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.