Global Tax Alert (News from Transfer Pricing) | 21 November 2016

Dutch Government publishes Decree extending deadline for filing first notifications under Country-by-Country reporting rules

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Executive summary

On 21 November 2016, the Dutch Secretary of Finance published a Decree1 by which the date for Dutch constituent entities to comply with the first notification requirement under the Dutch Country-by-Country (CbC) reporting rules has been extended.

Based on the Dutch Corporate Income Tax Act (CITA), Dutch constituent entities of a multinational enterprise (MNE) group must notify the Dutch tax authorities about the identity and tax residence of the entity filing the CbC report by the last day of their reporting fiscal year. By means of the Decree, the deadline for filing the notification for the first CbC report has been extended to 1 September 2017. If the reporting fiscal year ends after 31 August 2017, the general notification rule will apply and the notification should be submitted by the last day of the reporting fiscal year.

Additionally, the Decree states that:

  • A software tool has been developed to submit these notifications and that it is intended to make the use of this software tool mandatory
  • it is intended to officially confirm that the Dutch tax authorities will accept CbC reports that have been filed in other jurisdictions on a voluntary basis (parent surrogate filing) in line with guidance issued by the Organisation for Economic Co-operation and Development (OECD)

Detailed discussion

As a part of the implementation of Action 13 of the OECD/G20’s Base Erosion and Profit Shifting (BEPS) Action Plan, the Netherlands has introduced CbC reporting requirements for qualifying MNE groups for reporting fiscal years starting on or after 1 January 2016.

Dutch tax resident constituent entities of an MNE group are required to notify the Dutch tax authorities – no later than the last day of the reporting fiscal year - whether they are the reporting entity, or, if this is not the case, which constituent entity of the MNE group will be the reporting entity (article 29d CITA). A reporting entity can be the Ultimate Parent Entity (UPE), the Surrogate Parent Entity or another constituent entity of the MNE.

In the Decree, the Dutch State Secretary, however, approves that:

  • A Dutch tax resident constituent entity can notify the Dutch tax inspector for the first time whether it is the UPE or the Surrogate Parent Entity by 1 September 2017
  • If the Dutch tax resident constituent entity is not the UPE nor the Surrogate Parent Entity, that constituent entity can notify the Dutch tax inspector for the first time about the identity and tax residence of the entity filing the CBC report by 1 September 2017

This approval does not apply if the reporting fiscal year of the MNE group ends after 31 August 2017.

Background of the extension

The Dutch Tax Authorities intend to exchange CbC reports with other jurisdictions based on the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement on the Exchange of CbC Reports (MCAA). Approximately 49 countries have signed the MCAA at this point. In order for the MCAA to enter into force and to actually establish automatic exchange of information between countries, a country must inform the OECD pursuant to article 8 of the MCAA. Through this, a participating country confirms that it has introduced CbC rules in its domestic laws and provides a list of the countries with which it will exchange CbC reports. The automatic exchange of CbC reports will take place between two countries after they have submitted matching confirmations with the OECD.

The Dutch State Secretary of Finance expects that it may take until August 2017 to have clarity on this matching process for reporting fiscal years starting on or after 1 January 2016. Dutch tax resident constituent entities with a fiscal reporting year ending before 1 September 2017 will therefore not have definitive certainty with regard to which countries the Netherlands can exchange CbC reports with on the date that they will ultimately have to notify the Dutch tax authorities of the identity and tax residence of the reporting entity.

In view of the above and to avoid later corrections and changes to reporting entities, the Dutch State Secretary of Finance has extended the deadline for the filing of such notifications by Dutch tax resident constituent entities to 1 September 2017. This approval does not apply if the reporting fiscal year of the MNE group ends after 31 August 2017.

Notification software tool and voluntary filing

In addition to the extension for the filing of notifications under the Dutch CbC rules, the Dutch State Secretary of Finance included two additional announcements in the Decree.

The Dutch tax authorities have developed a software tool that can be used to submit the above described notification. It is intended to make the use of this software tool mandatory for notification by Dutch tax resident entities.

Furthermore, it is intended to officially confirm that the Dutch Tax Authorities will accept CbC reports that have been filed in other jurisdictions on a voluntary basis (parent surrogate filing) in line with the OECD Guidance on the Implementation of Country-by-Country Reporting, updated in October 2016.2 In this guidance, the OECD addresses situations in which countries have not implemented CbC rules for reporting years starting on or after 1 January 2016.3 To avoid that constituent entities of an MNE group with a UPE tax resident in such countries will have to fall back to the ”local filing” of a CbC report, the OECD recommends countries to accept, under certain conditions, CbC reports filed on a voluntary basis in the jurisdiction of the UPE for CbC reports related to the reporting fiscal year starting on or after 1 January 2016 (i.e., the first CbC report).

Implications

The Decree extends the notification requirements for Dutch constituent entities of an MNE group to 1 September 2017. At the same time, MNE groups need to be aware that requirements in other jurisdictions may require notifications in the respective jurisdictions by an earlier deadline, typically by 31 December 2016.

Endnotes

1. Decree of the State Secretary of Finance dated 15 November 2016, DGBel 2016-0000184128M.

2. OECD (2016), Guidance on the Implementation of Country-by-Country Reporting – BEPS Action 13, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris, www.oecd.org/tax/guidance-on-the-implementation-of-country-by-country-reporting-beps-action-13.pdf.

3. For additional background information, also see the EY Global Tax Alert, OECD releases additional Guidance on implementation of Country-by-Country reporting, dated 29 June 2016.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Belastingadviseurs LLP, International Tax Services, Amsterdam
  • Danny Oosterhoff
    +31 88 407 1007
    danny.oosterhoff@nl.ey.com
  • Dirk Stalenhoef
    +31 88 407 8505
    dirk.stalenhoef@nl.ey.com
Ernst & Young Belastingadviseurs LLP, International Tax Services, Rotterdam
  • Ronald van den Brekel
    +31 88 407 9016
    ronald.van.den.brekel@nl.ey.com
  • Michiel Swets
    +31 88 407 8517
    michiel.swets@nl.ey.com
Ernst & Young LLP, Belgium-Netherlands Tax Desk, New York
  • Dirk-Jan Sloof
    +1 212 773 1363
    dirkjan.sloof@ey.com
Ernst & Young LLP, Belgium-Netherlands Tax Desk, Chicago
  • Erwin Sieders
    +1 312 879 2338
    erwin.sieders@ey.com
Ernst & Young LLP, Belgium-Netherlands Tax Desk, San Jose
  • Sebastiaan Boers
    +1 408 918 5877
    sebastiaan.boers1@ey.com
Ernst & Young LLP, Belgium-Netherlands Tax Desk, Beijing
  • Yee Man Tang
    +86 10 5815 3765
    yeeman.tang@cn.ey.com
Ernst & Young LLP, Belgium-Netherlands Tax Desk, Singapore
  • Barbara Voskamp
    +65 630 98063
    barbara.voskamp@sg.ey.com
Ernst & Young LLP, Belgium-Netherlands Tax Desk, Sydney
  • Yvette Gorter-Leeuwerik
    +61 292 485 820
    yvette.gorter@au.ey.com
Ernst & Young LLP, Belgium-Netherlands Tax Desk, London
  • Jelger Buitelaar
    +44 20 795 15648
    jbuitelaar@uk.ey.com

EYG no. 04006-161Gbl