title: Council Directive (EU) 2016/881 of 25 May 2016 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation

text:
                  3.6.2016

                  EN

                  Official Journal of the European Union

                  L 146/8

            COUNCIL DIRECTIVE (EU) 2016/881
      of 25 May 2016
      amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 113 and 115 thereof,
      Having regard to the proposal from the European Commission,
      After transmission of the draft legislative act to the national parliaments,
      Having regard to the opinion of the European Parliament (1),
      Having regard to the opinion of the European Economic and Social Committee (2),
      Acting in accordance with a special legislative procedure,
      Whereas:

                  (1)

                  In recent years, the challenge posed by tax fraud and tax evasion has increased considerably and has become a major focus of concern within the Union and at global level. The automatic exchange of information constitutes an important tool in this regard: in its Communication of 6 December 2012 setting out an Action Plan to strengthen the fight against tax fraud and tax evasion, the Commission highlighted the need to promote vigorously the automatic exchange of information as the future European and international standard for transparency and exchange of information in tax matters. In its conclusions of 22 May 2013, the European Council requested the extension of automatic information exchange at both Union and global level with a view to combating tax fraud, tax evasion and aggressive tax planning.

                  (2)

                  As multinational enterprise groups (MNE Groups) are active in different countries, they have the possibility of engaging in aggressive tax-planning practices that are not available for domestic companies. When MNE Groups do so, purely domestic companies, normally small and medium-sized enterprises (SMEs), may be particularly affected, as their tax burden is higher than that of MNE Groups. On the other hand, all Member States may suffer revenue losses and there is the risk of competition to attract MNE Groups by offering them further tax benefits.

                  (3)

                  Member States' tax authorities need comprehensive and relevant information on MNE Groups regarding their structure, transfer-pricing policy and internal transactions in and outside the Union. That information will enable the tax authorities to react to harmful tax practices by making changes in legislation or by undertaking adequate risk assessments and tax audits, and to identify whether companies have engaged in practices that have the effect of artificially shifting substantial amounts of income into tax-advantaged environments.

                  (4)

                  Increased transparency towards tax authorities could have the effect of giving MNE Groups an incentive to abandon certain practices and pay their fair share of tax in the country where profits are made. Enhancing transparency for MNE Groups is therefore an essential part of tackling base erosion and profit shifting.

                  (5)

                  The Resolution of the Council and of the representatives of the governments of the Member States on a code of conduct on transfer pricing documentation for associated enterprises in the European Union (EU TPD) (3) already sets out a way for MNE Groups in the Union to provide tax authorities with information on global business operations and transfer-pricing policies (‘the masterfile’) and information on the concrete transactions of the local entity (‘the local file’). However, the EU TPD does not at present provide for any mechanism for the provision of a country-by-country report.

                  (6)

                  In the country-by-country report, MNE Groups should provide annually and for each tax jurisdiction in which they do business the amount of revenue, profit before income tax and income tax paid and accrued. MNE Groups should also report the number of their employees, stated capital, accumulated earnings and tangible assets in each tax jurisdiction. Finally, MNE Groups should identify each entity within the group doing business in a particular tax jurisdiction and provide an indication of the business activities in which each entity engages.

                  (7)

                  In order to enhance the efficient use of public resources and reduce the administrative burden for MNE Groups, the reporting obligation should only apply to MNE Groups with annual consolidated group revenue exceeding a certain amount. This Directive should ensure that the same information is collected and made available to tax administrations in a timely manner throughout the Union.

                  (8)

                  To ensure the proper functioning of the internal market, the Union has to provide for fair competition between Union MNE Groups and non-Union MNE Groups for which one or several of their entities are located in the Union. Both of them should therefore be subject to the reporting obligation. However, in order to ensure a smooth transition, Member States should be able to defer by one year the reporting obligation for Constituent Entities resident in a Member State which are not the Ultimate Parent Entities of MNE Groups or their Surrogate Parent Entities.

                  (9)

                  Member States should lay down rules on penalties applicable to infringements of national provisions adopted pursuant to this Directive and ensure that those penalties are implemented. While the choice of penalties remains within the discretion of the Member States, the penalties provided for should be effective, proportionate and dissuasive.

                  (10)

                  To ensure the proper functioning of the internal market, it is necessary to ensure that Member States adopt coordinated rules on transparency obligations of MNE Groups.

