Tax

CbCR notification term extended till September 1, 2017

The State Secretary of Finance announced, on November 17, that the term for the Country-by-Country notification obligation regarding Dutch parent entities, surrogate parent entities and other Dutch group entities to the Dutch tax authorities has been extended to September 1 2017. What does this mean for you?

Multilateral Competent Authority Agreement

In order to determine which entity will be, the Country-by-Country (CbC) reporting entity within a multinational group, it is important to understand which countries have signed up to exchange CbC information and whether they have implemented CbC legislation.

There are 49 signatories to the Multilateral Competent Authority Agreement on the exchange of Country-by-Country reports (MCAA), including the Netherlands. As a part of the MCAA, signatories also have to provide notification to the OECD. The Netherlands is one of only 10 countries to have already implemented CbC legislation, while several others are still in the process of doing so. Therefore, the OECD has devised an updated timeline to push back the notification deadline to July 1, 2017.

Previously, Dutch group entities were obligated to file the CbC notification on the last day of the financial year of the multinational group (for most groups this deadline would be December 31, 2016). The tax inspector would be informed whether an entity is the reporting entity, and if not, which entity within the group is.

However, due to the fact that the MCAA notifications will only be exchanged starting as of July 1, 2017, the Dutch tax authorities have granted all Dutch entities an extension of the notification term by 8 months to September 1, 2017. This extension will only apply to multinational groups that have concluded their financial year prior to August 31, 2017.

Notification tool and voluntary filing

The announcement also refers to an automated notification tool developed by the Dutch tax authorities in order to streamline and simplify the notification process in the Netherlands. The Dutch State Secretary intends to implement regulations regarding the mandatory use of this notification tool but no formal dates have been announced yet.

Furthermore, as mentioned previously, there are several countries which have not yet implemented CbC legislation for multinational groups with a financial year starting on or after January 1, 2016. Generally, this will result in the filing of the CbC report in the countries where the local subsidiaries are situated.

Therefore, in order to prevent the (temporary) shift of a local filing obligation to local subsidiaries in countries which already have implemented CbC regulations, the OECD has announced that the CbC report may be filed in the country where the parent entity is situated, that has not yet implemented CbC. This is referred to as voluntary filing or parent surrogate filing.

Online notification portal

Here you can find the online notification portal regarding CbC provided by the Dutch Tax and Customs Administration.

Questions

For more questions or clarifications on the affect of this announcement on your Transfer pricing compliance, contact our Transfer pricing specialists.