On 8 March 2016, the Member States of the European Union reached a political agreement on the automatic exchange of country-by-country reporting (CbCR) at a meeting of the Ministers of Economic and Financial Affairs in Brussels. The CbC reports contain tax-related financial information of multinational companies. The agreement is, however, still subject to the scrutiny of the UK parliament. The agreement, based on the European Commission’s Anti-Tax Avoidance Package which it launched only two months ago, entails the mandatory exchange of tax-related financial information rules which will apply to multinational companies operating cross-border in the EU. After the implementation, all Member States will have all the necessary financial information in order to protect their tax bases by addressing the companies that try to avoid paying their so-called “fair share” of taxes in the country where their profits originate from.
Pierre Moscovici, the EU Commissioner for Economic and Financial Affairs, Taxation and Customs, enthusiastically welcomed the Member States’ agreement, calling it “another important signal that the EU is ready to deliver on our common goal of fair and effective taxation”.
The CbCR rules are seen as a necessary complement to the OECD guidelines on BEPS, being the answer to the call for action of the European Parliament (and other stakeholders) as regards further transparency on multinational groups. The Commission is working on a separate work stream with regard to public CbCR and will present a proposal in April. Member States will have 12 months to transpose the new rules into national law after its entry into force, which is expected during Spring 2016.
It is imperative that organisations can comply with the detailed data requests and act now to risk assess the data to be disclosed. For more insights on CbCR and to understand the implications for your organisation, please contact Jonas Van de Gucht.
More news about
- Accounting and Tax Compliance
- Corporate income tax
- Financial Services Tax & Regulatory
- Transfer pricing