Country-by-country report (CbCR): what you need to know
Why CbCR?
Countries are implementing country-by-country reporting (CbCR) to compel multinational companies to disclose detailed information about their business activities and profits in different countries, thereby combating tax avoidance and profit shifting.
When and how often is CbCR required?
Multinational companies must prepare a CbCR report annually and submit it to the relevant tax authority by the deadline – usually within twelve months of the end of the financial year. The exact deadlines and requirements may vary from country to country.
Who is required to prepare country-by-country reports?
Country-by-country reports (CbCR) generally apply to multinational groups with a global consolidated annual turnover exceeding certain thresholds, which vary from country to country, and is required by the relevant national tax authorities.
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Good to know
What is country-by-country report (CbCR)?
Country-by-country report (CbCR) is a tool used by multinational enterprises (MNEs) to provide a country’s tax authority with information about their global business operations. The aim of CbCR is to combat tax avoidance and evasion by MNEs by giving tax authorities access to comprehensive and detailed information about the business activities of MNEs in different countries.
CbCR requires MNEs to report information on turnover, profit, taxes paid, number of employees, assets and other key figures for each jurisdiction in which they operate. This information is then used by the tax authorities of the countries concerned to ensure that MNEs meet their tax obligations and to detect potential tax evasion and avoidance.
CbCR was first introduced by the Organisation for Economic Co-operation and Development (OECD) as part of its BEPS (Base Erosion and Profit Shifting) project to combat tax avoidance and evasion by MNEs. Many countries have since incorporated CbCR into their tax legislation or require MNEs to prepare and submit CbCR reports.
Who is country-by-country report relevant for?
The country-by-country report (CbCR) applies to multinational enterprises (MNEs) that operate in several countries and generate annual turnover of at least 750 million euros. These companies are required to prepare and submit CbC reports containing detailed information about their global business activities in different countries.
Furthermore, CbCR is also relevant for tax authorities and governments seeking to combat tax avoidance and evasion by MNEs. By having access to comprehensive and detailed information on the business activities of MNEs in different countries, tax authorities can detect potential tax evasion and avoidance and ensure that MNEs fulfil their tax obligations.
CbCR may also be of interest to the public, as it can help to increase the transparency of MNEs and ensure that they are taxed fairly and appropriately in all countries where they operate. Some countries have made CbC reports publicly available to increase transparency and strengthen public scrutiny of the tax practices of MNEs.
What does this kind of reporting look like?
A country-by-country reporting (CbCR) report is a comprehensive report prepared by multinational enterprises (MNEs) to provide information to tax authorities about their global business activities in different countries. The report is usually divided into three parts:
- General Information: This part contains basic information about the company, including its name, registered office, business structure and main business activities.
- Country-specific information: Detailed information is provided here for each jurisdiction in which the company operates, including sales, profit, taxes paid, number of employees, assets and other key figures. This information provides an overview of the company’s business activities in each country and can help tax authorities detect potential tax avoidance and evasion.
- Other Information: This section may contain additional information relevant to the tax authorities, such as a description of the company’s business strategy or intercompany transactions between the company’s different entities.
The CbCR report must meet certain standards and must usually be submitted electronically to the relevant tax authorities. The exact requirements for the CbCR report may vary by country, as each country has its own laws and regulations regarding CbCR.
Professional software for country-by-country report
Creating a CbC report with Opti.Tax
In our live stream “hsp live at 11”, just before the CbCR software is released, you’ll find out everything you need to know.
The video is in German. Therefore, please don’t forget to switch the subtitles on.
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