On May 25, 2016 the Economic and Financial Affairs Council (ECOFIN) adopted rules on the reporting by multinational companies of tax-related information and the exchange of that information between member states.

The directive implements the recommendations made by the OECD, on country-by-country reporting by multinationals (Action 13 of the G20/OECD’s BEPS Action Plan), into a legally binding EU instrument. It covers groups of companies with a total consolidated group revenue of at least €750 million.

The directive requires multinationals to report information on a country-by-country basis regarding revenues, profits, taxes paid, capital, earnings, tangible assets and the number of employees. This information must be reported, already for the 2016 taxable year, to the tax authorities of the member state where the group's parent company is tax resident.

If the parent company of a group is not a tax resident in one of the countries of the European Union and does not file a report, it must do so through its EU subsidiaries. Such "secondary reporting" will be optional for the 2016 taxable year, but it will be mandatory as from the 2017 taxable year.

The directive requires tax authorities to exchange these reports automatically, so that tax avoidance risks related to transfer pricing can be assessed. For this, it builds on the EU's existing framework for automatic exchange between tax authorities, established by directive 2011/16/EU.

The directive sets deadlines of:

·        12 months after the end of the fiscal year for companies to file the information;

·        a further three months for tax administrations to automatically exchange the information.

The Directive also requires the member states to lay down rules on penalties applicable to infringements.

ECOFIN already reached a political agreement with respect to the Directive on March 8, 2016.

Click here to be forwarded to the Directive as made available on the website of the Council of the European Union, which will open in a new window.

Copyright – internationaltaxplaza.info

Are you looking for a motivated newcolleague? Then place your job ad on International Tax Plaza!

and

Stay informed: Subscribe to International Tax Plaza’s Newsletter! It’s completely FREE OF CHARGE!