By Stella Koukounis
Following the publication of the DAC6 Ministerial Decree in the Official Gazette on 04/11/2021, the relevant reporting framework and timeframes are now in force under applicable Cypriot law. More specifically, main and secondary intermediaries are required to report DAC6 reportable transactions undertaken between 25/06/2018 and 31/10/2021 by 30/11/2021. This effectively extends the reportable timeline with no applicable fines.
Section 46 of the Decree which transposes the EU DAC6 rules into Cypriot law, includes and applies a “legal professional privilege” exemption. The persons able to raise the “legal professional privilege” exemption, are practicing advocates or their licensed limited liability companies as per Advocates Law Cap.2. Once informed of the obligation to report, their client may or may not waive his rights derived by the legal professional privilege. Where the exemption applies, the intermediaries (practicing advocates) are under an obligation to notify other intermediaries or their client (tax payer) of the duty to report, within 10 days following the reporting day.
As the Decree has only recently been enforced, it remains to be seen how waivers or notifications by advocates to the intermediaries or the clients can be documented and presented to the tax authorities.
It is interesting to note that earlier this year, the French Supreme Administrative Court requested a preliminary ruling by the European Court of Justice (ECJ) regarding the DAC6 filing rules applicable to intermediaries in the case of legal professional privilege. French domestic law provides that intermediaries applying legal professional privilege are still subject to DAC6 rules, and require to obtain their client’s consent to waive privilege and report a transaction within a 30-day period. In case the relevant intermediary does not obtain their client’s consent, then they have to notify other intermediaries of their reporting obligations and a report needs to be made by a different intermediary within 90 days of notification.
The questions raised by the French Supreme Administrative Court to the ECJ are as follows:
- Is the right to a fair trial infringed because legal professional privilege does not exclude lawyers acting in legal proceedings from the scope of intermediaries subject to the obligation of declaration or notification?
- Is the right to respect for private life and communications infringed, as lawyers evaluating the legal situation of their clients are not excluded from the scope of the filing obligations?
As of the date of this article the ECJ decision on legal is still pending. Once issued the decision by the ECJ will affect all EU Member States, including Cyprus.
For more information on the legal framework governing DAC6 rules and relevant obligations feel free to speak to Stella Koukounis at [email protected]