Country-by-country reporting (CbCR) aims to provide tax authorities with additional information on cross-border corporate structures. Generating country-based reports for multinational enterprises and automatic exchange of their information is meant to better allow tax authorities to review them.
Country-by-country reporting (CbCR) aims to provide tax authorities with additional information on cross-border corporate structures. Generating country-based reports for multinational enterprises and automatic exchange of their information is meant to allow the tax authorities to better review them. The Bundeszentralamt für Steuern (BZSt – German Federal Central Tax Office) is the central body for exchanging these reports in Germany.
Process
Standardized documentation requirements have been agreed upon in the area of transfer pricing for multinational enterprises. These requirements were used to develop a three-level approach consisting of:
- An overview of the multinational enterprise’s business activity and its transfer pricing methodology (master file)
- Country-specific documentation of specific business transactions of the taxpayer with affiliated businesses (local file)
- The country-by-country report
At the latest, the obligated businesses send the country-by-country report to the BZSt one year after the end of fiscal year for which the country-by-country report is being generated. Reports must be created for fiscal years that start after 31 December 2015.
The country-by-country report must be provided as an officially mandated data record that complies with the OECD’s XML Schema (see Section 138a (6) sentence 1 Abgabenordnung (AO – Fiscal Code)).
The following group data must be transmitted to BZSt by the obligated businesses:
- An overview of how the group’s business activities are distributed among the tax jurisdictions where its businesses or permanent establishments are engaged in business activity – broken down by tax jurisdiction. To this end, the overview shall show the following information, based on the group’s consolidated financial statements:
- Sales and other income from business transactions with affiliated businesses
- Sales and other income from business transactions with non-affiliated businesses
- Total sales and other income in accordance with letters a) and b)
- Tax on earnings paid during the fiscal year
- Tax on earnings paid and accrued during the fiscal year for that fiscal year
- Profit (loss) before tax on earnings
- Net assets
- Retained earnings
- Number of employees
- Tangible assets
- A list of all the key business activities of all business units of the multinational group that are recorded with various information, by tax jurisdiction. The list must specify the established tax jurisdiction of the group units and the country where they are established or the country where they are entered on the commercial register, if different from the country of establishment.
- Key business activities are:
- Research and development
- Ownership or management of intellectual property
- Purchasing or procurement
- Processing or production
- Sales, marketing or distribution
- Administration, management or support services
- Providing services for unrelated third parties
- Intra-group financing
- Regulated financial services
- Insurance
- Ownership of shares or other securities of a participatory nature
- Inactivity
- Other
BZSt forwards the country-by-country report to the respective participating countries. In return, BZSt receives data from the participating countries. The data held by BZSt is then transmitted to the competent land revenue authorities.
There are no plans to publish information from the country-by-country reports.
Businesses subject to reporting requirements
Pursuant to Section 138a (1) AO, the following businesses are subject to reporting requirements:
- Businesses with headquarters or management in the territory of the country (domestic businesses)
- that prepare consolidated financial statements or that must prepare them in accordance with rules other than taxation laws (domestic group parent) and
- whose consolidated financial statements include at least one foreign business or a foreign company or one foreign permanent establishment and
- whose consolidated sales in the previous fiscal year is equal to at least EUR 750 million as shown in the consolidated financial statements.
Such businesses subject to reporting requirements must prepare a country-by-country report of this group and send it to BZSt.
There is no obligation if the domestic business is controlled by another business and included in its consolidated financial statements.
Reporting can be commissioned pursuant to Section 138a (3) AO.
Commissioning reporting pursuant to Section 138a (3) AO
If the consolidated financial statements of a foreign business, which under the provisions of (1) would be required to submit a country-by-country report if its headquarters or management are in Germany (foreign group parent), cover a domestic business (covered domestic group company), and if the foreign group parent commissions the covered domestic group company with submitting a country-by-country report for the group (reporting company), then the reporting entity must send the country-by-country report to BZSt.
Incomplete reports pursuant to Section 138a (4) AO
If BZSt will not receive a country-by-country report by a foreign group parent from a foreign authority, then each covered domestic group company is required to send any incomplete country-by-country report for this group.
If a country-by-country report is sent to BZSt by one of these domestic group companies, then this requirement is waived for all other group companies.
Temporal guidelines
German businesses subject to reporting requirements must transmit the country-by-country report no later than one year after the end of the fiscal year for which the country-by-country report is being generated. The country-by-country reports must be prepared for fiscal years that start after 31 December 2015.
