As a quick recap, in the Netherlands the Country-by-Country Reporting (“CBCR”) requirements involve the following:
- Multinational Groups ("Groups") that generated consolidated revenues of EUR 750 million or more in the preceding year must prepare and file a CBCR, covering reporting years that started on or after January 1, 2016.
- Dutch Constituent Entities (e.g., entities and permanent establishments) that are part of such qualifying Group must file a notification with the Dutch Tax Authorities ("DTA"). This notification must specify which Constituent Entity will file the CBCR on behalf of the Group. The deadline for filing this notification is the last day of the reporting year of the Group. In the Netherlands, however, this deadline was extended for the first year to September 1, 2017. Groups with a reporting year that ends after August 31, 2017 will not have an extended deadline for this notification.
As the deadline for this local notification requirement is approaching, we would like to remind you of this compliance requirement.
For a more detailed overview of the CBCR legislation in the Netherlands, please refer to our Summary Paper.
Background on the notification deadline for CBCR purposes
Since CBCR legislation has been effective in many countries starting from January 1, 2016, the first notification deadline for Groups with a calendar reporting year was December 31, 2016. As mentioned, in the Netherlands this deadline was extended for the first year to September 1, 2017. Groups with a reporting year that ends after August 31, 2017 will not have an extended deadline for this notification.
As such, it is necessary to determine whether the Constituent Entities of your Group that are located in the Netherlands are subject to this notification requirement. The notification for CBCR purposes can be filed online on the website of the DTA, by either a representative of the Group itself or an external advisor like Baker McKenzie.
This notification requirement applies, in principle, to each and every Constituent Entity separately (i.e., also to the separate entities in case of a Fiscal Unity for Dutch corporate income tax purposes). However, if a Group has more than one Constituent Entity located in the Netherlands, only one Constituent Entity may submit the notification, and list the other Constituent Entities in the Netherlands should be attached to the notification.
Increased maximum penalties for non-compliance with CBCR requirements
In addition to the general administrative requirements applicable to Dutch taxpayers, specific penalties were recently introduced for non-compliance with CBCR requirements. These newly introduced penalties are high and are aimed at encouraging compliance. These penalties apply where the taxpayer intentionally or due to gross negligence failed to file a notification in the Netherlands and/or make available the CBCR itself. The maximum penalties for intentionally or due to gross negligence not complying with the legislation were increased to EUR 820,000 per Constituent Entity from June 5, 2017. These increased penalties are applicable to reporting years starting on or after January 1, 2016. In addition to administrative penalties, non-compliance with the documentation requirements in the Netherlands can lead to a reversal of the burden of proof from the tax authorities to the taxpayer.
- Constituent Entities in the Netherlands that are part of a Group that is subject to the CBCR requirements and that have a reporting year that ended between December 31, 2016 up to and including August 31, 2017 must file a notification to the DTA identifying the Constituent Entity within the Group that will file the CBCR for the Group on September 1, 2017 at the latest.
- Constituent Entities in the Netherlands that are part of a Group that has a reporting year that ended after August 31, 2017 must file this notification on the last day of their reporting year.