EU: Automatic exchange of country-by-country reporting by multinational companies

EU: Automatic exchange of country-by-country reporting

The European Commission today announced that an agreement was reached by EU Member States on the automatic exchange of tax-related financial information of multinational companies—known as country-by-country reporting—subject to UK parliamentary scrutiny.

Related content

The agreement was reached at today’s meeting of Economic and Financial Affairs ministers in Brussels, less than two months after the European Commission presented the proposal.

As explained in an EC release, the new rules:

  • Will apply to multinational companies that operate cross-border in the EU
  • Reflect an approach toward implementation of OECD guidelines on base erosion and profit shifting (BEPS)
  • Respond to calls from the European Parliament and other interested parties for further transparency on multinational groups

The new rules are part of the anti-tax avoidance package adopted by the European Commission in January 2016 that aim at addressing tax avoidance and aggressive tax planning by imposing greater transparency requirements on multinational groups, and through more information sharing among EU Member States.

Under the rules, multinational groups will have to provide certain, tax-related information on an annual basis for each tax jurisdiction where they do business. The information includes: 

  • The amount of revenue
  • The profit or loss before income tax
  • The income tax paid and accrued
  • The number of employees
  • The stated capital
  • The retained earnings
  • The tangible assets of the group

The parent company will provide this information to the tax authorities of its country of establishment in Europe. Otherwise, EU-based subsidiaries will be obliged to request that information from their parent company.

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

Final adoption by the European Council is expected in May 2016. The EU Member States will have 12 months to transpose the new rules into national law after its entry into force, which is expected for spring 2016.

 

Read a March 2016 report prepared by KPMG’s EU Tax Centre

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.