What Are You Doing About the New Country-by-Country Reporting Requirements?
Action 13 addressed transfer pricing and country-by-country reporting (CbCR). CbCR is a requirement for Multi-National Enterprises (MNEs) to report income, taxes paid, and other financial data by country. MNEs will file the report with the tax authority of their surrogate country which is typically the country of residence of the group parent. The surrogate tax authority will share the information with the tax authorities of the other countries in which the particular MNE has activity.
Fastforward to 2017
CbCR will be mandatory in the U.S. for tax years starting on or after 1/1/2017, however in many countries worldwide, including most of Europe, CbCR is mandatory for years starting on or after 1/1/2016. U.S. parented MNEs may have CbCR requirement in any number of countries for 2016 even though they don’t have this filing requirement in the U.S. until 2017. The IRS is accepting voluntary CbCR for the 2016 “gap” year for U.S. parented MNEs.
The current reporting requirement is for MNEs with €750M (approximately $850M in USD) or more in consolidated worldwide revenue.
How Can Withum Help?
There are significant benefits for U.S. parented MNEs in filing their CbCR with the IRS rather than adopting a surrogate country in Europe or elsewhere in the world. We can help you understand the filing requirement, assist in preparing or reviewing the IRS Form 8975 “Country by Country Report”, and share our valuable insight on how best to file your “gap year” filing.
In addition Withum’s unique approach to servicing MNEs combining our Transfer Pricing and Global Tax Structuring practices allows us to review your CbCR for potential planning ideas as well as identifying areas of tax risk.
To discuss our CbCR, transfer pricing or global tax structuring services please reach out to a member of Withum’s International Services Team at [email protected].
