On November 21, 2016 the Dutch Deputy Minister of Finance issued a policy statement granting Dutch subsidiaries of multinational enterprises (MNEs) which are subject to Country-by-Country Reporting (CbCR) a one-off extension for filing the 2016 CbCR notification until September 1, 2017.
Based on the Additional Transfer Pricing Documentation Requirements that took effect on January 1, 2016 (i.e. implementation of the OECD BEPS Action 13 Final Report, see link), a Dutch group entity of an MNE with a minimum consolidated group turnover of EUR 750 million, which is a tax resident in the Netherlands, must notify the tax inspector, at the latest on the last day of the reporting fiscal year whether:
- it is the reporting Ultimate Parent Entity or the Surrogate Parent Entity; or, if not,
- the identity of the Reporting Entity (i.e. Tax Identification Number) and its tax residence.
As a consequence of the above, taxpayers with a financial year equal to a calendar year would have to file the notification for 2016 no later than December 31, 2016. However, the new policy statement extends the notification deadline until September 1, 2017. No extension has been granted to MNEs with a reporting fiscal year ending after August 31, 2017.
The extension was granted because it is currently unclear which countries will have final CbC legislation in place and which countries will have a reciprocal relationship for the automatic exchange of information based on the Multilateral Competent Authorities Agreement (MCAA) CbC. The MCAA CbC builds on the ‘Convention on Mutual Administrative Assistance in Tax Matters’ which was developed jointly by the OECD and the Council of Europe in 1988 and amended by Protocol in 2010.
According to Article 8 of the MCAA CbC, countries that have signed the MCAA will still need to notify the OECD about the countries with which they wish to exchange CbCR information. The OECD expects this notification process to take until July 1, 2017. The matching process following these notifications is expected to take two months. As such, the extension date has been set at September 1, 2017, in order to avoid CbCR notifications having to be corrected as a result of the outcome of this process.
Meijburg & Co comment
In view of the uncertainty surrounding the implementation of final CbCR legislation in time for the 2016 fiscal year and the reciprocity of the exchange of CbCR information between countries, the Netherlands has now extended the deadline for filing the CbCR notification. However, as quite a few countries still have December 31, 2016 or the last day of the reporting fiscal year as the notification deadline, MNEs should observe all relevant notification deadlines and consider where they will file their CbCR in case a Surrogate Parent filing is required for 2016 and/or later years.
3. Announcement: notification tool and voluntary filings
In the same policy statement, the Deputy Minister of Finance announced that he will soon issue guidance on the Dutch tax authorities online CbCR notification tool and voluntary CbCR filing.
Meijburg & Co comment
The Deputy Minister has more specifically announced that he intends to make the online CbCR notification tool compulsory. This could mean that notifications which have already been filed, or which will be emailed before the online tool is available, will have to be re-submitted via the online tool.
With respect to voluntary filings (e.g. in Japan, the US or Switzerland), the current position is that the Netherlands cannot accept voluntary filings, because Dutch legislation would require a CbCR ‘requirement’ in the country of the reporting entity. However, the Deputy Minister of Finance has now announced that he intends to present a proposal to accept voluntary filings. Please note that this issue may also arise in other countries that have implemented final CbCR legislation based on the OECD BEPS Action 13 Final Report, before the additional Guidance on the implementation of CbCR of June 2016, in which the OECD allows voluntary parent surrogate filing.