Ireland introduces Country-by-Country Reporting Legislation

Country-by-Country Reporting Legislation

The obligation to report country-by-country tax information to all jurisdictions is here for Irish multinational groups. The impact will be significant, with implications for tax compliance and reporting functions, transfer pricing policies, tax audits and controversies, and management of potential reputational issues.

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In line with the OECD’s recommendations in October 2015 under its “Base Erosion and Profit Shifting” (“BEPS”) project, Ireland introduced Country-by-Country Reporting (“CbyC”) legislation in Finance Act 2015, followed by accompanying regulations published on 23 December 2015. The legislation applies for accounting periods commencing on or after 1 January 2016. It will place an obligation on Irish parented multinational groups that exceed the size threshold to file certain information with the Irish Revenue in relation to their operations in every jurisdiction in which they operate. Irish resident subsidiaries of non-Irish parented multinational groups may also have a similar obligation in certain circumstances.

Which groups are in scope?

The provisions apply to Irish resident parented groups with a taxable presence in more than one country and consolidated turnover of more than €750 million in 2015. Broadly speaking, a group is Irish parented for these purposes if it must prepare consolidated financial statements in Ireland (or would have to if it was listed in Ireland), and the Irish parent does not have a parent further up the ownership chain which must prepare consolidated financial statements in its country of residence.

Taking the example of an Irish group with a 31 December 2015 year end and consolidated revenues in that period in excess of €750 million, it must file a CbyC report with Irish Revenue in respect of the period ending 31 December 2016 by 31 December 2017. A group with a 31 March 2016 year end, for example, must file its FY2017 information by 31 March 2018, if its 31 March 2016 consolidated revenues exceeded €750 million.

The legislation broadly follows the OECD Model legislation which is included in the OECD report on Action 13 of the BEPS project. 

What information must be filed in the CbyC report?

The information required includes related and unrelated party revenue, profit and loss before tax, income taxes paid and accrued, capital, retained earnings, employees, and assets for each jurisdiction (not each entity). The group must also report the business activities of each entity in each jurisdiction.

What will the CbyC report information be used for?

Irish Revenue will automatically share information contained in the CbyC report with the tax authorities in other jurisdictions to which the CbyC report information relates (provided that they have put in place appropriate arrangements to share and receive CbyC reports).

The stated purpose of the CbyC report is to allow tax authorities to carry out a high level transfer pricing risk assessment. CbyC information will be kept confidential as between tax authorities. 

CbyC obligations for Irish resident subsidiaries of non-Irish parented groups

Irish resident subsidiaries of non-Irish parented groups may have Irish CbyC reporting obligations if:

  • the ultimate parent is not required to provide a CbyC report in its jurisdiction of residence 
  • the jurisdiction of residence of the parent does not have an agreement with Ireland that provides for the exchange of CbyC reports, or 
  • there has been a systemic failure by the jurisdiction of tax residence of the ultimate parent to share CbyC reports which has been notified by Irish Revenue to the Irish subsidiary.

In these circumstances, an Irish resident subsidiary must file “an equivalent” CbyC report. An equivalent CbyC report means essentially a full country-by-country report but only to the extent that the information required to be included in that report is within the custody of the Irish resident company or it has the power to obtain or acquire the information.

The Irish resident subsidiary will not have to meet CbyC reporting requirements in Ireland if the group has nominated a ‘surrogate parent’ which is a company resident in a jurisdiction that has CbyC reporting and can meet the standards set for exchange of CbyC reports with Ireland. Again, this follows the recommended OECD Model. 

Interaction with US CbyC legislation

The United States of America (‘US’) has proposed similar CbyC legislation for US parented multinational groups. The US legislation will not apply for calendar year groups until 2017. The practical implications of this are that Irish resident subsidiaries of US multinational groups may face the prospect of having to file an equivalent CbyC report in Ireland for the 2016 accounting period even though the ultimate US parent will not be filing a US CbyC report.

A number of other countries have enacted measure to implement CbyC reporting effective from 2016. US multinational groups may choose to nominate a “surrogate” parent which is tax resident in one of these jurisdictions (which could include Ireland) in order to centrally meet CbyC reporting obligations. This could mean that the group does not have to make separate and multiple CbyC filing obligations in jurisdictions in which it operates and which have implemented CbyC for the 2016 accounting period.

Key considerations

Preparation of the CbyC report may pose significant compliance burdens. Not only that, but affected groups will need to understand and evaluate the possibility of increased tax audit scrutiny, particularly regarding transfer pricing policies in the jurisdictions in which they operate. In particular, a group will need to consider:

  • how CbyC reports align with past filing positions taken or publicly available information? 
  • how to best manage potential communications with stakeholders and interaction with tax authorities in receipt of information in this new format? 
  • who will have responsibility within the group for reporting – this will require input from multiple stakeholders across various functions? 
  • can group finance reporting systems and supporting data enable the automatic extraction of the information required? If not, what workarounds or manual intervention will be needed? 
  • has the group developed a robust narrative that explains the group’s structure and operations to articulate the tax position that is reflected in the figures reported?

Next steps and work required

There are a number of work streams involved in collating a CbyC report. We recommend that groups begin the process now by carrying out “dry runs” in order to identify the main challenges arising. KPMG can help with the process in the following ways:

Scoping – assisting in determining the scope and impact of the legislation, including the scope of countries affected, dealing with complexities like compiling information for joint ventures, acquisitions, disposals, branches;

Data gathering – assisting with the interpretation of OECD guidance and the Irish legislation, assessing the most appropriate data sources (group GAAP versus local GAAP, consolidated reporting systems versus local systems, etc.), designing the data gathering process;

Pilot exercise – designing and managing a pilot exercise to test the process, technology and output and assessing its implications;

Review – review of the output of a pilot exercise to assess consistency of data with transfer pricing policies, identifying potential areas of challenge from tax authorities, preparing anticipated questions and answers, identifying areas for improvement or restructuring if necessary. 


Sourcing cash tax paid, including withholding taxes, is not an easy task, even with an advanced enterprise resource planning (ERP) system. We have configured technology tools to assist with the data gathering and reporting. This technology automatically aggregates all entity level data, can convert local currency data to group reporting currency, has oversight functionality to monitor progress and is flexible to take into account changing requirements.

This is our online web based technology that we have used to deliver our global country by country reporting projects. We have specific templates and reports designed to meet the OECD requirements that local country teams complete and submit online. KPMG LINK 360 also includes secure documentation storage.

In conclusion, CbyC reporting legislation will require in-scope groups to allocate internal resources, forward plan, and ensure to the extent possible that CbyC reports tell a story which is consistent with their transfer pricing policies and documentation.

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