                  (11)

                  As regards exchange of information between Member States, Council Directive 2011/16/EU (4) already provides for the mandatory automatic exchange of information in a number of fields

                  (12)

                  The mandatory automatic exchange of country-by-country reports between Member States should in each case include the communication of a defined set of basic information that would be accessible to those Member States in which, on the basis of the information in the country-by-country report, one or more entities of the MNE Group are either resident for tax purposes or subject to tax with respect to the business carried out through a permanent establishment of an MNE Group.

                  (13)

                  In order to minimise costs and administrative burdens both for tax administrations and for MNE Groups, it is necessary to provide rules that are in line with the international developments and contribute positively to their implementation. On 19 July 2013 the Organisation for Economic Development and Cooperation (OECD) published its Action Plan on Base Erosion and Profit Shifting (‘BEPS Action Plan’), which is a major initiative to modify existing international tax rules. On 5 October 2015 the OECD presented its final reports, which were endorsed by the G20 Finance Ministers. During the meeting of 15 and 16 November 2015, the OECD package was also endorsed by the G20 leaders.

                  (14)

                  The work on Action 13 of the BEPS Action Plan resulted in a set of standards for providing information for MNE Groups, including the masterfile, the local file and the country-by-country report. It is therefore appropriate to take into account the OECD standards when establishing the rules on the country-by-country report.

                  (15)

                  In a situation where a Constituent Entity cannot obtain or acquire all the information required in order to fulfil the reporting requirement under this Directive, Member States could consider this as an indication of the need to assess high-level transfer-pricing risks and other base-erosion and profit-shifting risks related to that MNE Group.

                  (16)

                  Where a Member State determines that another Member State has persistently failed to automatically provide country-by-country reports, it should endeavour to consult that Member State.

                  (17)

                  Union action in the area of country-by-country reporting should continue to take particular account of future developments at OECD level. In implementing this Directive, Member States should use the 2015 Final Report on Action 13 of the OECD/G20 Base Erosion and Profit Shifting Project, developed by the OECD, as a source of illustration or interpretation for this Directive and in order to ensure consistency of application across Member States.

                  (18)

                  It is necessary to specify linguistic requirements for the exchange of information between Member States on the country-by-country report. It is also necessary to adopt the practical arrangements necessary for the upgrading of the common communication network defined in point 13 of Article 3 of Directive 2011/16/EU (‘the CCN network’). In order to ensure uniform conditions for the implementation of Articles 20(6) and 21(6) of Directive 2011/16/EU, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (5).

                  (19)

                  In order to enhance the efficient use of resources, facilitate the exchange of information and avoid the need for each Member State to make similar adjustments to its systems, the exchange of information should be made through the CCN network. The practical arrangements necessary for the upgrading of the system should be adopted by the Commission in accordance with the procedure referred to in Article 26(2) of Directive 2011/16/EU.

                  (20)

                  The scope of the mandatory exchange of information should therefore be extended to include the automatic exchange of information on the country-by-country report.

                  (21)

                  Member States' yearly report to the Commission under Article 23 of Directive 2011/16/EU, should detail the extent of local filing under Article 8aa of that Directive and Point 1 of Section II of Annex III thereto and a list of any jurisdictions where Ultimate Parent Entities of Union-based Constituent Entities are resident, but full reports have not been filed or exchanged.

                  (22)

                  The information exchanged under this Directive does not lead to the disclosure of a commercial, industrial or professional secret, a commercial process or information the disclosure of which would be contrary to public policy.

                  (23)

                  This Directive respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union.

                  (24)

                  Since the objective of this Directive, namely efficient administrative cooperation between Member States under conditions compatible with the proper functioning of the internal market, cannot be sufficiently achieved by the Member States and can therefore, by reason of the uniformity and effectiveness required, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective.

                  (25)

                  Directive 2011/16/EU should therefore be amended accordingly,

            HAS ADOPTED THIS DIRECTIVE:
      Article 1
      Directive 2011/16/EU is amended as follows:

                  (1)

                  point 9 of Article 3 is replaced by the following:

                              ‘9.

