CbCR - increased international data exchange
The topic of Country by Country Reporting (CbCR) has been around for a few years now and has already undergone some changes by the German tax authorities, especially of a technical nature. For example, the update to CbC Schema 2.0 is due soon, which will also bring some innovations in the template. We at AMANA are already working on an implementation.
The ELMA interface used by the BZSt for transmission will also be used for the Mandatory Disclosure Regime / EU Directive on administrative cooperation V6 (MDR/DAC6) topic. In addition, as recently announced, the CbCR "circle of participants" is now being expanded (we reported).
After long negotiations, the USA and Germany have now agreed on a bilateral data exchange.
What is CbCR?
This is Action Point 13 of the OECD's Base Erosion and Profit Shifting (BEPS) initiative. The aim of CbCR is to enable the tax authorities concerned to carry out initial analyses and assessments of transfer pricing in multinational corporations through the international exchange of information.
The necessary exchange of data must be regulated by law and on an individual basis
Multinational* and European** conventions exist for this purpose. In addition, as in the US-Germany case, there is now also a bilateral agreement.***
In cases where no exchange takes place, many states see a compulsion for secondary filing, quasi a local CbCR filing. This also applies to Germany.
Until now, a "spontaneous exchange" applied between the US and Germany, which was agreed for financial years beginning in 2016, 2017 and 2018. This avoided secondary filing.
These interim solutions have now been replaced by the bilateral agreement. However, important details concerning the exchange of data, such as the start of the exchange, the frequency of the exchange and what exactly is exchanged, are still missing.
Thus, there is currently a certain amount of uncertainty regarding secondary filing, "spontaneous exchange" and the bilateral agreement. It remains to be said, however, that the exchange of data between the individual countries is intensifying and that this trend will continue in the future.
Thus, the CbCR and the information transmitted with it will become increasingly important when it comes to German tax audits or foreign tax audits.
With the Tax Questionnaire, AMANA offers both a technical solution for CbCR and, with the Excel converter, a simple solution for converting the report and sending it to the relevant authorities. More information at: