On 26 September 2019, federal government of German issued a draft proposal regarding the implementation of mandatory disclosure rules pursuant to the EU’s Council Directive 2018/822 of 25 May 2018 (commonly referred to as DAC 6) into Germany’s domestic law. Under DAC6, taxpayers and intermediaries are required to report cross-border reportable arrangements as from 1 July 2020.
The draft bill is broadly aligned with the EU Directive with respect to reportable arrangements and the scope of taxes covered. Further, the draft describes the applicable reporting procedures with significantly more details, but without fundamentally altering the general reporting procedure. Based on the proposal, the reporting obligation generally applies to the intermediary. Indirect taxes and excise duties are not in scope.
The draft bill proposed administrative penalties of up to EUR 25,000 may be triggered by violating the mandatory reporting of tax arrangements, where the first step of implementation is made after 30 June 2020. Incorrect or missing notifications for arrangements implemented in the so-called pre-implementation period (25 June 2018 to 30 July 2020), which are to be subsequently reported by 31 August 2020, would therefore not be penalized.
The draft proposal is subject to a consultation procedure with business and professional organizations, which ends on 30 September 2019, and is expected to be submitted soon to the German Parliament. It may be amended before or during the legislative procedure. According to the EU Directive, the final provisions will enter into force on 1 July 2020.
