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COVID-19 Prompts DAC 6 Deferral Proposal

In response to the disruptions brought by COVID-19, the European Commission has published a proposal of a three-month deferral of the initial reporting deadlines under the EU mandatory disclosure rule (DAC 6).

What is DAC 6?

DAC 6 is an EU directive that provides for the mandatory automatic exchange of information between the Member States of the EU (including the United Kingdom for the purposes of DAC 6 and this article) in relation to “reportable cross-border arrangements,” which are transactions and tax arrangements with certain hallmarks considered by the EU to be “potentially aggressive.”

In essence, once implemented by the Member States in their national legislation, DAC 6 will require the reporting of “reportable cross-border arrangements” by certain intermediaries or relevant taxpayers to a Member State tax authority. The provisions of DAC 6 will, in turn, require the tax authorities of the Member States to exchange with each other the information they have received regarding the relevant disclosed reportable cross-border arrangements.

Under the current provisions of DAC 6, the directive will come into force on July 1, 2020. However, as issued, the DAC 6 directive has retroactive effect, requiring the reporting of “historical” reportable cross-border arrangements (namely, those arrangements that become reportable between 25 June 2018 and 30 June 2020), with disclosure to EU Member States’ tax authorities required by 31 August 2020. DAC 6 requires the reporting of post-30 June 2020 reportable cross-border arrangements to be done within a 30-day period.

For more information, we previously wrote a BrassTax article about the details and the potential burden of DAC 6.

European Commission’s Proposal

On 8 May 2020, the EU Commission published a proposal (the Proposal) to postpone certain deadlines under DAC 6 in response to COVID-19.

If the Proposal is to be adopted as currently drafted, DAC 6 would still come into effect on 1 July 2020, but:

  • the deadline for reporting “historical” cross-border arrangements would be delayed from 31 August 2020 to 30 November 2020;
  • the start of the 30-day period for reporting post-June 30, 2020 cross-border arrangements would be delayed from July 1, 2020 to October 1, 2020; and
  • the date for the first exchanges of information between EU tax authorities on reportable cross-border arrangements would be delayed from October 31, 2020 to January 31, 2021.

Under the Proposal, the Commission has the right to extend the postponement measures for a maximum of three months.

Enactment of the deferral

It is worth noting that the above is currently a proposal of the European Commission. The Proposal is subject to change and approval by both the European Parliament and the European Council. As DAC 6 is an EU directive, the above measures will also need to be implemented into domestic law by the Member States.

Under the Proposal, the Commission can only exercise its extension power “if during part or all of the period of deferral, the exceptional circumstances of severe risks for public health caused by the COVID-19 pandemic persist and Member States have to implement lockdown measures.”


The burdens introduced by the DAC 6 directive on both taxpayers and intermediaries require considerable due diligence and analysis. The delay in the introduction of certain deadlines of the DAC 6 directive is therefore to be welcomed warmly. An equally pragmatic approach from EU Member States’ tax authorities concerning the interpretation of the complex DAC 6 directive would also be welcomed.

Key Contacts

Adam Blakemore
T. +44 (0) 20 7170 8697

Linda Z. Swartz
T. +1 212 504 6062

Jon Brose
T. +1 212 504 6376

Andrew Carlon
T. +1 212 504 6378

Mark P. Howe
T. +1 202 862 2236

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