Directive (EU) 2018/822 Information Exchange DAC6

The Official State Gazette of 30 December 2020 published the law transposing into Spanish law Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards automatic and compulsory exchange of information in the field of taxation concerning cross-border arrangements subject to reporting (known as DAC 6). For the time being, however, the dates on which the relevant disclosures will need to commence are not known.

The transposition of the CAD6 is carried out through Law 10/2020, of 29 December, which incorporates two new additional provisions in the General Tax Law (LGT): (i) the twenty-third additional provision (DA 23), which refers to the “obligation of information on cross-border tax planning mechanisms” and (ii) the twenty-fourth additional provision (DA 24), which refers to the “obligations between individuals derived from the obligation of information on cross-border tax planning mechanisms”.

The main aspects regulated by these additional provisions are summarised below:

1.Obligationto inform the tax authorities

DA 23 provides that “intermediaries”, as defined by the Directive, or the taxpayers concerned (e.g. where there is a defence of professional secrecy on the part of the intermediary or where there is no intermediary) must provide the following information to the tax authorities:

a. Cross-border mechanisms in which they are involved or participate where any of the distinguishing features defined in Annex IV of the Directive are present.

b. Update information on tradable cross-border arrangements.

c. Information on the use in Spain of the cross-border tax planning mechanisms referred to in a) and b) above.

To this end, the law specifies that cross-border tax planning arrangements, legal transactions, schemes or cross-border operations based on “tax regimes notified and expressly authorised by a decision of the European Commission”are not considered to be a cross-border tax planning mechanism subject to declaration.

DA 24 regulates the reporting obligations between participants and participants in cross-border tax planning arrangements subject to reporting, stating that:

a. Intermediaries exempted by the duty of professional secrecy from the filing of the declaration must reliably communicate this exemption to the other intermediaries and taxpayers concerned.

b. Those who have the legal status of taxpayers and have declared the mechanism to the tax authorities must reliably notify the rest of the intermediaries or taxpayers concerned, who will be exempt from the obligation to declare.

2.Professionalsecrecy

DA 23 expressly provides that those considered as intermediaries, regardless of the activity carried out, who have advised on the design, marketing, organisation, provision for execution or management of the execution of a cross-border mechanism, for the sole purpose of assessing the adequacy of such mechanism with the applicable regulations and without seeking or facilitating its implementation, shall be exempted from the obligation to provide information in accordance with the duty of professional secrecy.

In this respect, the law recognises that the intermediary may be released from professional secrecy by means of authorisation given in a reliable manner by the taxpayer concerned.

On the other hand, it is established that compliance by intermediaries with the obligation to provide information, in the legally required terms, does not constitute a violation of the restrictions on disclosure of information imposed by contract or regulation, and does not imply any type of liability for the obligated parties with respect to the interested taxpayer who is the owner of said information.

3. Penalties

The CAD6 left it up to the Member States to regulate the penalty regime with the sole premise that it should be “effective, proportionate and dissuasive“. In the case of Spain, Law 10/2020 regulates this aspect in section 4 of DA 23 and section 3 of DA 24 of the LGT, establishing a specific system of offences and penalties that will be incompatible with the general offences established in Articles 198 and 199 of the LGT.

(a) Infringementsrelating to the obligation to make a declaration

Serious tax offences are defined as (i) failure to file on time and (ii) incorrect filing of information returns.

In both cases, the penalty shall consist of a fixed pecuniary fine of 2,000 euros for each item of information or set of information referring to the same return or which has been provided incompletely, inaccurately or falsely, with a minimum limit of 4,000 euros and a maximum limit equivalent to the amount of the intermediary’s fees or the value of the tax effect derived from the mechanism, depending on whether the offending party is the intermediary or the taxpayer concerned, respectively.

For those cross-border mechanisms that are worthless and where the offender is the taxable person concerned, the penalty is foreseen to be equivalent to the amount of the fees received or to be received by the intermediary.

In all the above cases, a 50% reduction in the amount of the penalty is envisaged when the tax return is filed after the deadline without prior request from the tax authorities.

Finally, it is also a serious tax offence to file tax returns by means other than electronic, computerised and telematic means, when there is an obligation to do so by such means. For this offence, a fixed fine of 250 euros per item of data or set of data referring to the same return is established, with a minimum of 750 euros and a maximum of 1,500 euros.

(b) Infringements relating toobligations of communication between private parties

Non-compliance (or incorrect compliance) with the obligation of the intermediary exempted by the duty of professional secrecy to communicate this exemption to other intermediaries and taxpayers is classified as a minor infringement. The penalty shall consist of a pecuniary fine of 600 euros.

However, when this infringement coincides with the failure of the other intermediaries involved or the taxpayer concerned to declare the corresponding cross-border mechanism, the infringement will be classified as serious and the sanction will be that which would have corresponded to the failure to file the declaration, i.e. a fixed pecuniary fine of 2,000 euros, with the minimum and maximum limits referred to above.

On the other hand, non-compliance with the obligation, on the part of the intermediary or taxpayer concerned who has submitted the information return, to notify the other intermediaries involved and the taxpayers concerned of this circumstance is classified as a minor infringement with a penalty of 600 euros.

4.Entryinto force

The entry into force of this law will take place on 31 December 2020. In any case, the complete transposition of CAD 6 is pending the approval of a regulatory rule that implements the law. This regulation will regulate, among other things, the reporting deadlines and, fundamentally, the date from which cross-border mechanisms must begin to be reported.

In this sense:

a. The law vaguely regulates a transitional regime for the reporting obligations of cross-border arrangements subject to reporting whose first phase of implementation took place between 25 June 2018 and 30 June 2020, stating only that they “shall be reported within the time limits established by regulation”.

b. The law also states that it “shall apply to cross-border arrangements subject to reporting whose obligation has arisen on or after 1 July 2020″ but without specifying deadlines.

In view of the lack of specificity with which the law regulates the declaration deadlines, it will be necessary to wait for the approval of the regulations and the official declaration forms to find out the rest of the details – relevant and necessary – for effective compliance with this new information obligation in the tax sphere.