With a total of 15 action points, the OECD's Base Erosion
and Profit Shifting (BEPS) project aims at fighting the artificial
shift of profits from jurisdictions with high taxes to tax havens,
often as a part of an entirely legal strategy used by MNEs.
The BEPS Action 13 (Transfer Pricing Documentation and
Country-by-Country Reporting) imposes to multinationals the
so-called Country-by-Country (CbC) Report by which MNEs must
annually report certain information about their business. The CbC
is filed in every tax jurisdiction in which a given MNE
Action 13 has now been fully implemented in Croatia, with the
full legal framework in place. The Act on Administrative
Cooperation in the Field of Taxation, in force as of January 1,
2017, as a separate section of the old General Tax Act, adopts and
implements various EU Directives in the area of administrative
support and automatic exchange of information between EU member
states. Based on this Act, the Ordinance on Automatic Exchange of
Information in the Field of Taxation was issued and entered into
force on March 9, 2017.
In late march 2017, the Croatian Tax Office also published the
CbC reporting requirements which are applicable to constituent
entities of Croatian-resident MNE groups with consolidated revenue
exceeding EUR 750 million as of January 1, 2015.
The first automatic exchange of information for Croatia shall be
conducted for the fiscal year 2016, with the first notification
deadline set at April 30, 2017. What follows is a discussion of the
details of the notifications and reports required.
" Each Constituent Entity of an
MNE resident in Croatia shall inform the Croatian Tax Office
whether the Ultimate Parent Entity, a Surrogate Parent Entity or a
Constituent Entity (as defined in the Ordinance), has the
obligation to file the CbC Report on behalf of the MNE in question.
The deadline for delivery of such notification is
four months after the fiscal year end. Thus, for the fiscal year
which ended on December 31, 2016, the deadline is April 30,
" Each Constituent Entity of an
MNE resident in Croatia which is neither the Ultimate Parent
Entity, a Surrogate Parent Entity or a Constituent Entity, has the
obligation to inform the Croatian Tax Office on the identity and
tax residency (name of the country) of the entity which will file
the CbC Report on behalf of the MNE in question. The deadline is
the same as above.
" The Ultimate Parent Entity of
an MNE or its Surrogate Parent Entity has the obligation to file to
the Croatian Tax Office the first CbC Report for
the fiscal year that started on January 1, 2016 or any time after
this date, within 12 months from the fiscal year end. Thus, for the
fiscal year ended on December 31, 2016, the deadline is
December 31, 2017. By virtue of exception, a
Constituent Entity meeting the conditions set out in article 102 of
the Ordinance shall file its first CbC Report for the fiscal year
that started on January 1, 2017 or any time after this date, within
12 months from the fiscal year end.
Affected MNEs should note that the notifications discussed above
are to be filed to the Tax Administration's Central Office,
specifically to the Department for Normative Affairs and
International Cooperation. The CbC reports due at the end of the
year will be submitted electronically, with detailed instructions
pending publication by the tax authorities.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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