                              “automatic exchange” means,

                                          (a)

                                          for the purposes of Article 8(1) and Articles 8a and 8aa, the systematic communication of predefined information to another Member State, without prior request, at pre-established regular intervals. For the purposes of Article 8(1), reference to available information relates to information in the tax files of the Member State communicating the information, which is retrievable in accordance with the procedures for gathering and processing information in that Member State;

                                          (b)

                                          for the purposes of Article 8(3a), the systematic communication of predefined information on residents in other Member States to the relevant Member State of residence, without prior request, at pre-established regular intervals;

                                          (c)

                                          for the purposes of provisions of this Directive other than Article 8(1) and (3a) and Articles 8a and 8aa, the systematic communication of predefined information provided in points (a) and (b) of this point.

                                    In the context of Articles 8(3a), 8(7a) and 21(2) and Article 25(2) and (3), any capitalised term shall have the meaning that it has under the corresponding definitions set out in Annex I. In the context of Article 8aa and Annex III, any capitalised term shall have the meaning that it has under the corresponding definitions set out in Annex III.’;

                  (2)

                  in Chapter II, Section II the following Article is inserted:
                  ‘Article 8aa
                  Scope and conditions of mandatory automatic exchange of information on the country-by-country report
                  1.   Each Member State shall take the necessary measures to require the Ultimate Parent Entity of an MNE Group that is resident for tax purposes in its territory, or any other Reporting Entity in accordance with Section II of Annex III, to file a country-by-country report with respect to its Reporting Fiscal Year within 12 months of the last day of the Reporting Fiscal Year of the MNE Group in accordance with Section II of Annex III.
                  2.   The competent authority of a Member State where the country-by-country report was received pursuant to paragraph 1 shall, by means of automatic exchange and within the deadline laid down in paragraph 4, communicate the country-by-country report to any other Member State in which, on the basis of the information in the country-by-country report, one or more Constituent Entities of the MNE Group of the Reporting Entity are either resident for tax purposes or subject to tax with respect to the business carried out through a permanent establishment.
                  3.   The country-by-country report shall contain the following information with respect to the MNE Group:

                              (a)

                              aggregate information relating to the amount of revenue, profit (loss) before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents with regard to each jurisdiction in which the MNE Group operates;

                              (b)

                              an identification of each Constituent Entity of the MNE Group setting out the jurisdiction of tax residence of that Constituent Entity and, where different from that jurisdiction of tax residence, the jurisdiction under the laws of which that Constituent Entity is organised, and the nature of the main business activity or activities of that Constituent Entity.

                        4.   The communication shall take place within 15 months of the last day of the Fiscal Year of the MNE Group to which the country-by-country report relates. The first country-by-country report shall be communicated for the Fiscal Year of the MNE Group commencing on or after 1 January 2016, which shall take place within 18 months of the last day of that Fiscal Year.’;

                  (3)

                  in Article 16, the following paragraph is added:
                  ‘6.   Notwithstanding paragraphs 1 to 4 of this Article, information communicated between Member States pursuant to Article 8aa shall be used for the purposes of assessing high-level transfer-pricing risks and other risks related to base erosion and profit shifting, including assessing the risk of non-compliance by members of the MNE Group with applicable transfer-pricing rules, and where appropriate for economic and statistical analysis. Transfer-pricing adjustments by the tax authorities of the receiving Member State shall not be based on the information exchanged pursuant to Article 8aa. Notwithstanding the above, there is no prohibition on using the information communicated between Member States pursuant to Article 8aa as a basis for making further enquiries into the MNE Group's transfer-pricing arrangements or into other tax matters in the course of a tax audit, and, as a result, appropriate adjustments to the taxable income of a Constituent Entity may be made.’;

                  (4)

                  in Article 20, the following paragraph is added:
                  ‘6.   The automatic exchange of information on the country-by-country report pursuant to Article 8aa shall be carried out using the standard form provided in Tables 1, 2 and 3 of Section III of Annex III. The Commission shall, by means of implementing acts, adopt the linguistic arrangements for that exchange by 31 December 2016. They shall not preclude Member States from communicating information referred to in Article 8aa in any of the official and working languages of the Union. However, those linguistic arrangements may provide that the key elements of such information also be sent in another official language of the Union. Those implementing acts shall be adopted in accordance with the procedure referred to in Article 26(2).’;

