Country by country reporting – What is it about?

9. 10. 2017
The obligation about sharing information was implemented in Czech law as of September 19, 2017 by amendment of the law No.305/2017 changing the law No. 164/2013 Coll., on international cooperation in tax administration and on the amendment of certain related Acts.

What are the new duties according to the amendment of the law No. 164/2013 Coll.?
Mandatory automatic exchange of information in the field of taxation and accounting between member countries of the EU called Country by country reporting. Multinational groups of companies (MNE Groups) provides Country-by-country Report including summary information about multinational group of companies and each member entities of the group (further only “constituent entity”). The CbC Report contains relevant information to review the correct split of tax base between particular countries and jurisdictions. It is divided into three parts. The first part contains financial details about the MNE group according to each country. In the second part is described the scope of business of the constituent entities and their tax residency. The third part includes additional information about given CbC Report.
Czech constituent entities of MNE group, i.e. Czech tax subjects, report most often a notification including their parent company, which provides CbC Report. The Czech constituent entity could also report about representing entity providing CbC Report in case the parent company hasn’t done yet.

Who is related to new duties and in which scope?
Multinational groups of companies of legal entities, whose consolidated profits are higher than 750 million Euros, i.e. roughly 20 billion CZK, for previous accounting period, submit announcement of providing CbC Report. The obligation relates also to the highest domestic parent company within multinational groups of companies. It is approximately 15 companies in the Czech Republic. The representing constituent entity can report for the entire MNE group in case the parent company comes from country where automatic exchange of information is not realized. The obligation to submit a notification relates to companies, which have obligation to submit the notification of CbC Report. Further, Czech companies which are part of MNE group which report in other member country and are not highest parent entity of this MNE group.

How and to whom?
To the Specialised Tax Office on a form for announcement and notification published in EPO app.

What are deadlines for meeting the obligations? When am I related to the duties for the first time?
The Czech companies, which are subsidiary companies within MNE group, submit the notification until 31 October 2017, in case the reported accounting period was finished until 30 September 2017. In case the fiscal year is the same as calendar year, the company is going to submit the notification until 31 December 2017 for accounting period 1 January 2017 – 31 December 2017. The announcement of CbC Report is submitted to parent company or to representing constituent entity in 12 months from finishing the reported accounting period, with given respect to previous paragraph the date is 31 October 2018 respectively 31 December 2018.

What are sanctions for infringement?
Maximum 1,5 million CZK, resp. 600 thousand CZK for infringement the notifying obligation by Czech parent company, representing Czech constituent entity or Czech constituent entity respectivelly. Subsidiary a fine up to 500 thousand CZK for infringement the obligation of storing documents or not asking the parent company for cooperation.

What to do in case the tax subject had already met the obligation before the effect of this novelization?
Financial management alerts that all notifications and registrations, which had already been reported before effect of the novelization i.e. before 19 September 2017, are not going to be dealt with, because there was no legislative background. Therefore it is necessary to submit the notification and registration again according to the prescribed way (see up).

Tax Authority (CZ)
Amendment of the law No.305/2017 changing the law No. 164/2013 Coll., on international cooperation in tax administration and on the amendment of certain related Acts (CZ)