All groups of multinational enterprises (MNE) are required to provide information to the tax jurisdiction in which they operate each year, and state the amount of income, profit (loss) before tax, paid and calculated corporate income tax, reported capital, accumulated (retained) profit, number of employees and tangible assets that are not money or cash equivalent, as well as the identity of each entity in the group in which it operates and business activities engaged in each entity – the so-called Country-by-Country Report (CbCR).

According to the Law on Administrative Cooperation in the Field of Taxation, CbCR reporting by countries refers to MNE groups whose total consolidated revenue in the previous tax year exceeds EUR 750 million. The ultimate parent entity is required to file the CbCR in the jurisdiction where it has established its tax residency.

If the taxpayer of the Republic of Croatia is considered the ultimate parent entity, he is obliged to file to the Croatian Tax Authorities a country-by-country report within 12 months from the last day of the tax year for which the report is filed.

Each constituent entity of the MNE group, which is a taxpayer in the Republic of Croatia (including the branch office), is obliged to file the MNE notification on its status within the MNE group, and whether the same entity is liable to file CbCR. If not, it is necessary to inform the Tax Authorities about the identity and country of tax residence of the constituent entity of the MNE group that will file the CbCR on behalf of the MNE group.

According to the notice of the Tax Authorities issued on April 11, 2022, after the notification on the identity and tax residency of the reporting entity who will file a country-by-country report is submitted to the Tax Administration, it no longer must be submitted every year. An exception is made only if the previously submitted notification contains an error or change in the status and obligation of filing the country-by-country report. From 2020, MNE notifications are submitted via the e-Porezna system.

This year, the deadline for submitting the MNE notification is May 2, 2022.

According to the Organization for Economic Co-operation and Development (OECD), the automatic exchange of country-by-country reports is also one of the measures under the Base erosion and profit shifting project (BEPS). In addition to the EU Member States, automatic country-by-country exchange will take place with third countries also, based on the Multilateral Agreement of Competent Authorities on Country Exchange.

If you want to find out which countries are on the list of signatories to the Multilateral Agreement, you can find them on the official website of the OECD. Countries with which the Republic of Croatia has in force the legal framework for the automatic exchange of CbCR is regularly updated on the official OECD website.