                  (5)

                  in Article 21, the following paragraph is added:
                  ‘6.   Information communicated pursuant to Article 8aa(2) shall be provided by electronic means using the CCN network. The Commission shall, by means of implementing acts, adopt the necessary practical arrangements for the upgrading of the CCN network. Those implementing acts shall be adopted in accordance with the procedure referred to in Article 26(2).’;

                  (6)

                  in Article 23, paragraph 3 is replaced by the following:
                  ‘3.   Member States shall communicate to the Commission a yearly assessment of the effectiveness of the automatic exchange of information referred to in Articles 8, 8a and 8aa as well as the practical results achieved. The Commission shall, by means of implementing acts, adopt the form of and the conditions of communication for that yearly assessment. Those implementing acts shall be adopted in accordance with the procedure referred to in Article 26(2).’;

                  (7)

                  the following Article is inserted:
                  ‘Article 25a
                  Penalties
                  Member States shall lay down the rules on penalties applicable to infringements of national provisions adopted pursuant to this Directive concerning Article 8aa, and shall take all measures necessary to ensure that they are implemented. The penalties provided for shall be effective, proportionate and dissuasive.’;

                  (8)

                  Article 26 is replaced by the following:
                  ‘Article 26
                  Committee procedure
                  1.   The Commission shall be assisted by the Committee on administrative cooperation for taxation. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011 of the European Parliament and of the Council (*).
                  2.   Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.

                     (*)  Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by the Member States of the Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).’;"

                  (9)

                  Annex III, the text of which is set out in the Annex to this Directive, is added.

            Article 2
      1.   Member States shall adopt and publish, by 4 June 2017, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.
      They shall apply those measures from 5 June 2017.
      When Member States adopt those measures, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.
      2.   Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.
      Article 3
      This Directive shall enter into force on the date of its publication in the Official Journal of the European Union.
      Article 4
      This Directive is addressed to the Member States.

         Done at Brussels, 25 May 2016.

               For the Council

               The President

            J.R.V.A. DIJSSELBLOEM

         (1)  Opinion of the European Parliament of 12 May 2016 (not yet published in the Official Journal).

         (2)  Opinion of the European Economic and Social Committee of 28 April 2016 (not yet published in the Official Journal).

         (3)  Resolution of the Council and of the representatives of the governments of the Member States, meeting within the Council, of 27 June 2006 on a code of conduct on transfer pricing documentation for associated enterprises in the European Union (EU TPD) (OJ C 176, 28.7.2006, p. 1).

         (4)  Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC (OJ L 64, 11.3.2011, p. 1).

         (5)  Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by the Member States of the Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).

         ANNEX

               ‘ANNEX III

                  FILING RULES FOR GROUPS OF MULTINATIONAL ENTERPRISES

               SECTION I

                  DEFINED TERMS

                           1.

                           The term “Group” means a collection of enterprises related through ownership or control such that it is either required to prepare Consolidated Financial Statements for financial reporting purposes under applicable accounting principles or would be so required if equity interests in any of the enterprises were traded on a public securities exchange.

                           2.

                           The term “Enterprise” means any form of conducting business by any person referred to in points (b), (c) and (d) of Article 3, point 11.

                           3.

                           The term “MNE Group” means any Group that includes two or more enterprises the tax residence for which is in different jurisdictions, or includes an enterprise that is resident for tax purposes in one jurisdiction and is subject to tax with respect to the business carried out through a permanent establishment in another jurisdiction, and is not an Excluded MNE Group.

                           4.

                           The term “Excluded MNE Group” means, with respect to any Fiscal Year of the Group, a Group having total consolidated group revenue of less than EUR 750 000 000 or an amount in local currency approximately equivalent to EUR 750 000 000 as of January 2015 during the Fiscal Year immediately preceding the Reporting Fiscal Year as reflected in its Consolidated Financial Statements for such preceding Fiscal Year.

                           5.

                           The term “Constituent Entity” means any of the following:

                                       (a)

                                       any separate business unit of an MNE Group that is included in the Consolidated Financial Statements of the MNE Group for financial reporting purposes, or would be so included if equity interests in such business unit of an MNE Group were traded on a public securities exchange;

                                       (b)

                                       any such business unit that is excluded from the MNE Group's Consolidated Financial Statements solely on size or materiality grounds;

                                       (c)

                                       any permanent establishment of any separate business unit of the MNE Group included in (a) or (b) provided the business unit prepares a separate financial statement for such permanent establishment for financial reporting, regulatory, tax reporting, or internal management control purposes.

