The Council Directive (EU) 2016/881 of May 25, 2016, introduced provisions for the mandatory automatic exchange of information in the tax sector. Article 1, paragraphs 145 and 146 of the Law No. 208 of December 28, 2015 (Stability 2016), established that the ultimate parent entity of a multinational group, resident in the territory of the State pursuant to Article 73 of the TUIR, must submit a country-by-country report to the Revenue Agency. A decree by the Minister of Economy and Finance specifies the procedures, deadlines, elements, and conditions for the annual submission of the report. The ultimate parent entity required to submit the report is one that must prepare consolidated financial statements, with a consolidated turnover of at least 750 million euros in the tax period preceding the reporting period, and that is not controlled, directly or indirectly, by another enterprise of the multinational group or other entities subject to this obligation.

Similarly, the obligation for automatic exchange and the initial guidelines regarding the CbCR reporting obligation and information exchange between tax administrations are found in the BEPS (Base Erosion and Profit Shifting) so-called “BEPS Project” – Action 13 (“Guidance on the Implementation of Transfer Pricing Documentation and Country-by-Country Reporting”), published on October 5, 2015, at the conclusion of the project. The guidelines contained in BEPS – Action 13, regarding country-by-country reporting, were incorporated into domestic law by Law No. 208 of December 28, 2015.

Submission Deadlines

The country-by-country report (CbCR) must be submitted by the ultimate parent entity, resident in the territory of the State, of a multinational enterprise group whose total revenues resulting from the consolidated financial statements are, for each tax period preceding the reporting obligation, not less than 750 million euros or an equivalent amount in local currency approximately equivalent to 750 million euros. If the ultimate parent entity is not resident in the territory of the State and one of the conditions referred to in Article 2, paragraph 2, letter b) of the Decree of the Minister of Economy and Finance of February 23, 2017, occurs, the report must be submitted alternatively: a) by the entity resident in the territory of the State, belonging to the multinational group, required to submit the report pursuant to Article 2, paragraph 2, of the decree; b) by the entity resident in the territory of the State designated by the multinational group pursuant to Article 2, paragraph 4, of the decree. Resident entities required to submit the report pursuant to Article 2, paragraph 2, of the decree are exempt from the reporting obligations if the multinational group makes the report available through a surrogate parent entity pursuant to and under the conditions referred to in Article 2, paragraph 6, of the decree or through another entity resident in the territory of the European Union designated to submit the report to its tax authority.

Update of the Technical Annex

By provision of November 28, 2017, certain application aspects of the discipline were outlined, including the methods for communicating data prepared according to the XML format described in the technical annex. By provision of October 27, 2020, the technical annex was replaced to update the technical rules for compiling the communication to incorporate the changes introduced to the international Country-by-Country Report XML schema adopted by the Organization for Economic Cooperation and Development in June 2019.

Furthermore, additional rules were introduced to improve the quality of data transmitted to the Revenue Agency. The new XML schema applies to all communications made by entities required to submit country-by-country reports starting from January 1, 2021. Given that the changes to the XML schema will be applicable in exchanges with foreign jurisdictions starting from February 1, 2021, and that from this date the use of the previous XML schema in exchanges will be inhibited, it was deemed appropriate to allow the entities required to report to use the previous XML schema for preparing annual communications until December 31, 2020. This means that the Revenue Agency will exchange country-by-country report information for the fiscal period ending December 31, 2019, in January 2021.