On 9 October 2019, the German Federal Government issued an update of the draft legislation on Mandatory Disclosure Rules addressing the implementation of the European Union (EU) Directive on the mandatory disclosure and exchange of cross-border tax arrangements (DAC6). The draft legislation contains some changes compared to the ministerial draft bill that was issued on 26 September 2019.
Under DAC6, taxpayers and intermediaries are required to report cross-border reportable arrangements as from 1 July 2020. The most important amendment compared to the previous draft bill is a change to the hallmark regarding cross-border payments between two or more associated, which was suggested in the many comments on the ministerial draft bill.
According to draft bill, only those payments which are deductible for the payor as operating expenses are considered relevant. However, this limitation would currently only apply to the subset of the C1-equivalent hallmark which is not subject to the so-called “main benefit test.” Presumably, this is an editorial mistake which could be corrected during the legislative process.
