Disclosure of a reportable cross-border arrangement

Main information

In general, the disclosure obligation applies to persons who create, offer, implement or participate in a reportable cross-border arrangement and where one of the outcomes of such an arrangement is:

• to obtain a tax advantage,
• circumvent the OECD Common Reporting Standard (CRS) and
• disguise the beneficial owner.

In certain cases specified by law, the disclosure obligation passes to the relevant taxpayer (user) of the reportable arrangement. These are cases where the intermediary is not known (e.g. where the reportable cross-border arrangement is created in-house) or where the intermediary is covered by a legal professional privilege and the cross-border arrangement has no other intermediary.

Further, it can be assumed that in order for someone to propose or offer a cross-border arrangement, there must be, in principle, a combination of the following:

• the existence of someone who proposes such an arrangement (be it the intermediary, the relevant taxpayer or their employee),
• the existence of the proposal itself, the intention of which is to provide a tax advantage to the taxpayer (the user of the cross-border arrangement) (careful not to confuse this with the main benefit test, which is only applied to certain more generally defined characteristics, in order to determine whether one of the main advantages of the tested situation is indeed obtaining a tax advantage).

For a ‘cross-border arrangement’ to exist, there must be a combination of ‘the existence of a particular arrangement proposed by someone’ and ‘some tax advantage, or concealment of income, assets or circumvention of the OECD Common Reporting Standard (CRS) or concealment of the beneficial owner described in the Category D hallmarks, arising from such an arrangement’.

If the above-mentioned overlap (‘general overlap’) does not occur, it is not a cross-border arrangement subject to the disclosure requirement. If a general overlap exists, it must be verified that at least one of the hallmarks listed in Annex to Act, is fulfilled (or, where necessary, with the application of the main benefit test).

Further information on this issue can be found in the DAC6 FAQ documents on the website of the Financial Administration of the Czech Republic.

Intermediaries of cross-border arrangements and, in certain cases specified by law, relevant taxpayers of cross-border arrangements, are required to file a disclosure of a reportable cross-border arrangement. 

This applies to you if

You are an intermediary of the cross-border arrangement and, in certain cases specified by law, a relevant taxpayer of the cross-border arrangement.

When to use this service

Disclosure of the reportable cross-border arrangement must be made within 30 days of the date on which:

• this arrangement has been made available for implementation,
• this arrangement was prepared to be implemented, or
• the first step in the implementation of this arrangement has been taken.

Where the disclosure of a reportable cross-border arrangement is made by an intermediary in relation to that arrangement, the disclosure shall be made within 30 days of the date on which that intermediary has provided itself or through another person or unincorporated entity aid, assistance or advice in relation to that arrangement.

Disclosure of changes to the information on the marketable cross-border arrangement to be disclosed must be made within 30 days of the last day of the calendar quarter in which the changes occurred.

Additional information

What is the benefit of this service

Identifying potential loopholes that are used for tax optimisation, disguising the beneficial owner or circumventing the Common Reporting Standard. In general terms, the service contributes to tax transparency and the prevention of harmful tax practices.

Appeal options

You cannot appeal against this service.

Sanctions

If you are an obliged entity and you breach the obligation to retain documents the tax administrator may impose a penalty for not complying with non-monetary obligations up to 500 000 CZK. 

If you are an intermediary and you breach the information obligation the tax administrator may impose a penalty for not complying with non-monetary obligations up to 500 000 CZK..

If you are an obliged entity and you breach an obligation in reporting the tax administrator may impose a civil fine up to 500 000 CZK. 

Frequently asked questions

What is the DAC6?

The European Union Directive on Administrative Cooperation, which imposes a reporting obligation on intermediaries (in statutory cases, users) of cross-border arrangements. These intermediaries, from 2020 onwards, are obliged to collect the information required by law and subsequently transmit it to the Specialised Tax Office.

Where can I find more information about DAC6?

Frequently asked questions and answers about DAC6 can be found on the website of Financial Administration of the Czech Republic.

What is the Common Reporting Standard?

It is a global standard for the exchange of information provided by financial institutions to tax administrations developed by the OECD.

What does OECD stand for?

Organisation for Economic Co-operation and Development. The OECD brings together 30 countries, including the Czech Republic.