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If under Step 1 you have established that the EU Directive (or the OECD Model Rules) applies to the group for a fiscal year it means that one or more top-up tax information returns will have to be filed. Since this might help you in the next steps, you might consider having a look at the provisions arranging the filing obligations as laid down in Article 42 of the proposed Directive. The reason here for is that having an understanding of what information has to be included in the top-up tax information return(s) to be filed might help you with efficiently gathering the necessary information that you need for the top-up tax information return(s) that have to be filed for the fiscal year regarding the in-scope constituent entities that you will identify in Step 3.

Which constituent entity is obliged to file a top-up tax information return?

In principle a constituent entity located in an EU Member State shall file a top-up tax information return with its tax administration. However, such return may be filed by a designated local entity on behalf of the constituent entity/entities.

 

By way of derogation of the aforementioned, a constituent entity shall not be required to file a top-up tax information return with its tax administration if such a return has been filed, in accordance with the requirements set out in Article 42, Paragraph 5, by:

(a) the ultimate parent entity located in a jurisdiction that has a qualifying competent authority agreement in effect with the Member State in which the constituent entity is located; or

(b) the designated filing entity located in a jurisdiction that has a qualifying competent authority agreement in effect with the Member State in which the constituent entity is located.

 

In such cases the constituent entity, or the designated local entity on its behalf, shall notify its tax administration of the identity of the entity that is filing the top-up tax information return as well as the jurisdiction in which it is located.

 

 

Information to be included in the top-up tax information return

The top-up tax information return shall include the following information with respect to the MNE group:

(a) identification of the constituent entities, including their tax identification numbers, if any, the jurisdiction in which they are located and their status under the rules of this Directive;

(b) information on the overall corporate structure of the MNE group, including the controlling interests in the constituent entities held by other constituent entities;

(c) the information that is necessary in order to compute:

(i)    the effective tax rate for each jurisdiction and the top-up tax of each constituent entity;

(ii)   the top-up tax of a member of a joint-venture group;

(iii)  the allocation of top-up tax under the income inclusion rule and the UTPR top-up tax amount to each jurisdiction; and

(d) a record of the elections made in accordance with the relevant provisions of the proposed Directive.

 

By way of derogation of the aforementioned, where a constituent entity is located in a Member State with an ultimate parent entity located in a third country jurisdiction that applies rules which have been assessed as equivalent to the rules of this Directive pursuant to Article 51 (“Assessment of equivalence”), the constituent entity or the designated local entity shall file a top-up tax information return containing the following information:

(a) all information that is necessary for the application of Article 7 (“Partially-owned parent entity in the Union”), including:

(i)    identification of all the constituent entities in which a partially-owned parent entity located in a Member State holds, directly or indirectly, an ownership interest at any time during the fiscal year and the structure of such ownership interests;

(ii)   all information that is necessary to compute the effective tax rate of the jurisdictions in which a partially-owned parent entity located in a Member State holds constituent entities identified under (i) and the top-up tax due; and

(iii)  all information that is relevant for that purpose in accordance with Articles 8, 9 or 10 (see Step 8);

(b) all information that is necessary for the application of Article 12 (see Step 8), including:

(i)    identification of all the constituent entities located in the ultimate parent entity jurisdiction and the structure of such ownership interests;

(ii)   all information that is necessary in order to compute the effective tax rate of the ultimate parent entity’s jurisdiction and of the top-up tax due; and

(iii)  all information necessary for the allocation of such top-up tax based on the UTPR allocation formula set out in Article 13 (see Step 8).

 

Filing deadline

The top-up tax information return and any relevant notifications shall be filed with the tax administration of the Member State in which the constituent entity is located no later than 15 months after the last day of the fiscal year.

 

Notwithstanding the aforementioned, the top-up tax information return and the notifications shall be filed with the tax administration of the Member States no later than 18 months after the last day of the fiscal year that is the transitional year.

 

 

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