EU political agreement to automatically exchange transfer pricing related information of multination
Many countries have already implemented country-by-country regulations that require multinational companies to disclose detailed information on their transfer pricing policy and set up. This obligation is in particularly relevant for companies that are part of a group with a global consolidated turnover of at least € 750 million.
On March 8, the EU Member States reached political agreement on the automatic exchange of this transfer pricing information between EU member states. The new rules will apply to multinational companies which operate cross-border in the EU. The objective is that all Member States will have the information they need to protect their tax bases and to effectively address companies that try to escape paying their fair share of taxes.
Under the rules, multinational groups will have to provide certain, tax-related information on an annual basis for each tax jurisdiction in which they do business. The information includes: the amount of revenue, the profit or loss before income tax, the income tax paid and accrued, the number of employees, the stated capital, the retained earnings and the tangible assets of the group. The parent company will provide this information to the tax authorities of its country of establishment in Europe, where applicable; otherwise, EU-based subsidiaries will be obliged to request that information from their parent company.
The automatic exchange of information will provide tax authorities with valuable information and most likely will increase the number of tax audits. Therefore it will be more important to check for companies whether the transfer policy and documentation is still up to date and complete in order to avoid misinterpretation and discussions from the side of local tax authorities.
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