On 31th of October 2017, the Executive Director of the NRA with an official Order has set clear rules on Country-by-Country Reporting for companies belonging to multinational groups of companies.
What is Country-by-Country Reporting:
Country-by-Country Reporting (CbCR) is more than just another compliance burden. The CbCR therefore refers to tax planning strategies used by multinational enterprises and provides a template for multinational enterprises (MNEs) to report annually and for each tax jurisdiction in which they do business the information set out therein. This report is called the Country-by-Country (CbC) Report.
Country-by-Country Reporting form will allow to compare the volume of operations, taxable income and tax paid across the countries.
Which companies will be affected?
The new Regulation (EC) No 881/2004 into the Bulgarian Tax-Insurance Procedure Code will apply to multinational groups (“Groups”). You need to take steps in compliance with the new rules if your company is part of a multinational group of companies for which one of the following is true:
• The Mother company is in Bulgaria and the Group has consolidated revenue of over 51 million euro for the year preceding the reporting fiscal year
• The Mother company is in another country and the group has consolidated revenue of over 750 million euro for the year preceding the reporting fiscal year.
What кind of information will be provided?
The CbC Reporting will contain data for all companies or places of business Group activity and description of the activity as well as summarized financial information such as the amount of the revenue, profit/loss before the taxation, CIT, etc. for each jurisdiction in which the Group performs an activity.
Deadlines for reporting:
The CbC report should be submitted to the National Revenue Agency (NRA) within 12 months of the end of the reporting tax year for the Group. In addition to the obligation to report for each tax year, there is an obligation for the companies who are submitting the report to notify the Administration. The notification is also submitted electronically.
Penalty payments will impose on those companies who do not fulfill the obligation to submit the report, notify or provide incomplete information.
The purpose of the CbC Reporting:
The main objectives of thе new Regulation (EC) No 881/2004 is to enhance the tax transparency between the international companies and the Administration. Providing this information will allow the Bulgarian revenue administration to gain a more complete and clear picture of the scale of international companies based in Bulgaria. Last but not least, the CbC Reporting will aid tax administrators in assessing transfer pricing and other BEPS-related risks.
In case you recognise your company in any of the above categories, we would be happy to assist you in identifying and submitting the necessary declarations in front of the Bulgarian tax authorities within the statutory term (by 31 of December 2017).
We hope you find this information useful. In case of need we would be happy to assist you in submitting the necessary information before the tax authorities.