BUSINESS INTELLIGENCE & PERFORMANCE MANGEMENT SOLUTION
Reportingstandards for internationally active companies
Country by Country Reporting
Since the 2016 financial year, country-by-country reporting (CbCR) has been obligatory for internationally active corporations. In accordance with § 138a AO (German Fiscal Code), corporations with at least one (subsidiary) company or branch abroad and a consolidated turnover from 750 million euros are obliged to provide the Federal Central Tax Office (BZSt) with a country-specific report. However, even non-reportable companies should prepare themselves for the CbCR Standard, which is setting new standards for the tax registration of international business activities.
THE BENEFITS OF AUTOMATED CBC REPORTING
Within the IDL CPM suite, IDL provides a standardised solution for the automated country-by-country reporting. This solution comprises software and ready-made contents designed for the efficient and secure preparation of the required reports on the basis of the IDL consolidation solution:
- A standard and consistent data source based on the consolidation database.
- Predefined report forms to produce and fill CbC Table 1. (Overview of allocation of income, taxes and business activities by tax jurisdiction)
- Prepared business content, which is dynamically filled from the data in the IDL consolidation solution.
- Automatic validation of data
- Possibility of recording data, which has not previously been entered in IDL.KONSIS
- Complete documentation along the entire CbC report process
- Automatic creation of the XML report file required.
- Use of existing system options for further reporting and supplementary analyses.
Corporations obliged to provide reports are thus enabled to prepare their CbC reports in a standardised and comprehensible manner with a high level of process reliability thereby fulfilling the compliance requirements in relation to reporting and the reporting process.
COMPLIANCE REQUIREMENTS COMPREHENSIBLY MET
The Cubeware and IDL solution comprises software and ready-made contents designed for the efficient and secure preparation of the required reports on the basis of the IDL consolidation solution.
Corporations obliged to provide reports are thus enabled to prepare their CbC reports in a standardised, comprehensible and historicised manner with a high level of process reliability, thereby fulfilling the compliance requirements in relation to reporting and the reporting process.
BACKGROUND: BEPS – THE INITIATIVE FOR FAIR INTERNATIONAL TAX COMPETITION
Within the framework of the initiative “Base erosion and profit shifting” (BEPS), the OECD – on behalf of the G20 countries – has drawn up an action plan to combat profit shortening and transfer of profits undertaken by multinational corporations, which it published on 5th October 2015. With its corresponding amendment to the EU Mutual Assistance Directive (Directive 2011/16/EU), the European Union decided on 25th May 2016 to implement this BEPS action plan in the EU with 15 specific measures in a harmonised manner.
On 13th July 1016, the German Cabinet adopted the draft on a “Law to implement the amendment to the EU Mutual Assistance Directive as well as other measures designed to combat profit shortening and transfer of profits“, thus incorporating substantive BEPS recommendations into national law. Key contents concern the automatic information exchange on “tax rulings” and the “country-by-country reporting” within the EU. At the end of 2016, the new § 138a AO “country-by-country reporting of multinational corporations” was created for this purpose, which incorporates OECD Measure No. 13 into national tax law.
YOU INTEND (OR HAVE) TO USE Country-by-Country-Reporting? IF SO, THESE THREE COMPONENTS ARE REQUIRED!
Together with the IDL and Cubeware experts, you only require 3 components to prepare your own country-by-country reporting.
IDL.KONSIS supports you in the preparation of your financial statement in accordance with different accounting standards. The software is entirely oriented to the consolidation phases, provides automated consolidation functions in the actual and budget figures while allowing the execution of simulations and plan consolidations. You yourself determine the degree of automation and – via different specialist monitors – always have an overview of your data, progress and pending tasks. Detailed posting lists provide auditors with the necessary transparency while supporting the auditing reliability.
The implementation of CbCR ensues within the framework of standardised transfer pricing documentation. For this purpose, a three-tiered approach has been developed, which provides for an overview of the business activity of the multinational company and its transfer pricing policy (master file), a country-by-country documentation of the specific business transactions of the taxable company with associated companies (local file) as well as the CbCR report itself.
The country-by-country report consists of three parts and can be transmitted entirely in the English language. In any case, it is obligatory to transmit the information and explanations contained in the third part in the English language.
In the first part of the country-by-country report, an “overview of the breakdown of revenues, taxes and business activities by tax jurisdiction” must be provided. This includes information such as turnover, annual result before tax, paid and deferred income tax, equity capital, profit, number of employees and tangible assets.
The second part contains a “list of all companies and business premises of the corporation by tax jurisdiction, including information on their most important business activities”. The German Ministry of Finance letter contains two tables, in which the information required on the country-by-country report are summarised.
There is also a third table, in which additional information can be included in accordance with § 138a Section 2 Clause 3 AO, which the domestic group parent company considers necessary for an understanding of the overview (in accordance with § 138a Section 2 Clause 1 AO and the list (in accordance with § 138a Section 2 Clause 2 AO). The report has to be transmitted in XML format to the BZSt, who then forward the data collected both to the appropriate financial authorities and the respective signatory countries.
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IDL BERATUNG FÜR INTEGRIERTE DV-LÖSUNGEN GMBH MITTE – THE EXPERTS FOR PROBLEMS AND CHALLENGES IN RELATION TO CBC REPORTING IN THE CUBEWARE ECOSYSTEM
IDL specialises in technical consultancy and the development of software solutions for integrated company management (CPM). We perceive ourselves as a solutions partner who understands the strategic, specialist and technical requirements of our customers and accompanies them with modern solutions in a future-oriented manner.