Recent Law 4490/2017 ratified the Multilateral Competent Authority Agreement (MCAA) on the Exchange of Country-by-Country Reports.
This Agreement established the framework for the annual automatic exchange of Country-by-Country Reports of the MNE Groups between the Authorities of the signatory countries.
THE COUNTRY-BY-COUNTRY REPORT
MNE Groups liable to file the Country – by – Country Report
The obligation for filing a Country – by – Country Report refers to MNE Groups with a total consolidated group revenue exceeding 750.000.000 euro during the Fiscal Year immediately preceding the Reporting Fiscal Year.
[As Reporting Fiscal Year is considered the year the financial data of which are included in the Report].
Reporting Entity and Competent Authority
The Country – by – Country report is filed by the Reporting Entity, i.e. the Ultimate Parent Entity (UPC) of the Group (the entity of the Group which is required to prepare Consolidated Financial Statements) with the competent authority of its Tax Residency Country.
Under certain conditions, the filing of the Report may be assigned to another entity of the Group, the Surrogate Parent Entity.
Filing by the subsidiary “Constituent Entity”
A Greek tax resident Constituent Entity, not being the UPC (Ultimate Parent Company) of a qualifying MNE group, should file a Country – by – Country Report in Greece, if any of the following conditions is met::
- The UPC of the Group is not liable to file a Country – by – Country Report in the Jurisdiction of its tax residence.
- The Jurisdiction in which the UPC is a tax resident, has signed an International Agreement in which Greece is a Contracting Member, but has not signed a Special Competent Authority Agreement in which Greece is a Contracting Member at the time the Country – by – Country report should be submitted for the reporting fiscal year.
- The Greek Tax Authorities have notified the Constituent Entity with Greek tax residence about the systemic incompliance of the Jurisdiction of the UPC’s tax residence.
Nevertheless, the Constituent Entity is not obliged to file the Country – by – Country Report (even if the above conditions are met) if the MNE Group has made available the Country – by – Country Report through the Surrogate Parent Entity, which files the said Country – by – Country Report to the Tax Authorities of the Jurisdiction of the tax Residence and fulfills the following conditions:
- The Tax Residence Jurisdiction of the Surrogate Parent Entity requires the submission of the Country – by – Country Report,
- The Tax Residence Jurisdiction of the Surrogate Parent Entity has in force a Special Competent Authority Agreement, in which Greece is a Contracting Member at the time of submission of the Country – by – Country Report
- The Tax Residence Jurisdiction of the Surrogate Parent Entity has not communicated to the Greek Tax Authorities any systemic weakness.
- The Tax Residence Jurisdiction of the Surrogate Parent Entity has been informed by the Constituent Entity with tax residence in its Jurisdiction, that it constitutes the Surrogate Parent Entity.
- The Greek subsidiary/Constituent Entity has notified the Greek Tax Authorities (see below).
Deadline for filing the Country – by Country Report
The Country – by – Country Report is filed within twelve (12) months from the last day of the Reporting Fiscal Year of the MNE Group.
Namely, for the fiscal year ending 31/12/2016, the Report is filled by 31/12/2017.
Note: This obligation refers to FY commencing from 1/1/2016 and onwards.
Mandatory content of the Country – by – Country Report
The Country – by – Country Report includes the following information regarding the MNE Group:
- aggregated information regarding the amount of revenue, the income profits (loss), the income tax paid, the income tax due, the share capital, the accumulated profits, the number of employees, the tangible assets except cash and cash equivalents, in every jurisdiction, where the MNE Group operates,
- an identification document of each Constituent Entity of the MNE Group, that defines the jurisdiction in which the Constituent Entity has its tax residence and in case it differs from the jurisdiction of the tax residence, the Jurisdiction under the legislation of which the said Constituent Entity operates, as well as the nature of the main business activity/activities of this Constituent Entity.
Communication of the Report
The Competent Authority in each country receiving the Report, communicates it through the automatic exchange of information to all states where, on the basis of the information in the Report, one or more Constituent Entities of the MNE Group are either resident for tax purposes or subject to tax with respect to the business carried out through a permanent establishment.
The communication takes place within fifteen (15) months from the last day of the Fiscal Year of the MNE Group, to which the Country – by – Country Report relates.
Exceptionally, the first Country – by – Country Report shall be communicated and shall take place within eighteen (18) months from the last day of that Fiscal Year.
Collaboration on Compliance and Enforcement
A Competent Authority will notify the other Competent Authority when the first-mentioned Competent Authority has reason to believe, with respect to a Reporting Entity that is resident for tax purposes in the jurisdiction of the other Competent Authority, that an error may have led to incorrect or incomplete information reporting or that there is non-compliance of a Reporting Entity with respect to its obligation to file a Country – by – Country Report. The notified Competent Authority will take appropriate measures available under its domestic law to address the errors or non-compliance described in the notice.
In case of non-submission of the Country – by – Country Report from the Greek Ultimate Parent Entity of the MNE Group, a penalty of 20.000 euro is imposed, whilst in case of late submission or submission of inaccurate information, the penalty amounts to 10.000 euro.
Notification from the Greek Constituent Entity
The Constituent Entity (subsidiary or permanent establishment) of the MNE Group, which is a tax resident of Greece, provides notification to the Greek Tax Authorities:
- Whether it is the Reporting Entity of the Group, responsible for filing the Report, or (if this is not the case)
- Regarding the identity and the tax residence of the Reporting Entity
The above notification should be effected at the latest until the last day of the fiscal year for the submission of the report of the MNE Group.
Especially for the first year of implementation, the deadline is extended until the last day for the submission of the Country-by-Country reports.
Consequently, for the fiscal year ending on 31/12/2016 by 31/12/2017. The same deadline applies for the fiscal year ending on 31/12/2017.
This Agreement will come into effect between two Competent Authorities on the later of the following dates: i) the date on which the second of the two Competent Authorities has provided notification to the Co-ordinating Body Secretariat and ii) the date on which the Convention has entered into force and is in effect for both Jurisdictions.
Issuance of Ministerial Decisions
A Decision of the Minister of Finance to be issued shall define the list with the Jurisdiction of the Competent Authorities of the MCAA, with which Greece intends to implement the said MCAA.
A similar decision shall determine the dates of entry into force of the MCAA on a bilateral basis for each of the Jurisdictions of the Competent Authorities included in the above list, as well as the procedure for filing the Reports and any other technical matters.
AGREEMENT BETWEEN THE HELLENIC REPUBLIC AND THE UNITED STATES OF AMERICA
Recent Law 4493/2017 ratified the Agreement between the Hellenic Republic and the United States of America regarding the implementation of the Law for International Tax Compliance through mutual assistance in tax matters, known as Foreign Account Tax Compliance Act (FATCA).