Form 8975 Instructions for Country-by-Country Reporting

Form 8975 instructions apply to the ultimate parent of a U.S. multinational group with $850 million or more in consolidated revenue in the preceding reporting period: you complete a two-part cover sheet identifying the filer, attach one Schedule A for each tax jurisdiction where the group operates (including the United States), and file the package as an attachment to the parent’s income tax return by that return’s due date, including extensions.

Who Has to File

The filing obligation sits with the ultimate parent entity (UPE) of a U.S. MNE group when the group’s revenue for the preceding reporting period was $850 million or more.¹ Revenue is measured using the UPE’s consolidated financial statements under whatever accounting principles the UPE uses for its financial reporting. If the group’s revenue was below $850 million in the preceding period, there is no filing obligation for the current tax year.

A U.S. MNE group is a set of business entities that includes at least one entity organized or tax-resident outside the United States and whose accounts consolidate under U.S. GAAP (or would consolidate if the UPE were publicly traded). The UPE is the U.S. business entity at the top of that chain.² Governmental entities, international organizations, and certain retirement funds fall outside the definition even if they would otherwise clear the threshold.

The reporting period is generally the 12-month period covered by the UPE’s applicable financial statement that ends with or within the UPE’s tax year. If the UPE does not prepare an annual financial statement, the reporting period is the 12-month period ending on the last day of its tax year.²

Only one U.S. entity files for the whole group. If a U.S. territory UPE controls a U.S. business entity, it can designate that U.S. entity to file on its behalf.

How the Package Fits Together

Form 8975 itself is a two-page cover sheet identifying the filer. The financial data lives on Schedules A, and you attach one Schedule A for every tax jurisdiction where the group has a constituent entity. That includes the United States, so every filer submits at least two Schedules A.² A group with constituent entities in 30 jurisdictions attaches 30 Schedules A.

A constituent entity is any separate business entity within the group, plus any permanent establishment that prepares its own financial statements for tax, regulatory, or internal management purposes. A permanent establishment generally means a branch or fixed place of business treated as such under an applicable income tax treaty, or one that is separately liable to tax in its jurisdiction. Foreign corporations and foreign partnerships for which information is not otherwise required under Section 6038(a), and their permanent establishments, are excluded from the constituent entity definition.³

Completing Form 8975

Header

At the top of the form, enter the reporting period you are filing for and the total number of Schedules A attached. If this is an amended report, check the amended-report box.

Part I — Identification of Filer

Line 1a: The reporting entity’s complete legal name.
Line 1b: Reporting role code. Enter ULT if you are the ultimate parent entity, or SUR if you are a U.S. business entity designated to file on behalf of a U.S. territory UPE.
Line 1c: Employer identification number.
Lines 2 and 3a–3c: Legal address, including suite or unit number. For a foreign address, follow the country’s postal code format and spell out the country name.
Line 4: The common name of the U.S. MNE group, if it differs significantly from the reporting entity’s name on Line 1a.

Part II — Additional Information

Part II is optional. Use it to describe the group’s overall business and structure, or to explain assumptions and conventions you used to compile the report. Any financial amounts you enter here must be in U.S. dollars. If you need more space, attach additional copies of page 2.²

An authorized corporate officer signs the form, certifying the information is true, correct, and complete.

Completing Each Schedule A

Each Schedule A covers one tax jurisdiction and has three parts.

Part I — Aggregated Financial and Employee Data

Aggregate the following across all constituent entities resident in the jurisdiction:

Revenue, broken into unrelated-party revenue, related-party revenue, and total revenue.
Profit or loss before income tax.
Income tax paid, on a cash basis for the reporting period.
Income tax accrued for the current year.
Stated capital.
Accumulated earnings.
Number of employees.
Tangible assets other than cash and cash equivalents, at net book value.

Amounts should come from the constituent entities’ applicable financial statements, books and records, regulatory financial statements, or records used for tax reporting or internal management purposes, for each entity’s annual period ending with or within the reporting period.²

Part II — Constituent Entity Information

List each constituent entity resident in the jurisdiction. For each one, provide:⁴

Entity name.
Entity role within the group.
Tax identification number.
Jurisdiction of organization or incorporation, if different from the tax jurisdiction of residence.
Main business activity code.

