An amendment of the Act on International Administrative Cooperation (“the Act”) was published on 19 September 2017. The amendment of the Act implements the obligations regarding the Country-by-Country Reporting in the Czech Republic.
Country-by-Country Report due by 31 December 2017
The new Country-by-Country Reporting requirements are to be implemented for fiscal years beginning on or after 1 January 2016 and apply to multinational enterprises (“MNE”) with annual consolidated group revenue equal to or exceeding EUR 750 million. Ultimate Parent Company of the MNEs Group will be obliged to file the Country-by-Country Report in the jurisdiction of its tax residence. The Country-by-Country Report should contain information for each company in the MNE Group such as revenues from transactions with associated enterprises and from transactions with independent parties, profit (loss) before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, tangible assets, etc.
The Czech entity of the MNE Group shall file the Country-by-Country Report with respect to the reporting fiscal year of the MNE group, although the Czech entity is not the
Ultimate Parent Entity, if the following criteria are satisfied;
- the Ultimate Parent Entity of the MNE Group is not obligated to file a Country-by-Country Report in its jurisdiction of tax residence; or,
- the jurisdiction in which the Ultimate Parent Entity is a resident for tax purposes does not exchange the Country-by-Country Report for the reported fiscal year; or,
- there has been a systemic failure of the jurisdiction of tax residence of the Ultimate Parent Entity that has been publically notified by the Ministry of Finance.
Nevertheless, the Czech entity shall not file the Country-by-Country report on behalf of the Ultimate Parent Entity as above if another EU entity of the MNE Group has been appointed by the MNE Group as a sole substitute for the Ultimate Parent Entity (i.e. Surrogate Parent Entity) and when another conditions stated in the Act are fulfilled.
The Country-by-Country Report required by this Act shall be filed no later than 12 months after the last day of the reporting fiscal year of the MNE Group, i.e. by 31 December 2017 for the fiscal year 2016. The Country-by-Country Report has to be filed with the so-called Specialized Tax Office.
The Surrogate Parent Entity is obliged to ask the Ultimate Parent Entity for co-operation with obtaining all necessary information for preparing the Country-by-Country Report. If the Czech entity as a Surrogate Parent Entity does not fulfill its duties with respect to the filing of the Country-by-Country Report, the penalty up to CZK 1,500,000 might be assessed.
Notification due by 31 October 2017
Provided the Czech entity is not obliged to prepare the Country-by-Country Report, it has to file so called Notification, in which it specifies which entity of the MNE Group will file the Country-by-Country Report and in which jurisdiction. The Czech entity will file the Notification with the Specialized Tax Office regardless which tax office is usually competent for it.
The Notification for the first reporting fiscal year is due by the end of the reporting fiscal year. The Notification for all reporting fiscal years ending by 31 October 2017 is due by 31 October 2017. Any changes of information declared in the Notification have to be notified within 15 days after the change occurs. If the Notification is not submitted according to the Act, the penalty up to CZK 500,000 might be assessed.
The Country-by-Country Report and the Notification will be completed in a form published by the Ministry of Finance and have to be filed electronically (e.g. electronic signature, company’s databox).