Incomplete reports pursuant to Section 138a (4) AO shall be sent for the first time for fiscal years that start after 31 December 2016 (see Section 31 Einführungsgesetz zur Abgabenordnung (EGAO – Introductory Act to the German Fiscal Code)).
Information on data transmission
The data must be sent to BZSt as a De-Mail attachment in 2017 and 2018. Starting in January 2019, the data can be transmitted via the BOP using the mass data interface ELMA.
Legal basis
On 5 October 2015, the OECD published the results of the Base Erosion and Profit Shifting (BEPS) joint project by G20 and OECD, which proposed a package of measures against base erosion and profit shifting.
BEPS action 13 stipulates the preparation of country-by-country reports for multinational enterprises and their automatic exchange of information (“country-by-country reporting”). Further information can be found on the OECD’s website.
On 8 December 2015 (Directive (EU) 2015/2376) and 25 May 2016 (Directive (EU) 2016/881), the EU Member States resolved the corresponding changes to the EU Mutual Assistance Directive, which implements this BEPS recommendation on country-by-country reporting as a standard within the EU.
With the “Act on Implementing the Changes to the EU Mutual Assistance Directive and Other Measures against Base Erosion and Profit Shifting” (BEPS Implementation Act, BGBl. I 2016, 3000), the BEPS recommendation on country-by-country reporting was put into national law through the inclusion of Section 138a AO.
Country-by-country reports are exchanged with third parties on the basis of the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbC MCAA) signed on 27 January 2016, which was put into national law by ratifying the “Act on the Multilateral Agreement of 27 January 2016 between the competent authorities on the exchange of country-by-country reports of 19 October 2016” (BGBl. I page 1178).
Mass data transmission (ELMA)
Data is exchanged in the XML format and in an automatic procedure using the ELMA mass data interface.
The ELMA Communication Manual and its accompanying XSD schema can be found under the tab “Communication Manual“.
Activation for the ELMA interface
In order to send data to BZSt, you must first register with the competent specialist unit at BZSt (St I 7). To do so, please use the contact form “Registration as the submitting person or company to electronically transmit data in the CbCR procedure.” By registering, you are telling the specialist unit that you wish to send data. You must register with BZSt regardless of whether the reporting office already sends or has sent data using the mass data interface ELMA as part of another process.
Registration is required only for the submitting person or company, i.e. for the reporting office that ultimately sends the data to BZSt (foreign service providers, domestic subsidiary or the parent business itself) and must occur only once, prior to the first data transmission. Information on the ultimate parent company and, if different, the submitting person or company must be entered in the registration. If the parent company does not transmit the data itself, a power of attorney must be sent to BZSt via De-Mail, e-mail or mail.
If you still do not use the BOP and thus do not have an active BZSt number or have a valid login, you must register for the portal. Otherwise, you may skip this step. Based on the registration submitted, you will be informed of any other steps required once reviewed by BZSt.
Certificates created based on a BZSt number and beginning with “BZ5″ cannot be used for the mass data interface. Please request a new BZSt number if you currently have only a BZ5 number.
Information for commissioned service providers
A commissioned service provider must have its own BZSt number to be able to participate in the ELMA interface transmission. It may need to register for the BOP. All information can be found in the ELMA Communication Manual.
All transmissions, including for multiple businesses, are sent under the same BZSt numbers as the commissioned service providers.
For each business, the commissioned service provider must register for electronic mass data transmission (ELMA) using the contact form “Registration as the submitting person or company to electronically transmit data in the CbCR procedure”.
You can send the power of attorney for the transmission to BZSt via De-Mail, e-mail or mail.
Transmitting test data
You can send test data deliveries to the ELMA interface as part of your integration test. Data transmission is described in the ELMA Communication Manual. In deviation from this, the following distinctions must be noted:
In deviation from the ELMA Communication Manual, “elma5c.bfinv.de” is to be used to deliver data. The IP address may change without prior notice. As a result, use the domain name system (DNS) to determine the IP address.
The server “elma5p.bfinv.de” must not be used to deliver test data!
During the integration test, all deliveries must be marked as test deliveries in the ELMA header using the XML field <processing run>. To do so, enter the value “TEST RUN” in this field.
BZSt is also unable to change or delete your data deliveries in the test environment. Please ensure that you do not put actual data in the test system or test data in the production system.
