CbCR is upon us

Further to the developments on the level of the OECD and the EU the first deadline regarding the country-by-country reporting (“CbCR”) obligation is approaching in Hungary as well. The new statutory obligation pertains to Hungarian resident companies that were, in the fiscal year preceding the reporting fiscal year, members of a company group with a total annual consolidated group revenue exceeding EUR 750 million. The new obligation requires the companies to submit certain administrative and in certain cases financial data of their own and their group members’ operation to the Hungarian Tax Authority (“HTA”).

When submitting the necessary information to the HTA a question may arise whether – if the group related financial figures are submitted in another jurisdiction – the country in which the CbC Report will be filed would exchange the CbCR related data with Hungary.

In this regard, the countries have been implementing bi- and multilateral agreements on the exchange of information which should facilitate the collaboration among tax authorities.

The list of countries with which Hungary has qualifying competent authority agreements in effect has been published on the website of the HTA together with information on any systematic failure between Hungary and the other countries which could prevent the CbC Reports from actually being shared.

In conclusion, it may be helpful to consider beforehand the information mentioned above as the status of the agreements on the automatic exchange of information and any possible systematic failure could potentially affect the scope of information that should be reported as part of the CbCR obligation.