                           6.

                           The term “Reporting Entity” means the Constituent Entity that is required to file a country-by-country report conforming to the requirements in Article 8aa(3) in its jurisdiction of tax residence on behalf of the MNE Group. The Reporting Entity may be the Ultimate Parent Entity, the Surrogate Parent Entity, or any entity described in point 1 of Section II.

                           7.

                           The term “Ultimate Parent Entity” means a Constituent Entity of an MNE Group that meets the following criteria:

                                       (a)

                                       it owns directly or indirectly a sufficient interest in one or more other Constituent Entities of such MNE Group such that it is required to prepare Consolidated Financial Statements under accounting principles generally applied in its jurisdiction of tax residence, or would be so required if its equity interests were traded on a public securities exchange in its jurisdiction of tax residence;

                                       (b)

                                       there is no other Constituent Entity of such MNE Group that owns directly or indirectly an interest described in point (a) in the first mentioned Constituent Entity.

                           8.

                           The term “Surrogate Parent Entity” means one Constituent Entity of the MNE Group that has been appointed by such MNE Group, as a sole substitute for the Ultimate Parent Entity, to file the country-by-country report in that Constituent Entity's jurisdiction of tax residence, on behalf of such MNE Group, when one or more of the conditions set out in point (b) of the first paragraph of point 1 of Section II apply.

                           9.

                           The term “Fiscal Year” means an annual accounting period with respect to which the Ultimate Parent Entity of the MNE Group prepares its financial statements.

                           10.

                           The term “Reporting Fiscal Year” means that Fiscal Year the financial and operational results of which are reflected in the country-by-country report referred to in Article 8aa(3).

                           11.

                           The term “Qualifying Competent Authority Agreement” means an agreement that is between authorised representatives of an EU Member State and a non-Union jurisdiction that are parties to an International Agreement and that requires the automatic exchange of country-by-country reports between the party jurisdictions.

                           12.

                           The term “International Agreement” means the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, any bilateral or multilateral tax convention, or any tax information exchange agreement to which the Member State is a party, and that by its terms provides legal authority for the exchange of tax information between jurisdictions, including automatic exchange of such information.

                           13.

                           The term “Consolidated Financial Statements” means the financial statements of an MNE Group in which the assets, liabilities, income, expenses and cash flows of the Ultimate Parent Entity and the Constituent Entities are presented as those of a single economic entity.

                           14.

                           The term “Systemic Failure” with respect to a jurisdiction means either that a jurisdiction has a Qualifying Competent Authority Agreement in effect with a Member State but has suspended automatic exchange (for reasons other than those that are in accordance with the terms of that Agreement), or that a jurisdiction otherwise persistently failed to automatically provide to a Member State country-by-country reports in its possession of MNE Groups that have Constituent Entities in that Member State.

                     SECTION II

                  GENERAL REPORTING REQUIREMENTS

                           1.

                           A Constituent Entity resident in a Member State which is not the Ultimate Parent Entity of an MNE Group shall file a country-by-country report with respect to the Reporting Fiscal Year of an MNE Group of which it is a Constituent Entity, if the following criteria are satisfied:

                                       (a)

                                       the entity is resident for tax purposes in a Member State;

                                       (b)

                                       one of the following conditions applies:

                                                   (i)

                                                   the Ultimate Parent Entity of the MNE Group is not obligated to file a country-by-country report in its jurisdiction of tax residence;

                                                   (ii)

                                                   the jurisdiction in which the Ultimate Parent Entity is resident for tax purposes has a current International Agreement to which the Member State is a party but does not have a Qualifying Competent Authority Agreement in effect to which the Member State is a party by the time specified in Article 8aa(1) for filing the country-by-country report for the Reporting Fiscal Year;

                                                   (iii)

                                                   there has been a Systemic Failure of the jurisdiction of tax residence of the Ultimate Parent Entity that has been notified by the Member State to the Constituent Entity resident for tax purposes in the Member State.

