On March 8, 2016 the European Commission issued a pres release stating that it welcomes the political agreement reached on the same date during the ECOFIN Council by the EU Member States on the automatic exchange of tax-related financial information of multinational companies, known as Country-by-Country Reporting. The Commission notes that the agreement is subject to UK parliamentary scrutiny.

The new rules will apply to multinational companies which operate cross-border in the European Union.

The new rules are part of the implementation of OECD guidelines on Base Erosion and Profit Shifting (BEPS). The European Commission states that as part of a separate work stream, it is currently finalizing its impact assessment on public Country-by-Country Reporting and states that it will present a proposal in April 2016.

The new rules are a key part of the Anti-Tax Avoidance Package adopted by the European Commission on January 28, 2016. The obligation of Country-by-Country Reporting will be introduced by a Council Directive amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation.

Based on the proposal for a Council Directive amending Directive 2011/16/EU as published by the European Commission on January 28, 2016 the country-by-country report shall contain the following information with respect to the MNE Group: 

(a)   aggregate information relating to the amount of revenue, profit (loss) before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents with regard to each jurisdiction in which the MNE Group operates;

(b)   an identification of each Constituent Entity of the MNE Group setting out the jurisdiction of tax residence of such Constituent Entity, and where different from such jurisdiction of tax residence, the jurisdiction under the laws of which such Constituent Entity is organized, and the nature of the main business activity or activities of such Constituent Entity.

(A link to this proposal for a Council Directive amending Directive 2011/16/EU as published by the European Commission on January 28, 2016 can be found in our Article from January 28, 2016)

Member States will also be required to share the information with the other Member States.

The amendments also arrange that the Commission will regularly receive the information it needs to monitor the implementation of the new rules and to ensure that Member States are complying with their responsibilities.

When the Directive is adopted by the European Council and after its entry into force, Member States will have 12 months to transpose the new rules into national law.

Click here to be forwarded to a press release issued by the Council of the EU in this respect.

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