequently no disclosure requirement. The BMF cited the following eight cases in the annex to the consultation draft of the application-related circular dated 2 March 2020:
- Matrimonial property clauses making use of section 5 of the Inheritance Tax and Gift Tax Act (Erbschaftsteuer- und Schenkungsteuergesetz – ErbStG)
- Amendment of articles of association to meet the requirements of section 13a (9), ErbStG
- Conclusion of pooling agreements within the meaning of section 13b (1) no. 3, ErbStG to benefit shares in corporations
- Gifts that make use of the available allowances
- Postponement of a sale in view of expiry of the disposal period as defined in section 22 no. 2 in conjunction with section 23 (1) sentence 1 of the Income Tax Act (Einkommensteuergesetz – EStG)
- Conclusion of basic pension agreements and retirement plans that are certified in accordance with section 5a of the Certification of Retirement Plans Act (Altersvorsorgeverträge-Zertifizierungsgesetz – AltZertG),
- Conclusion of contracts where the contributions made may be recognised as pension expenses in accordance with section 10 (1) no. 2, 3 or 3a, EStG
- Transactions that are subject to the Research Incentives Act (Forschungszulagengesetz – FZulG).
Overview of hallmarks for the disclosure requirement in relation to cross-border tax arrangements: DAC 6 hallmarks as defined in Annex IV Part II Category A-E; transposed by section 138e of the Fiscal Code (Abgabenordnung – AO) in the version that entered into force on 1 January 2020.
The disclosure requirement for cross-border tax arrangements mainly applies to 总裁大还是董事长大intermediaries总裁大还是董事长大. According to the proposed legal definition, this means primarily any person who designs, markets, organises or makes available for use a reportable cross-border tax arrangement, or who manages its implementation by third parties. The disclosure requirement is linked to involvement in the various stages of tax planning, from its origin through to implementation. Having said that, someone who has only been involved in implementing individual partial steps of a cross-border tax arrangement without knowing it and without reasonably being expected to know it, will not be regarded as an intermediary, according to the explanatory notes.
Classification as an intermediary does not depend on belonging to a particular professional group. In addition to members of the legal, tax and auditing professions, in practice financial services providers such as 总裁大还是董事长大banks总裁大还是董事长大, 总裁大还是董事长大fund initiators总裁大还是董事长大 and 总裁大还是董事长大insurance companies总裁大还是董事长大 as well as 总裁大还是董事长大asset and investment advisors总裁大还是董事长大 including 总裁大还是董事长大family offices总裁大还是董事长大 may be affected by the disclosure requirements. In addition, 总裁大还是董事长大group financing companies总裁大还是董事长大 in particular may also be subject to disclosure requirements.
With regard to the intermediary, there is a deviation from the Directive in that DAC 6 further stipulates that, under certain conditions, assistance and support services must also be disclosed. In Germany, there is (still) no disclosure requirement for auxiliary intermediaries in the transposition law. In other EU Member States (e.g. Poland), however, auxiliary intermediaries are subject to the requirement.
The intermediary must also be 总裁大还是董事长大linked to EU jurisdiction总裁大还是董事长大, e.g. by being domiciled in an EU Member State or by operating a permanent establishment in a Member State, through which services are provided for the arrangement in question. If the intermediary has a specific domestic connection to Germany (e.g. is domiciled in Germany), it is accordingly also subject to reporting requirements in Germany. A tax arrangement may also be subject to reporting requirements in more than one EU Member State if an intermediary has a domestic connection in more than one EU Member State, or if several intermediaries with different domestic connections are involved in the arrangement. With regard to the disclosure requirement of a (domestic) intermediary, it is also irrelevant whether Germany itself is affected by the cross-border tax arrangement or whether the effects occur solely outside the country.
An intermediary can only avoid double reporting by providing proof that it has already duly complied with its own disclosure obligation in another EU Member State, or that the relevant information on the same reportable arrangement has already been provided by another intermediary.
If there is no intermediary subject to disclosure requirements, for example, or if the intermediary is (partially) exempt from disclosure requirements due to professional secrecy obligations, e.g. in the case of lawyers, tax advisors and auditors, the users (taxpayers) of the tax arrangement may be subject to disclosure requirements under certain circumstances. A user is considered to be any person to whom a reportable cross-border arrangement is made available for implementation, or who is ready to implement an arrangement of this type or has implemented the first step of such an arrangement.
