With retroactive effect, EU Council Directive DAC 6 is now largely inapplicable in the United Kingdom. DAC 6, which came into force on June 25, 2018, requires certain intermediaries (including those who provide legal, tax, or consultancy services) or taxpayers to disclose information related to cross-border tax planning. Our prior coverage of DAC 6 may be found here.
Continue Reading Citing Brexit, UK Retroactively Curtails DAC 6 Reporting Requirements
Regulations Addressing Section 958(b)(4) Repeal Provide Relief for U.S. Payors but Hold the Line on the Portfolio Interest Exception
On October 2, 2019, Treasury and the IRS issued proposed regulations relating to the repeal of section 958(b)(4) by the Tax Cuts and Jobs Act (“TCJA”). On September 22, 2020, Treasury and the IRS issued final regulations largely following the proposed regulations, along with additional proposed regulations.
Continue Reading Regulations Addressing Section 958(b)(4) Repeal Provide Relief for U.S. Payors but Hold the Line on the Portfolio Interest Exception
DAC 6 Implementation Imminent in Finland and Germany Despite Delays in Other EU Countries and the UK Due to COVID-19
At the end of June, the European Union (“EU”) amended EU Council Directive 2011/16/EU and its cumulative amendments (referred to in the aggregate, as the Directive on Administrative Cooperation “DAC 6” or the “Directive”) to give EU Member States the option to defer imminent DAC 6 reporting deadlines by up to six months due to disruptions caused by COVID-19. (Various sources, including the European Union, refer to the Directive as “DAC6” without a space between DAC and 6. We use the alternative format in this post.) The amendment to the Directive also includes language potentially allowing for an additional three-month extension depending upon how the pandemic unfolds, but cautions that further delays are unlikely. Many EU Member States promptly announced a full six-month deferral, including Belgium, Croatia, Cyprus, the Czech Republic, Hungary, Ireland, Luxembourg, the Netherlands, Sweden, and the UK. To date, Finland and Germany have announced that DAC 6 reporting will commence without any delay on August 31, 2020.
If U.S. multinationals with affiliates in the UK or EU countries have not taken steps to identify reportable tax planning and other arrangements caught up in the DAC 6 dragnet, they should do so immediately because the reporting requirements are onerous.
For readers unfamiliar with DAC 6, an overview of this new reporting regime follows.
Continue Reading DAC 6 Implementation Imminent in Finland and Germany Despite Delays in Other EU Countries and the UK Due to COVID-19
November 15 Deadline Approaching for 2019 Qualified Intermediary Applications
On November 6, the IRS issued its final reminder alert that the deadline for all Qualified Intermediary (“QI”) (including Qualified Derivatives Dealer (“QDD”)), Withholding Foreign Partnership (“WP”) and Withholding Foreign Trust (“WT”) applications for the 2019 year is November 15, 2019.
Continue Reading November 15 Deadline Approaching for 2019 Qualified Intermediary Applications
Proposed Regulations Provide Guidance for Classification of Digital Content Transactions and Cloud Transactions
On August 9, 2019, Treasury and the IRS issued proposed regulations under section 861 of the Code to clarify how transactions involving digital content and cloud computing are classified for tax purposes. The new rules propose to revise and expand upon Treasury Regulation § 1.861-18 regarding digital content transactions and establish new Treasury Regulation § 1.861-19 regarding cloud computing transactions. The proposed regulations also propose changes to Treasury Regulation § 1.861-7 regarding the source rules for sales of personal property. Collectively, the rules are intended to address whether a digital transaction is characterized as a sale, lease, license, or provision of services for purposes applying various provisions of the Code, including the source rules, which are critical for purposes of determining whether withholding is required under Chapter 3 and reporting obligations under sections 6041 and 6050N, and Subpart F.
Continue Reading Proposed Regulations Provide Guidance for Classification of Digital Content Transactions and Cloud Transactions