What is Country-by-Country Reporting?
Country-by-Country Reporting (CbCR) is a mandatory tax compliance measure under the OECD’s BEPS Action 13. It requires multinational enterprises (MNEs) to disclose key financial, operational, and tax-related data. Therefore, it allows tax authorities to track profit allocation and ensure compliance with tax legislation in each jurisdiction. A well-prepared CbCR strengthens financial transparency and discourages profit shifting or tax avoidance strategies.
Why is CbCR Important?
- Prevents tax base erosion by identifying potential profit-shifting risks and artificial profit allocation.
- Ensures fair taxation by aligning tax payments with actual business activities and economic substance, thus reducing the risk of double taxation.
- Facilitates global tax cooperation, ensuring that tax authorities have access to relevant financial data.
- Minimizes risks of disputes and audits by allowing regulators to detect potential tax mismatches early.
- Improves corporate accountability, promoting responsible tax behavior and reducing reputational risks related to non-compliance.
Who is Required to File a CbC Report?
- MNEs with at least one foreign entity or one foreign permanent establishment and with annual consolidated sales revenue exceeding 750 million EUR.
- Subsidiaries of foreign MNEs, if the parent company designates them to prepare and file the report.
- Business groups with cross-border transactions that could raise transfer pricing concerns.
What Data is Included in a CbC Report?
- Revenue: Income breakdown from both third-party and intercompany transactions in each jurisdiction.
- Profits: Pre-tax profits declared for each country of operation.
- Taxes Paid: Actual and accrued tax amounts per location, ensuring transparency in contributions.
- Employees: Number of employees per jurisdiction, reflecting the company’s operational footprint.
- Assets & Business Activities: Tangible assets, operational functions, and economic presence in each region.
How T1 Advisory Supports Clients
T1 Advisory provides expert guidance on CbCR-related compliance inquiries:
- CbCR Preparation & Compliance: assisting companies in gathering, structuring, and analyzing relevant financial data, while ensuring full compliance with the OECD BEPS Action 13 and local regulatory requirements.
- Data Validation & Risk Assessment: identifying inconsistencies or red flags.
- Ensuring ongoing monitoring and strategic advisory: offering continuous updates on new regulations that impact CbCR requirements.
Why Choose T1 Advisory
Global Reach, Local Expertise: Our transfer pricing solutions are rooted in a profound understanding of local regulations.
- Personalized Approach: Our team consists of highly qualified professionals.
- Personalized Approach: Our documentation approach is personalized to individual needs.
- Risk Mitigation: We actively manage documentation compliance risks.
- Seamless Integration: Our solutions integrate smoothly into a company’s departments and working processes.
Ensure Compliance – Contact Us Today!
Find out how we can help you. For a full list of services, click the links below!