Specifically, in the case of cross-border tax arrangements that a user designs for their own use (in-house arrangements), the rules applicable to intermediaries apply accordingly. In this case, the user is subject to an independent disclosure requirement. In other EU Member States, the user may have to ensure that the intermediary complies with its disclosure obligations, otherwise the disclosure requirement may revert to the user.
In addition to abstract information about the intermediary, the relevant hallmarks and the content of the arrangement, the data record must also contain individual information about the user and the other persons concerned, as well as the date of implementation.
The details are laid down by the transposition law in the principal procedural regulations, section 138f and section 138g of the Fiscal Code (AO), for intermediaries and users. Section 138f (3) sentence 1 of the AO stipulates for the intermediary, and under section 138g of the AO analogously for the user, that the data record must include the following 总裁大还是董事长大abstract information (numbers 1 and 4 to 9)总裁大还是董事长大 and 总裁大还是董事长大individual information (numbers 2, 3 and 10)总裁大还是董事长大:
For each data record received, the Federal Central Tax Office (BZSt) will assign a registration number ("ArrangementID") to the cross-border tax arrangement and a disclosure number for the report received ("DisclosureID"). The intermediary must also inform the user of these numbers. One of the reasons for this is that the user is required to indicate in their tax return that a cross-border tax arrangement has been implemented; to do so, the user must state the registration and disclosure number.
In the event that the intermediary is subject to a statutory (i.e. not a contractual) obligation to maintain confidentiality, without having been released from this obligation by the user, intermediaries can be exempted from disclosure requirements in certain circumstances. In Germany, however, this exemption will be implemented only in part. This means that with regard to the "abstract information" (numbers 1 and 4 to 9), the intermediary always remains subject to disclosure requirements, even if under an obligation to maintain confidentiality. In these cases, however, the intermediary's disclosure requirement can be met by the user providing this information on behalf of the intermediary (i.e. by submitting just one data record). Only the requirement to disclose the individual information (numbers 2, 3 and 10) may pass to the user if the intermediary has informed the user in advance about the option of exemption from the obligation to maintain confidentiality and the transfer of the disclosure requirement, and has provided the user with the necessary information specified in numbers 2, 3 and 10 as well as the registration and disclosure number, insofar as the user is not aware of this information.
To the extent that the intermediary is aware that at least one other intermediary, in addition to itself, is subject to a requirement to disclose the same cross-border tax arrangement within the scope of this legislation or in another Member State of the European Union, it can also include in the data record the information referred to in number 1 with regard to the other intermediaries known to it. In this case, the disclosing intermediary must inform the other intermediaries of the registration number.
Intermediaries face challenging duties even at this stage due to the (retroactive) disclosure requirements. This includes:
- Identification of all potentially reportable arrangements in which you are involved as an intermediary. This also applies to arrangements implemented in the retroactive period between 25 June 2018 and 30 June 2020.
- Collection of relevant data on potentially reportable arrangements.
- Identification of the specific disclosure requirement on the basis of the DAC 6 hallmarks and, if applicable, the "main benefit" test, as well as documenting the results of both reportable and non-reportable arrangements.
- Identification of and coordination with other intermediaries involved, including determining whether the disclosure by the other intermediary has actually been made (requirement of proof of exemption from disclosure requirement for the arrangement).
- Making the disclosure and informing the taxpayer (user) that disclosure has taken place.
- Establishment of efficient internal processes for identification, analysis and documentation of reportable arrangements as part of a functioning compliance management system. This requires the definition of clear lines of responsibility and communication. It should be noted that setting up and configuring an IT-supported reporting system may take several months in some cases.
- Provision of key information (kick-off event) and regular training courses for responsible employees on all matters relating to disclosure obligations.
- Assessing the impact of the disclosure requirements on your company, including analysis of your business models
- Specific analysis of individual arrangements and products with regard to any disclosure requirement
- Systematic support for identifying, assessing, documenting and notifying reportable tax arrangements
- Coordination with international CMS offices in the case of disclosure requirements in other/multiple EU Member States
- Local representation in disputes with tax authorities, including in other EU Member States.