                                             Without prejudice to the obligation of the Ultimate Parent Entity referred to in Article 8aa(1) or its Surrogate Parent Entity to file the first country-by-country report for the Fiscal Year of the MNE Group commencing on or after 1 January 2016, Member States may decide that the obligation for Constituent Entities set out in point 1 of this Section shall apply for country-by-country reports with respect to the Reporting Fiscal Years commencing on or after 1 January 2017 onwards.
                                       A Constituent Entity resident in a Member State as defined in the first paragraph of this point shall request its Ultimate Parent Entity to provide it with all information required to enable it to meet its obligations to file a country-by-country report, in accordance with Article 8aa(3). If despite that, that Constituent Entity has not obtained or acquired all the required information to report for the MNE Group, this Constituent Entity shall file a country-by-country report containing all information in its possession, obtained or acquired, and notify the Member State of its residence that the Ultimate Parent Entity has refused to make the necessary information available. This shall be without prejudice to the right of the Member State concerned to apply penalties provided for in its national legislation and this Member State shall inform all Member States of this refusal.
                                       Where there are more than one Constituent Entities of the same MNE Group that are resident for tax purposes in the Union and one or more of the conditions set out in point (b) of the first paragraph apply, the MNE Group may designate one of such Constituent Entities to file the country-by-country report conforming to the requirements of Article 8aa(3) with respect to any Reporting Fiscal Year within the deadline specified in Article 8aa(1) and to notify the Member State that the filing is intended to satisfy the filing requirement of all the Constituent Entities of such MNE Group that are resident for tax purposes in the Union. That Member State shall, pursuant to Article 8aa(2), communicate the country-by-country report received to any other Member State in which, on the basis of the information in the country-by-country report, one or more Constituent Entities of the MNE Group of the Reporting Entity are either resident for tax purposes or are subject to tax with respect to the business carried out through a permanent establishment.
                                       Where a Constituent Entity cannot obtain or acquire all the information required to file a country-by-country report, in line with Article 8aa(3), then such Constituent Entity shall not be eligible to be designated to be the Reporting Entity for the MNE Group in accordance with the fourth paragraph of this point. This rule shall be without prejudice to the obligation of the Constituent Entity to notify the Member State of its residence that the Ultimate Parent Entity has refused to make the necessary information available.

                           2.

                           By derogation from point 1, when one or more of the conditions set out in point (b) of the first paragraph of point 1 apply, an entity described in point 1 shall not be required to file a country-by-country report with respect to any Reporting Fiscal Year if the MNE Group of which it is a Constituent Entity has made available a country-by-country report in accordance with Article 8aa(3) with respect to such Fiscal Year through a Surrogate Parent Entity that files that country-by-country report with the tax authority of its jurisdiction of tax residence on or before the date specified in Article 8aa(1) and that, in case the Surrogate Parent Entity is tax resident in a jurisdiction outside the Union, satisfies the following conditions:

                                       (a)

                                       the jurisdiction of tax residence of the Surrogate Parent Entity requires filing of country-by-country reports conforming to the requirements of Article 8aa(3);

                                       (b)

                                       the jurisdiction of tax residence of the Surrogate Parent Entity has a Qualifying Competent Authority Agreement in effect to which the Member State is a party by the time specified in Article 8aa(1) for filing the country-by-country report for the Reporting Fiscal Year;

                                       (c)

                                       the jurisdiction of tax residence of the Surrogate Parent Entity has not notified the Member State of a Systemic Failure;

                                       (d)

                                       the jurisdiction of tax residence of the Surrogate Parent Entity has been notified no later than the last day of the Reporting Fiscal Year of such MNE Group by the Constituent Entity resident for tax purposes in its jurisdiction that it is the Surrogate Parent Entity;

                                       (e)

                                       a notification has been provided to the Member State in accordance with point 4.

                           3.

                           Member States shall request that any Constituent Entity of an MNE Group that is resident for tax purposes in that Member State notifies the Member State whether it is the Ultimate Parent Entity or the Surrogate Parent Entity or the Constituent Entity designated under point 1, no later than the last day of the Reporting Fiscal Year of such MNE Group. Member States may extend that deadline to the last day for filing of a tax return of that Constituent Entity for the preceding fiscal year.

                           4.

                           Member States shall request that where a Constituent Entity of an MNE Group, that is resident for tax purposes in that Member State, is not the Ultimate Parent Entity nor the Surrogate Parent Entity nor the Constituent Entity designated under point 1, it shall notify the Member State of the identity and tax residence of the Reporting Entity, no later than the last day of the Reporting Fiscal Year of such MNE Group. Member States may extend that deadline to the last day for filing of a tax return of that Constituent Entity for the preceding fiscal year.

