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Deadline For CbC Reports is Here

Deadline For CbC Reports is Here

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Affiliated enterprises have to report their related undertakings in a Country-by-Country (furthermore “CbC”) report until 31 December 2019 for the financial year of 2018. The information therein is used for high level transfer pricing examination and risk assessment. If a company fails to comply with the deadline mentioned above, it may expect a default penalty up to HUF 20 million (~ EUR 60,420) from the Hungarian Tax Authority.

In order to ensure the flow of information from large enterprises to local tax authorities and to be able to explore the structure of such companies easier – hence strengthening transparency –, the CbC report system was introduced in 2017 as a part of the new three-level transfer pricing documentation based on BEPS Action 13. This measure has been adopted by over 90 countries resulting in 2400+ bilateral relationships. Adoption of the CbC report also makes it easier for local tax authorities to gain information from parent companies or subsidiaries formed outside of the country’s territory in question. The report is only obligatory for companies who have reached an income of EUR 750 million in the financial statement of the relevant year. 

However, not every member of a multinational corporation is required to compile a CbC report, only the ultimate parent company, who has to submit such report to its competent authority of its tax residence. Other members are also required to notify the national authorities about the fact that there is another member in the multinational corporation that will compile the report. Furthermore, there is a notification obligation arising from change of information that is stored at the database of the local tax authority, which should be reported in 30 days. It is important to underline that a CbC report must be submitted every year and failing to submit the report by the deadline and paying the default penalty imposed for late submission does not exempt the company from compiling and submitting the report.

By Eszter Kamocsay-Berta, Managing partner, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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