General Information in tax returns
For fiscal years that start after 31 December 2016, the tax return of a domestic business must specify whether it is:
- A domestic group parent pursuant to Section 138a (1) Abgabenordnung (AO – Fiscal Code)
- A reporting company (Section 138a (3) AO)
- A domestic group company that is part of a group with
- a foreign group parent.
To the extent that the country-by-country report is submitted abroad, the country and the business that submitted the group’s country-by-country report must also be specified. If this information is missing, the included domestic group company is required to transmit the country-by-country report itself in a timely manner. This also applies accordingly for the domestic permanent establishment of a foreign business that is included as a foreign group parent or as an included foreign group company in consolidated financial statements.
Corporation tax return
Entries on the corporation tax return must be made on lines 27–29 in the WA annex.
A country code for the country that the country-by-country report will be sent to must be entered in line 29. The country code must be entered with a two-character combination in accordance with ISO code 3166 (ALPHA 2). This can be found in the table below.
Statement for separate and joint determination of basis for income tax return
The country that the country-by-country report will be transmitted to must be entered on line 18 of income tax form 1 B of the statement for separate and joint determination of basis for income tax return (statement of determination of basis for tax assessment). The country code must be entered with a two-character combination in accordance with ISO code 3166 (ALPHA 2). This can be found in the table below.
The electronic statement of determination of basis for tax assessment has used a field definition intended for the country code to only be entered numerically, however. The corresponding two-digit country codes can be found in the table added below.
If the country to be entered is not included in this list of countries, “99” must be entered.
Country code
| Country (EU) | Country code (numerical) |
|---|---|
| Belgien | 01 |
| Bulgarien | 02 |
| Dänemark | 03 |
| Deutschland | 04 |
| Estland | 05 |
| Finnland | 06 |
| Frankreich | 07 |
| Griechenland | 08 |
| Irland | 09 |
| Italien | 10 |
| Kroatien | 11 |
| Lettland | 12 |
| Litauen | 13 |
| Luxemburg | 14 |
| Malta | 15 |
| Niederlande | 16 |
| Österreich | 17 |
| Polen | 18 |
| Portugal | 19 |
| Rumänien | 20 |
| Schweden | 21 |
| Slowakische Republik | 22 |
| Slowenien | 23 |
| Spanien | 24 |
| Tschechische Republik | 25 |
| Ungarn | 26 |
| Vereinigtes Königreich (Großbritannien) | 27 |
| Zypern | 28 |
| Country (non-EU states) | Country code (numerical) |
|---|---|
| Afghanistan | 29 |
| Ägypten | 30 |
| Algerien | 31 |
| Argentinien | 32 |
| Australien | 33 |
| Bahamas | 34 |
| Bangladesch | 35 |
| Belize | 36 |
| Bermuda | 37 |
| Brasilien | 38 |
| Britische Jungferninseln | 39 |
| Cayman Inseln | 40 |
| Chile | 41 |
| Costa Rica | 42 |
| Curaçao | 43 |
| Gabun | 45 |
| Georgien | 46 |
| Gibraltar | 47 |
| Guernsey | 48 |
| Haiti | 49 |
| Hongkong | 50 |
| Indien | 51 |
| Indonesien | 52 |
| Irak | 53 |
| Iran | 54 |
| Island | 55 |
| Isle of Man | 56 |
| Israel | 57 |
| Japan | 58 |
| Jersey | 59 |
| Jordanien | 60 |
| Kamerun | 61 |
| Kanada | 62 |
| Katar | 63 |
| Kolumbien | 64 |
| Kongo, Demokratische Republik | 65 |
| Libanon | 66 |
| Liechtenstein | 67 |
| Macau | 68 |
| Madagaskar | 69 |
| Malaysia | 70 |
| Mauritius | 72 |
| Mexiko | 73 |
| Monaco | 74 |
| Neuseeland | 75 |
| Nigeria | 76 |
| Norwegen | 77 |
| Pakistan | 78 |
| Panama | 79 |
| Peru | 80 |
| Philippinen | 81 |
| Russland | 82 |
| Saudi-Arabien | 83 |
| Schweiz | 84 |
| Singapur | 85 |
| Sir Lanka | 86 |
| Südafrika | 87 |
| Sudan | 88 |
| Südkorea | 89 |
| Thailand | 90 |
| Türkei | 91 |
| Turks- und Caicosinseln | 92 |
| Uganda | 93 |
| Uruguay | 94 |
| Venezuela | 95 |
| Vereinigte Staaten | 96 |
| Vietnam | 97 |
| Volksrepublik China | 98 |
CbC Reporting 