The European Parliament has approved the Commission proposal (as amended) on mandatory exchange of tax information and has issued the following explanatory statement:
“The challenge posed by cross-border tax avoidance, aggressive tax planning and harmful tax competition has increased considerably and has become a major focus of concern within the Union and at global level.
In its ECON and TAXE reports, the European Parliament called for increased transparency with regard to tax information to counter aggressive tax planning, notably by introducing country-by-country reporting (CbCR) for Multinational (MNE) Groups.
Under the current legal framework (Directive 2011/16/EU on administrative cooperation, currently DAC3), Member States do not yet share CbCR with one another.
An increase in transparency is therefore urgently required. The tools and mechanisms established by Council Directive 2011/16/EU need to be enhanced in order to achieve this.
The Commission proposal
The draft directive amends Directive 2011/16/EU on administrative cooperation, as amended most recently by Directive (EU) 2015/2376. It introduces a new Article into the existing Directive, setting out the scope and conditions for the mandatory automatic exchange of information of CbCR.
Scope of the proposal – threshold of MNEs
Multinational (MNE) Groups located in the EU or with operations in the EU, with total consolidated revenue equal or higher than € 750.000.000, will be obliged to file the country-by-country report.
The competent authority of the Member State that received the Country-by-Country Report shall, by automatic exchange, communicate the report to any other Member States in which one or more Constituent Entities of the MNE Group are either resident for tax purposes, or are subject to tax with respect to the business carried out through a permanent establishment.
The Country-by-Country Report has to be filed in the Member State in which the ultimate parent entity of the MNE Group or any other reporting entity is a resident for tax purposes.
The Member State will communicate the report to any other Member States in which one or more Constituent Entities of the MNE Group are either resident for tax purposes, or are subject to tax with respect to the business carried out through a permanent establishment.
Scope of the information exchanged
The Country-by-Country Report will include information for every tax jurisdiction in which the MNE group does business on the amount of revenue, the profit before income tax, the income tax paid and accrued, the number of employees, the stated capital, the retained earnings and the tangible assets.
As of 2017, the MNE group will have to file a Country-by-Country Report with respect to its reporting fiscal year on an annual basis, no later than 12 months after the last day of the reporting fiscal year of the MNE group.
Format / template
MNE groups will file the Country-by-Country report in accordance with the standard template as included in the Action 13 Report of the OECD.
The automatic exchange of information on Country by country report shall be carried out using the standard form. The information communicated shall be provided by electronic means using the CCN network.
The current proposal does not foresee public disclosure of CbCR. However, the Commission announced the publication of the impact assessment of public Country-by-Country Reporting for April 2016, which may be accompanied by a proposal to impose public disclosure obligations on companies.”