Introduced an obligation to inform the tax authorities of the capital group to which the entity belongs

What is the Country by Country Report?

The Country by Country Report is a standardized report developed by the OECD to combat the problem of international capital groups lowering their taxable income (so-called BEPS). Its purpose is to enable tax authorities to better analyze the finances of international capital groups and, consequently, to better counteract aggressive tax optimization.

The CbCR report should be sent electronically to the Head of National Tax Administration. It is crucial that the report covers the entire capital group and not just the Polish entity. According to a draft published on May 16, 2017 by the Government Center for Legislation (the draft may still be subject to change), it includes, among others. information on revenues, profits, taxes paid, capital held and number of employees.

Who is obligated to submit a CbCR?

According to the draft legislation, such an obligation is imposed on entities that:

• are the dominant entity in an international capital group and are not a dependant entity;
• have at least one dependant entity in another country or have their headquarters or management located in a different country to the one in which they conduct activities;
• recorded consolidated revenue, in the preceding tax year, of at least Euro 750,000,000 in all countries where activities are conducted;
• are responsible for consolidating the financial statement.

What about dependant entities?

According to the new legislation every dependant entity must notify the Head of the National Tax Administration whether it fulfils the role of the parent entity, the designated or other entity submitting the CbCR, or must notify which entity in the group will be submitting the report and in which country. The required information must be provided to the Head of KAS no later than by the last day of the reporting year of the financial year designated for the group to which the entity belongs. Failure to comply may result in a fine of up to PLN 1,000,000.