On 2 July the Maltese Revenue announced that the Commissioner for Revenue will be deferring by six months the first reporting deadlines under regulation 13 of the Cooperation with Other Jurisdiction on Tax Matters Regulations, SL 123.127. Such Regulations transpose, amongst others, Directive (EU) 2011/16/EU as amended by Directive (EU) 2018/822 on mandatory disclosure rules (‘MDR’ or ‘DAC 6’) which imposes mandatory exchange of information obligations on intermediaries and taxpayers. Such deferral follows the European Council’s agreement on the postponement of such deadlines and the publication of Directive (EU) 2020/876.

The Commissioner for Revenue notified that an amending legal notice will be issued to this effect within the coming weeks. This will provide taxpayers and intermediaries dealing with the impacts of the COVID-19 pandemic with additional time to ensure that they can comply with their obligations under the said Regulations. 

Considering this deferral, reporting systems in relation to reportable cross-border arrangements will be made available to taxpayers and intermediaries ahead of the new deferred deadlines. The Commissioner for Revenue announced that it intends to publish guidance within the coming months to help businesses in their preparations to meet their reporting obligations.

The MDR/DAC 6 requires the reporting to the tax authorities of cross-border arrangements that satisfy particular hallmarks. Taxes of any kind are within the scope of MDR/DAC6 with the exception of VAT, customs duties, excise duties and social contributions. The Revenue’s announcement affects only the provisions related to the reporting and filing of the information and does not relate to any other provision of the MDR/DAC6 that is now applicable (as of 1 July 2020).

The deferral has the effect of postponing the reporting deadlines as follows:

• By 28 February 2021 (previously 31 August 2020) for arrangements where the first step was implemented between 25 June 2018 and 1 July, 2020 (so-called “historical arrangements”).
• The start date for the 30 days reporting deadline to begin by January 1, 2021 (originally July 1, 2020). This will also apply with respect to cross-border arrangements for which the reporting trigger occurs between 1 July 2020 and 31 December 2020. The deadline for a reportable cross-border arrangement that is made available for implementation or is ready for implementation, or where the first step in its implementation has been made during the deferral period will therefore be 30 January 2021. 
• The new deadline for the first periodic report on marketable arrangements will be 30 April 2021.

Failure to report on a timely basis will incur penalties that are capped at EUR 20,000.

Should you wish more information about how this development will affect you, please do get in touch with us. We can also help you with:

• Analysing your cross-border arrangements, both retrospectively as from 25th June 2018 and monitoring your transactions going forward to assess whether such arrangements are reportable and determining where reporting responsibility will reside;
• Assisting with reporting through the KPMG technology solution; the MDR Processor tool; and
• Providing training on the subject.

To follow EU developments in this regard, we invite you to have a look at KPMG’s EU Tax Centre website.

Should you have any queries or wish to discuss further, please send an email to covid@kpmg.com.mt.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.