DAC 6
BASIC INFORMATION FOR TAXPAYER
The DAC 6 requires both intermediaries and taxpayers to provide the Malta Commissioner for Revenue information in respect of a reportable cross-border arrangement.
RELEVANT TAXPAYER
A relevant taxpayer is any person whom a reportable cross-border arrangement is made available for implementation, or who is ready to implement a reportable cross-border arrangement or has implemented the first step of such an arrangement.
ECONOMIC NEXUS
A taxpayer has the obligation to disclose information in relation to a reportable cross-border arrangement when it meets any one of the following criteria:
01
Resident for tax purposes in Malta.
02
PE in Malta benfetting from the arrangement.
03
Receives income or generates profits in Malta
04
Economic activity in Malta.
CROSS-BORDER ARRANGEMENTS
Cross-border arrangements are arrangements which concern more than one EU Member State or an EU Member State and a third country, having satisfied at least one of the following conditions:
1. Not all participants are resident in the same jurisdiction.
2. Participant/s are simultaneously resident for tax purposes in more than one jurisdiction.
3. Participant/s carrying a business in another jurisdiction through a PE situated in that jurisdiction and the arrangement forms part or is the whole business of that PE.
4. Participant/s carrying an activity in another jurisdiction without having a PE or being a tax resident.
5. The arrangement has a possible impact on the automatic exchange of information or the identification of the BO of the arrangement.
Any such cross-border arrangement is reportable if it falls within the scope of any one of the prescribed characteristics referred to as Hallmarks representing a potential risk to tax avoidance.
CROSS-BORDER HALLMARKS
Category
Cross-Border Hallmarks
Main Benefit Test
A1
Confidentiality
Yes
A2
Compensation related to a tax advantage
Yes
A3
Standardised documentation and/or structures
Yes
B1
Acquiring a loss-making company
Yes
B2
Conversion of income into other categories
Yes
B3
Circular transaction (round tripping of funds)
Yes
C1
Deductible cross-border payments
1. not resident in any tax jurisdiction.
2. assessed by EU as a non-cooperative jurisdiction within the OECD.
No
C1
Deductible cross-border payments
1. Taxpayer resident in a jurisdiction with Zero or almost Zero imposed corporate tax.
2. Payment is fully exempted from tax in the jurisdiction where the taxpayer is residing.
3. Benefiting from a preferential tax regime in the jurisdiction where the taxpayer is residing
Yes
C2
Deductions for the same depreciation
No
C3
Relief from double taxation
No
C4
Transfer of assets
No
D1
Undermining reporting obligations (CRS Legislation)
No
D2
Non-transparent legal or beneficial ownership chain
No
E1
Unilateral safe harbours (Transfer pricing)
No
E2
Hard-to-value intangibles
No
E3
Intra-group cross-border transfers
No
To view the full documentation by the Office of the Commissioner for Revenue, titled "Guidelines on the Mandatory Automatic Exchange of Information in relation to Cross-Border Arrangements" Click Here.
For more details do not hesitate to Contact Us.