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Reporting obligations in cross-border arrangements under the DAC6 Directive

Over the past few years, automatic exchange of information has been viewed as the ultimate tool to combat tax fraud and tax evasion and following various amendments to the first Directive issued during 2011, the EU Directive 2018/822 (DAC6) was implemented to ensure mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements. In Malta, the Directive was transposed into Maltese legislation under the ‘Cooperation with Other Jurisdiction on Tax Matters Regulation’, SL 123.127.

The Regulations, which came into force on 1 July 2020 with retrospective effect from 25 June 2018, require intermediaries and, in certain circumstances, taxpayers to provide information on reportable cross-border arrangements to the relevant EU Member State tax authority. An intermediary is any person that provides, directly or by means of other persons, aid, assistance or advice with respect to designing, marketing, organising, making available for implementation or managing the implementation of a reportable cross-border arrangement.

The obligation to report the arrangement falls upon the taxpayer, when no intermediary is involved because it is an in-house arrangement, or, when the intermediary is not established in an EU Member State, or, when the taxpayer is notified that the intermediary, resident in an EU Member State, has availed of legal professional privilege.

A cross-border arrangement is reportable if:

- It concerns at least one EU Member State; and

- It contains certain features that trigger at least one of the Hallmarks which cover a broad range of structures and transactions, indicative of potentially aggressive tax arrangements.

This disclosure regime applies to all types of taxes except for VAT, customs duties, excise duties and social security contributions.

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