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U.S. Signs CbC Exchange Arrangement with Germany — Orbitax Tax News & Alerts

The U.S. IRS has published the competent authority arrangement on the exchange of Country-by-Country (CbC) Reports with Germany. According to the IRS CbC Reporting Jurisdiction Status Table, the arrangement was signed on 24 March 2023, although the operative date is "To be determined".

The arrangement provides that pursuant to the provisions of Article 26 (Exchange of Information and Administrative Assistance) of the 1989 U.S.-Germany tax treaty, each competent authority intends to automatically exchange CbC reports received from each reporting entity resident for tax purposes in its jurisdiction, provided that, on the basis of the information provided in the CbC report, one or more constituent entities of the MNE group of the reporting entity are resident for tax purposes in the jurisdiction of the other competent authority, or are subject to tax with respect to the business carried out through a permanent establishment situated in the other jurisdiction. CbC reports are intended to be exchanged with respect to fiscal years of MNE groups commencing on or after 1 January 2021, with such CbC report to be exchanged as soon as possible and no later than 15 months after the last day of the fiscal year of the MNE group to which a CbC report relates. However, the competent authorities have until three months after the arrangement is operative to first exchange reports.

Note that Germany and the U.S. earlier signed an agreement for the exchange of CbC reports. The competent authorities previously issued annual joint statements under which the U.S. has agreed to the spontaneous exchange of CbC reports with Germany so that U.S. MNEs may avoid local filing obligations in Germany.