On 29 June 2016 the OECD published guidance on aspects of country by country (CbC) reporting. The guidance covers the following aspects:

• Transitional filing options for multinationals voluntarily filing in the parent jurisdiction;
• The application of CbC reporting to investment funds;
• The application of CbC reporting to partnerships; and
• The impact of exchange rate fluctuations on the agreed EUR 750 million filing threshold for multinational groups.

More detail is given below:

Transitional filing options in the parent jurisdiction

The OECD notes that some jurisdictions may need time to carry out their own legislative process to implement the CbC reporting requirements. Some jurisdictions may not be able to implement from 1 January 2016 and this means that there will be a transitional issue. They may be able to allow for voluntary filing by Ultimate Parent Companies resident in their jurisdiction. Those parent entities could therefore file in their own jurisdiction of residence from 1 January 2016. This is a form of surrogate filing (parent surrogate filing) and means that there would be no local filing obligations for that multinational group in any jurisdiction in which the multinational group has a constituent entity that would otherwise require local filing. This is subject to conditions on the appropriate law being in place, the CbC report conforming to requirements and prepared on time and appropriate notifications being given.

Investment funds

There is no general exemption for investment funds and the multinational group should follow the accounting consolidation rules to determine which investee companies form part of the multinational group. Investee companies that do not consolidate with the group are therefore not considered to be constituent entities of the group for country by country reporting.

Partnerships

Also in the case of partnerships the accounting consolidation rules should be followed to determine if the partnership is a constituent entity of the group for CbC reporting.

Where included in the report, if a partnership is not considered to be tax resident in any jurisdiction the relevant partnership information, if not attributable to a permanent establishment, should be included in the line in table 1 of the CbC report for stateless entities. An explanatory note could be included in the Notes section of the CbC report.

Impact of Exchange Rate Fluctuations

The agreed threshold for CbC reporting is group revenue of EUR 750 million. As a result of currency fluctuations a group’s turnover could be regarded as under the threshold in one country and over the threshold in another.

The OECD guidance indicates that provided that the jurisdiction of the Ultimate Parent Entity has implemented a reporting threshold that is a close equivalent of EUR 750 million in domestic currency (as at January 2015) a multinational group that complies with the local threshold should not be required to file in any other jurisdiction just because that jurisdiction is using a threshold denominated in a different currency.