                           5.

                           The country-by-country report shall specify the currency of the amounts referred to in that report.

                     SECTION III

                  COUNTRY-BY-COUNTRY REPORT

               Α.   Template for the country-by-country report
               Table 1.   Overview of allocation of income, taxes and business activities by tax jurisdiction

                           Name of the MNE Group:
                           Fiscal Year concerned:
                           Currency used:

                           Tax jurisdiction

                           Revenues

                           Profit (loss) before income tax

                           Income tax paid (on cash basis)

                           Income tax accrued — current year

                           Stated capital

                           Accumulated earnings

                           Number of employees

                           Tangible assets other than cash and cash equivalents

                           Unrelated party

                           Related party

                           Total

               Table 2   List of all the Constituent Entities of the MNE Group included in each aggregation per tax jurisdiction

                           Name of the MNE Group:
                           Fiscal Year concerned:

                           Tax Jurisdiction

                           Constituent Entities Resident in the Tax Jurisdiction

                           Tax Jurisdiction of Organisation or Incorporation if Different from Tax Jurisdiction of Residence

                           Main Business Activity(ies)

                           Research and Development

                           Holding or Managing Intellectual Property

                           Purchasing or Procurement

                           Manufacturing or Production

                           Sales, Marketing or Distribution

                           Administrative, Management or Support Services

                           Provision of Services to Unrelated Parties

                           Internal Group Finance

                           Regulated Financial Services

                           Insurance

                           Holding Shares or Other Equity instruments

                           Dormant

                           Other (1)

                           1.

                           2.

                           3.

                           1.

                           2.

                           3.

                     Table 3:   Additional information
               Name of the MNE Group:
               Fiscal Year concerned:
               Please include any further brief information or explanation you consider necessary or that would facilitate the understanding of the compulsory information provided in the country-by-country report
               B.   General instructions for filling in the country-by-country report
               1.   Purpose
               The template shall be used for reporting a multinational enterprise's (MNE) Group allocation of income, taxes and business activities on a tax jurisdiction-by-tax jurisdiction basis.
               2.   Treatment of branches and permanent establishments
               The permanent establishment data shall be reported by reference to the tax jurisdiction in which it is situated and not by reference to the tax jurisdiction of residence of the business unit of which the permanent establishment is a part. Residence tax jurisdiction reporting for the business unit of which the permanent establishment is a part shall exclude financial data related to the permanent establishment.
               3.   Period covered by the annual template
               The template shall cover the Fiscal Year of the reporting MNE. For Constituent Entities, at the discretion of the reporting MNE, the template shall reflect on a consistent basis either of the following information:

                           (a)

                           information for the Fiscal Year of the relevant Constituent Entities ending on the same date as the Fiscal Year of the reporting MNE, or ending within the 12 month period preceding such date;

                           (b)

                           information for all the relevant Constituent Entities reported for the Fiscal Year of the reporting MNE.

                     4.   Source of data
               The reporting MNE shall consistently use the same sources of data from year to year in completing the template. The reporting MNE may choose to use data from its consolidation reporting packages, from separate entity statutory financial statements, regulatory financial statements, or internal management accounts. It is not necessary to reconcile the revenue, profit and tax reporting in the template to the Consolidated Financial Statements. If statutory financial statements are used as the basis for reporting, all amounts shall be translated to the stated functional currency of the reporting MNE at the average exchange rate for the year stated in the “Additional information” section of the template. Adjustments need not be made, however, for differences in accounting principles applied from tax jurisdiction to tax jurisdiction.
               The reporting MNE shall provide a brief description of the sources of data used in preparing the template in the “Additional information” section of the template. If a change is made in the source of data used from year to year, the reporting MNE shall explain the reasons for the change and its consequences in the “Additional information” section of the template.
               C.   Specific instructions for filling in the country-by-country report
               1.   Overview of allocation of income, taxes and business activities by tax jurisdiction (Table 1)
               1.1.   Tax jurisdiction
               In the first column of the template, the reporting MNE shall list all of the tax jurisdictions in which Constituent Entities of the MNE Group are resident for tax purposes. A tax jurisdiction is defined as a State as well as a non-State jurisdiction which has fiscal autonomy. A separate line shall be included for all Constituent Entities in the MNE Group deemed by the reporting MNE not to be resident in any tax jurisdiction for tax purposes. Where a Constituent Entity is resident in more than one tax jurisdiction, the applicable tax treaty tie breaker shall be applied to determine the tax jurisdiction of residence. Where no applicable tax treaty exists, the Constituent Entity shall be reported in the tax jurisdiction of the Constituent Entity's place of effective management. The place of effective management shall be determined with internationally agreed standards.
               1.2.   Revenues
               In the three columns of the template under the heading “Revenues”, the reporting MNE shall report the following information:

