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Cross-border arrangements shall be reported as of July 2020

On May 25th 2018 the Council of the European Union adopted Council Directive 2018/822 (Directive 2018/822) amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements.

When does it comes into force?
EU Member States shall implement Directive 2018/822 in their national legislations by December 31st 2019 at latest. Directive 2018/822 provisions shall be applied from July 1st 2020. [1]

Directive 2018/822 will be implemented in Law On Tax and Duties in Latvia.  

Who has an obligation to report?
The primary disclosure obligation is on “intermediary” (namely, any person that designs, markets, organises or makes available for implementation or manages the implementation of a reportable cross-border arrangement). For example, credit institutions, insurers, advisors’ firms, accountants, law firms, notaries would be qualified as intermediates and will have to disclose information in respect of the reportable cross-border arrangement.

There are certain exceptions when intermediaries are not obliged to report reportable cross-border arrangement. For example, if in accordance with the national rules, reporting obligations infringes the right to the confidentiality of communication granted by the legislation.  

Which cross-border arrangements are reportable?  
According to Directive 2018/822 cross-border arrangement means an arrangement concerning either more than one EU Member State or EU Member State and a third country. There is no definition of the “arrangement” as such in Directive 2018/822. Therefore, the arrangement may mean, for example, one transaction or the chain of transactions. The “reportable cross-border arrangement” means any cross-border arrangement that contains at least one of the hallmarks indicating a protentional risk of tax avoidance.

In order to determine whether a respective cross-border arrangement qualified as a reportable, an arrangement test should be done and determined whether hallmarks of a potential risks of tax avoidance are met. Below are indicated the hallmarks based on which shall be determined whether respective cross-border arrangement is reportable.

Test in order to determine whether cross-border arrangement is reportable:  


What is the reporting due date?
First fillings of reportable cross-border arrangements shall be submitted to respective authorities by August 31st 2020. Despite the fact that Directive 2018/822 comes into force as of July 1st 2020 all cross-border arrangements which qualifies as reportable and are implemented on/after June 25th 2018 shall be reported.
Respectively, the first reporting will be (until August 31st 2020) for reportable cross-border arrangements that are implemented during period from June 25th 2020 until July 1st 2020.

After July 1st 2020 intermediaries shall report reportable cross-border arrangements within 30 days counting from:
1)  the day after reportable cross-border arrangement is made available for implementation; or
2)  the day after the reportable cross-border arrangement is ready for implementation; or
3)  when the first step in the implementation of the reportable cross-border arrangement has been    made,
whichever occurs first.

The relevant taxpayer with whom the reporting obligation lies shall file the information within 30 days, counting from the day when:
1)  the reportable cross-border arrangement is made available for implementation to that relevant    taxpayer,
2)  the reportable cross-border arrangement is ready for implementation by the relevant taxpayer,
3)  the first step of the reportable cross-border arrangement implementation has been made in    relation to the relevant taxpayer,
whichever occurs first.

What are the sanctions for non-reporting?
According to the Directive 2018/822 Member States shall set the rules on penalties applicable for non-reporting. The sanctions applied shall be effective, proportionate and dissuasive. The amounts of fines are not determined and shall be defined by each EU Member State individually.


Information prepared by Leinonen Latvia, Tax & Legal Advisory Department.



Inga Jomanta

Senior Tax Advisor

Mobile: +37123995382

Email: inga.jomanta(at)

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