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Irish revenue releases updated guidance on country-by-country reporting including details regarding notification requirements 

New update on 13 December 2016:

The Irish Revenue updated their guidance document on Country-by-Country Reporting (“CbCR”) on 9 December 2016. The main changes from the last update on 13 October 2016 (which is discussed below) are as follows:

  • Question 26 clarifies that where there is more than one Irish resident constituent entity in a group, one entity may be nominated to notify on behalf of other Irish resident constituent entities. This nomination option is only available where the secondary reporting mechanism does not take place; i.e. local filing of a CbCR. In effect, the nomination option can only be used where the CbCR for the group is filed by an ultimate parent or appointed surrogate parent.
  • The Irish Revenue acknowledged in Question 27 that at the time the Irish constituent entity of a group provides notification, the identity of the group company that is the reporting entity may not be known. This can occur for a number of reasons including where a jurisdiction has not yet formally introduced CbCR or the relevant competent authority agreement is not yet in place. As a transitional arrangement, the Irish Revenue will allow Irish resident constituent entities to provide notification based upon a preliminary assessment of the identity and tax residence of the reporting entity for the group. To the extent that this identity subsequently changes, a corrected notification can be made.
  • Some minor amendments are included in Appendix III which contains the step-by-step guide to providing notification by companies or their agents on the Revenue Online System (“ROS”) platform. The main changes of note are:

- Corrected guidance at 3.1.8 where a domestic Irish constituent entity is the reporting entity for CbCR purposes and inclusion of appropriate radio buttons on ROS;
- When an agent is registering a new reporting entity and reporting obligation on ROS, clarification at 2.1.5 and 2.2.7 that the registration date is the current date and not another date such as the year end of the entity for CbCR purposes; and
- Details of a new Irish Revenue e-mail address for queries pertaining CbCR notification procedure can be made.

The updated Irish Revenue guide can be found here.

On 13 October, Irish Revenue released updated guidance on Country-by-Country Reporting (“CbCR”), including a step-by-step guide on notification requirements.

Background

Ireland has introduced CbCR legislation and regulations effective for accounting periods commencing on or after 1 January 2016.

Under the new provisions, an Irish-resident ultimate parent entity of a multinational group (broadly, one with annual consolidated revenue in excess of €750 million in the immediate preceding accounting period) will be required to file a CbCR with Irish Revenue. The Irish legislative provisions provide for a secondary filing mechanism, under which a multinational group can designate an Irish-resident constituent entity of the group to act as a “surrogate parent” entity and file a CbCR with Irish Revenue on behalf of the group. Further, if it is not possible for the ultimate parent entity or a surrogate parent entity to file a CbCR, there will be a requirement for a local country filing with Irish Revenue – known as “an equivalent CbCR”.  

Updated Irish Revenue guidance 

The updated guidance includes details on notification requirements for CbCR purposes. The guidance outlines which entities must notify Irish Revenue. Notification is to be made via the Revenue Online Service (“ROS”) and Appendix III of the guide provides detailed, step-by-step instructions on notification. Notification is required on an annual basis with the first notification requirement by 31 December 2016 for accounting periods ending on that date.

The following table outlines details of the notification requirements and CbCR filing for various classifications of constituent entities in Ireland.

Status of Irish Resident Constituent Entity

Information required

Notification deadline to Irish Revenue

CbCR or local filing deadline with Irish Revenue

Ultimate Parent of multinational group is an Irish entity.

Notification that the company is the Ultimate Parent entity of a multinational group for the relevant reporting period.

On or before the end of the relevant reporting period for the group (e.g. notification will be required to be made on or before 31 December 2016, for the 31 December 2016 financial year) via ROS.

A CbCR is required to be filed with Irish Revenue within 12 months from the end of the accounting period (e.g. 31 December 2017, for the 31 December 2016 financial year). Report is shared with other tax authorities via information exchange protocols.

Irish entity is appointed Surrogate Parent of multinational group

Notification that the company is an appointed Surrogate Parent entity of a multinational group for the relevant reporting period.

On or before the end of the relevant reporting period for the group. (e.g. notification will be required to be made on or before 31 December 2016, for the 31 December 2016 financial year) via ROS.

A CbCR is required to be filed with Irish Revenue within 12 months from the end of the accounting period (e.g. 31 December 2017, for the 31 December 2016 financial year). Report is shared with other tax authorities via information exchange protocols.

Neither Ultimate Parent nor Appointed Surrogate Parent but a local Equivalent CbCR filing is required.

Notification that the company is an Irish constituent entity of a multinational group and is a reporting entity for CbCR purposes.

On or before the end of the relevant reporting period for the group (e.g. notification will be required to be made on or before 31 December 2016, for the 31 December 2016 financial year) via ROS.

An equivalent local report is required to be filed with Irish Revenue within 12 months from the end of the accounting period (e.g. 31 December 2017, for the 31 December 2016 financial year). It should be noted that an Equivalent CbCR report does not get exchanged with other tax authorities.

None of the above (i.e. a foreign Ultimate Parent or Surrogate Parent is filing on behalf of the group in another jurisdiction).

The identity and jurisdiction of tax residence of the relevant reporting entity for the multinational group.

On or before the end of the relevant reporting period for the group (e.g. notification will be required to be made on or before 31 December 2016, for the 31 December 2016 financial year) via ROS.

CbCR gets shared with Irish Revenue automatically via information exchange protocols.

To the extent that there is more than one domestic Irish constituent entity for CbCR purposes, the group may nominate one Irish entity to make notification on behalf of all other Irish constituent entities on ROS. Irish Revenue also allows an Irish tax-resident ultimate parent or surrogate parent entity to provide notification on behalf of all Irish domestic constituent entities.

Other points to note from the guidance issued include:

  • Guidance is included for scenarios where an ultimate parent entity of a group files a CbCR on a voluntary basis (e.g. filing in the U.S. for periods commencing 1 January 2016). Irish Revenue have confirmed, subject to satisfying a number of conditions, that Irish constituent entities will not be required to file an equivalent CbCR.
  • Where an equivalent CbCR is to be filed, Irish Revenue have stated that the Irish entity is best placed to determine what information it can provide in the equivalent report.  
  • Guidance on reporting for investment funds. Irish Revenue reiterate the guidance provided by the OECD in August 2016 that the content of the CbCR is dependent on the relevant accounting treatment applied.  
  • Confirmation by Irish Revenue that the data contained in a CbCR will not be used in isolation to make adjustments to income of a taxpayer.

Comments

The updated guidance provided by Irish Revenue is a timely reminder for affected companies that notification requirements for CbCR purposes is approaching for groups with a December 2016 year end. Companies should also be aware that other jurisdictions will also have separate notification requirements in place, so it is important to consider these requirements as well. 

With just over 12 months until the first filing of CbCRs at the end of 2017, companies need to ensure a plan is in place to readily collate CbCR data to compile the first reports. Companies are also advised to undertake an analysis of (and fully understand) the CbCR output to consider how it may be interpreted by tax authorities. This analysis should be linked to a group’s transfer pricing documentation strategy (Masterfile and Local file under Action 13 of the OECD BEPS project)  so that the documentation provides support for the CbCR data filed and is sufficiently robust to withstand tax authority challenge. 

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