COVID-19: Commission proposes postponement of DAC and VAT e-commerce

May 11, 2020

The European Commission has decided to postpone the entry into force of two EU taxation measures; the VAT e-commerce package and, second certain deadlines for filing and exchanging information under the Directive on Administrative Cooperation (DAC).  This is in response to the difficulties that businesses and Member States are facing due to the impacts of COVID-19.

The European Commission published the following update;

“First, the Commission has proposed to postpone the entry into application of the VAT e-commerce package by 6 months. These rules will apply as of 1 July 2021 instead of 1 January 2021, giving Member States and businesses more time to prepare for the new VAT e-commerce rules. 

Second, the Commission has decided to propose deferring certain deadlines for filing and exchanging information under the DAC.

Based on the proposed changes to DAC, Member States will have three additional months to exchange information on financial accounts of which the beneficiaries are tax residents in another Member State. Similarly, Member States will have three additional months to exchange information on certain cross-border tax planning arrangements. 

Depending on the evolution of the Coronavirus pandemic, the Commission proposes the possibility to extend the deferral period once, for a maximum of three further months. The proposed tax measures only affect the deadlines for reporting obligations.

The beginning of application of DAC 6 will remain 01 July 2020 and the reportable arrangements made during the postponement period will have to be reported once the deferral has terminated. Equally, the information on financial accounts to be exchanged under DAC 2 during that period will have to be reported after the deferral has ended.  The choice of different deferral periods responds to the fact that while the exchange of information under the DACs relies on an existing IT system, the e-Commerce package requires both adaptation of existing IT systems and the setting-up of new ones by Member States.

The Commission remains committed to fighting against tax evasion and avoidance. Both the European Parliament and the Council have been informed about these proposals. The Commission counts on  both institutions to adopt these proposals as soon as possible in order to provide legal certainty to all stakeholders.

Find more information about VAT e-commerce and about administrative cooperation.”