As provided for in the Free Trade Agreement with the EU, HMRC earlier this month announced that the UK will now apply the OECD mandatory disclosure rules (“MDR”) in place of the DAC6 requirements. Following suit, Gibraltar has aligned its reporting requirements with MDR. On 21 January 2021, the Income Tax Act 2010 (Amendment) (EU Exit) Regulations 2021 (the “Regulations”) were published, which amends the Income Tax Act 2010 (the “Act”) by replacing the previous DAC 6 rules contained in the Act with MDR. The Regulations are deemed to have come into operation on 1 January 2021.
DAC6 requires EU intermediaries to file information on Reportable Cross Border Arrangements to their home tax authorities. The OECD MDR is narrower in its provisions, containing fewer reportable hallmarks.
Only arrangements falling under the Category D hallmarks of DAC6 fall within the OECD’s disclosure requirements. This category comprises the obscuring of beneficial ownership and arrangements which undermine the reporting requirements under the laws implementing Union legislation or any equivalent agreements on the automatic exchange of Financial Account information.
The first reporting date under the new model will be 30 January 2021, and reporting will be in compliance with the OECD MDR requirements as transposed into the Gibraltar legislation.
It should be noted however, that due to Gibraltar’s commitments under the ongoing UK/Spain Agreement regarding Gibraltar, reporting standards in respect of Spain may be realigned with the EU Directive standards in the future.