As a recap, the DAC 6 directive covers the EU Mandatory Disclosure rules on certain tax arrangements. This directive was enacted in Belgian legislation in December 2019. To further clarify the DAC 6 law in Belgium, the Belgian tax authorities published a FAQ with further guidance on the application of the rules.
Recently an extension of the reporting deadline was approved. Under the new reporting deadlines:
- Reportable arrangements between 25 June 2018 and 30 June 2020 are to be reported by 28 February 2021.
- For reportable arrangements between 1 July 2020 and 31 December 2020, the 30 day reporting deadline will start on 1 January 2021. For all later arrangements, there is a 30 day reporting deadline.
What is in the FAQ?
The FAQ discusses a broad set of questions including what cross border arrangements are, how to interpret the hallmarks and more.
There are some interesting clarifications.
Without being exhaustive, we list a number of elements that we noted down during our first reading of the FAQ:
- It is not possible to obtain a ruling on the application of the DAC 6 rules. Amongst others because the timeline of the reporting obligation is difficult to match with the timing of a ruling request.
- The FAQ explains in which cases a tax advisor can be seen as an intermediary or what is to be seen as a construction in scope of the directive. There are some helpful examples in which there would not trigger a reporting obligation like the mere filing of a tax return, the performing of a benchmark study, the execution of a banking transaction, etc…
- Confirmation that the hallmark A.3. relates to standardised arrangements, referred to as ‘mass-marketed schemes’. This hallmark would not apply in case there is a need for tailored advice.
- The application of a tax incentive regime, like innovation deduction, does not automatically result in a reportable arrangement. This hallmark requires that the main benefit test is met and this test is clearly not automatically met in case a preferential regime is applied.
- The main benefit test requires an assessment of all tax and non tax benefits of a certain arrangement. Tax benefits cover all taxes in scope of DAC 6 (thus excluding VAT, customs, excise duties and social security). The tax benefits need to be measured on a global basis, so also tax benefits realised outside of the EU are relevant to consider.
- Safe harbours are not available in Belgium; the simplified approach with regard to low-value adding intra-group services is not considered a unilateral safe harbour;
- Licensing arrangements with regard to hard-to-value intangible assets could be considered a cross border arrangement (hallmark E2);
- EBIT should be determined in accordance with Belgian GAAP (hallmark E3) so possibly also covering financial income for financial companies or holding companies.
The FAQ confirms that the penalties (starting from 1,250 EUR up to 100,000 EUR per infringement) will also apply in case of an incomplete disclosure. As a result, the penalties can add up quite rapidly.
What is next?
The FAQ will enable intermediaries and taxpayers to refine their governance models on DAC 6 to fully align them in view of the upcoming reporting deadlines. Possibly some further clarifications will be needed, but this FAQ is an important next step in the roll-out of the DAC 6 rules in Belgium.
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