Brussels, 22/02/2016 (Agence Europe) - At a meeting of a working group on Tuesday 23 February, the Presidency of the Council of the EU is to propose a compromise to respond to the concerns raised by certain member states over the changes to the directive on administrative cooperation to include country-by-country reporting, action 13 of the BEPS action plan of the OECD.
Readers may recall that under the proposed changes, the parent entity of a group with a total consolidated turnover of at least €750 million must notify the tax administration of its country of residence of information regarding turnover, profit before tax, tax paid etc., for each country in which it has activities. The tax administrations will then exchange this information with each other (see EUROPE 11473).
During discussions at the Council, one question raised regards the frequency of the exchange of information between tax administrations. The European Commission's proposal provides that the communication of the information should take place within 15 months of the final day of the tax year in question. The OECD provides for a period of 18 months. The Council is therefore expected to bring this provision into line with BEPS.
The second question raised by various delegations concerned the secondary mechanism of the reporting (article 8aa). Under the OECD action plan, this mechanism allows that another company of the group may be obliged to submit the country-by-country reporting in its own country of residence if the ultimate parent company is not obliged to do so in its state of residence, if the state of residence of the ultimate parent company has not entered into an agreement on the automatic exchange of information on this reporting or if such a system does not exist.
Some states are therefore questioning the extent to which a subsidiary could be penalised on the grounds of incomplete reporting if it does not have access to the information of the whole of the group or if it is unable to oblige the rest of the group to provide it with this information. Other states also fear that the text may be watered down. It remains to be seen what the Dutch Presidency of the Council will propose this Tuesday. It is hoping for a political agreement on this dossier at the Ecofin Council of March - a timescale which certain sources feel is overly optimistic. (Original version in French by Elodie Lamer)