The IRS provides 13 standardized activity codes. The ones most groups reach for include:

CBC501 — Research and development
CBC504 — Manufacturing or production
CBC505 — Sales, marketing, or distribution
CBC506 — Administrative, management, or support services
CBC509 — Regulated financial services
CBC511 — Holding shares or other equity instruments
CBC512 — Dormant
CBC513 — Other (requires a written description)

The full list appears in the instructions.²

Part III — Additional Information

Use Part III to disclose any non-standard exchange rate you used for that jurisdiction’s Schedule A and to add jurisdiction-specific notes.

Stateless Entities

An entity is generally tax-resident in a jurisdiction if it is liable for tax there based on place of management, place of organization, or a similar criterion. Owing tax on gross income from local sources with no deduction for expenses (a withholding tax, for instance) does not make an entity resident. A corporation organized or managed in a jurisdiction that imposes no corporate income tax is treated as resident there, unless it qualifies as resident elsewhere under the standard rules. Permanent establishments take the residence of the jurisdiction where they are located.²

Entities that remain stateless after applying those rules go on a single Schedule A using country code X5.²

Currency Conversion

Report every amount in U.S. dollars. The default translation method is U.S. GAAP. If you use a different exchange rate method, disclose it in Part III of the relevant Schedule A.²

The IRS does not mandate one official rate. It generally accepts any consistently applied posted exchange rate, including the yearly average rates it publishes on its website.⁵ Whichever rate you pick, apply it consistently across all Schedules A.

How and When to File

Form 8975 and its Schedules A are attached to the income tax return of the UPE or designated reporting entity. There is no standalone submission. The underlying return is typically Form 1120, 1120-S, 1065, or 1041.²

The deadline is the due date of that underlying return, including extensions. An extension on the return automatically extends Form 8975.

E-Filing

The IRS strongly encourages electronic filing to support timely exchange of CbCR data with foreign jurisdictions. If you e-file through Modernized e-File, Form 8975 and every Schedule A must be attached electronically in XML format. PDF and binary attachments are not accepted for e-filed returns.⁶

Paper Filing

Paper returns are accepted, but paper filers have one extra step: separately mail a copy of the first page of Form 8975 to:²

Internal Revenue Service
Mailstop 4950
1973 N. Rulon White Blvd.
Ogden, UT 84201

The complete Form 8975 and all Schedules A still attach to the paper return itself.

Amended Reports

If you amend the underlying income tax return, file an amended Form 8975 with all Schedules A and check the amended-report box at the top. The amendment must use the same filing method as the original. If you e-filed originally, you must e-file the amendment.⁶

Penalties for Missing or Incomplete Filings

Penalties for failing to file or filing incomplete information fall under 26 U.S.C. § 6038.⁷ They stack:

An initial $10,000 penalty for each annual accounting period the required information is not furnished on time.
An additional $10,000 for each 30-day period (or fraction of one) that the failure continues more than 90 days after the IRS mails a notice, capped at $50,000.
A 10% reduction of taxes paid or deemed paid to foreign countries for the applicable tax year, increasing by another 5% for each three-month period the failure continues 90 or more days after IRS notice.

The foreign tax credit reduction can outweigh the dollar penalties for a large group, so late filers should move quickly once a notice arrives rather than let the 90-day clock run.

1
Internal Revenue Service. About Form 8975, Country by Country Report
2
Internal Revenue Service. Instructions for Form 8975 and Schedule A (Form 8975)
3
Internal Revenue Service. Instructions for Form 8975 and Schedule A (Form 8975)
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Internal Revenue Service. Schedule A (Form 8975) – Tax Jurisdiction and Constituent Entity Information
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Internal Revenue Service. Yearly Average Currency Exchange Rates
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Internal Revenue Service. Frequently Asked Questions (FAQs) – Country-by-Country Reporting
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GovInfo. 26 USC 6038 – Information Reporting With Respect to Certain Foreign Corporations and Partnerships