The competent authorities of the US and Germany have issued a joint statement, agreeing to spontaneously exchange country-by-country reports on large multinationals while two countries continue to negotiate a final competent authority agreement on the exchange.
According to the statement, published on the IRS’s website on December 2, the US and Germany will exchange the country-by-country reports commencing on or after January 1, 2019, and before January 1, 2020. The exchange will take place pursuant to Article 26 of the US-Germany tax treaty.
Similar joint statements have been made by the two countries’ competent authorities pertaining to earlier years.
The purpose of the exchange of country-by-country reports is to give the tax authorities of both countries more data about the activities of large multinationals operating in their countries so that the authorities can assess whether there is a risk that an MNE is engaging in tax avoidance through inappropriate transfer pricing or through other means.
The competent authorities said that the assessment of these risks is “critical” and should not be postponed while the final agreement is being negotiated.
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