Cross-border transaction reporting duty is heading to Chamber of Deputies

An amendment to tax legislation for 2020, also covering the implementation of DAC 6, is heading to the Chamber of Deputies. It introduces a new information duty regarding cross-border arrangements. The latest draft amendment includes new changes relating not only to the confidentiality obligation of cross-border arrangement intermediaries but also to cases in which the tax administrator does not perform any act based on the report filed.

DAC 6’s fundamental task is to implement the mandatory reporting of information about cross-border arrangements fulfilling certain characteristic features (‘hallmarks’) defined in an annex to law. The directive introduces the duty to report such arrangements and to automatically exchange information about such arrangements on a cross-border level.

The latest version of the amendment submitted to the chamber differs from the one we discussed previously, mainly as a result of extensive discussion with the professional public and the fact that the final version transposed to the domestic law must first and foremost comply with the directive’s meaning and purpose, otherwise the Czech Republic could be penalised by the EU.

Changes have also been made to the information duty of intermediaries bound to maintain confidentiality, typically attorneys, notaries, and tax advisors. According to the draft amendment, these intermediaries will have the reporting duty regarding their confidentiality obligation as regards both the arrangement users and other intermediaries known to them. The latest draft also includes a provision regarding the tax administrator’s inactivity after a report has been made. 

The tax administrator may decide not to act in relation to the arrangement intermediary or user after a report has been filed regarding the cross-border arrangement. However, this does not automatically mean that the administrator approves of such an arrangement. The characteristic features (‘hallmarks’) of cross-border arrangements have been re-defined, mainly in terms of their wording, and transferred from a separate decree to an annex to law.

The chamber deputies are expected to have another round of discussions regarding the draft bill.