                           (a)

                           the sum of revenues of all the Constituent Entities of the MNE Group in the relevant tax jurisdiction generated from transactions with associated enterprises;

                           (b)

                           the sum of revenues of all the Constituent Entities of the MNE Group in the relevant tax jurisdiction generated from transactions with independent parties;

                           (c)

                           the total of the sums referred to in points (a) and (b).

                     Revenues shall include revenues from sales of inventory and properties, services, royalties, interest, premiums and any other amounts. Revenues shall exclude payments received from other Constituent Entities that are treated as dividends in the payer's tax jurisdiction.
               1.3.   Profit (loss) before income tax
               In the fifth column of the template, the reporting MNE shall report the sum of the profit (loss) before income tax for all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. The profit (loss) before income tax shall include all extraordinary income and expense items.
               1.4.   Income tax paid (on cash basis)
               In the sixth column of the template, the reporting MNE shall report the total amount of income tax actually paid during the relevant Fiscal Year by all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. Taxes paid shall include cash taxes paid by the Constituent Entity to the residence tax jurisdiction and to all other tax jurisdictions. Taxes paid shall include withholding taxes paid by other entities (associated enterprises and independent enterprises) with respect to payments to the Constituent Entity. Thus, if company A resident in tax jurisdiction A earns interest in tax jurisdiction B, the tax withheld in tax jurisdiction B shall be reported by company A.
               1.5.   Income tax accrued (current year)
               In the seventh column of the template, the reporting MNE shall report the sum of the accrued current tax expense recorded on taxable profits or losses of the year of reporting of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. The current tax expense shall reflect only operations in the current year and shall not include deferred taxes or provisions for uncertain tax liabilities.
               1.6.   Stated capital
               In the eighth column of the template, the reporting MNE shall report the sum of the stated capital of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. With regard to permanent establishments, the stated capital shall be reported by the legal entity of which it is a permanent establishment unless there is a defined capital requirement in the permanent establishment tax jurisdiction for regulatory purposes.
               1.7.   Accumulated earnings
               In the ninth column of the template, the reporting MNE shall report the sum of the total accumulated earnings of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction as of the end of the year. With regard to permanent establishments, accumulated earnings shall be reported by the legal entity of which it is a permanent establishment.
               1.8.   Number of employees
               In the tenth column of the template, the reporting MNE shall report the total number of employees on a full-time equivalent (FTE) basis of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. The number of employees may be reported as of the year-end, on the basis of average employment levels for the year, or on any other basis consistently applied across tax jurisdictions and from year to year. For this purpose, independent contractors participating in the ordinary operating activities of the Constituent Entity may be reported as employees. Reasonable rounding or approximation of the number of employees is permissible, providing that such rounding or approximation does not materially distort the relative distribution of employees across the various tax jurisdictions. Consistent approaches shall be applied from year to year and across entities.
               1.9.   Tangible assets other than cash and cash equivalents
               In the eleventh column of the template, the reporting MNE shall report the sum of the net book values of tangible assets of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. With regard to permanent establishments, assets shall be reported by reference to the tax jurisdiction in which the permanent establishment is situated. Tangible assets for this purpose do not include cash or cash equivalents, intangibles, or financial assets.
               2.   List of all the Constituent Entities of the MNE Group included in each aggregation per tax jurisdiction (Table 2)
               2.1.   Constituent Entities resident in the tax jurisdiction
               The reporting MNE shall list, on a tax jurisdiction-by-tax jurisdiction basis and by legal entity name, all the Constituent Entities of the MNE Group which are resident for tax purposes in the relevant tax jurisdiction. As stated in point 2 of the general instructions with regard to permanent establishments, however, the permanent establishment shall be listed by reference to the tax jurisdiction in which it is situated. The legal entity of which it is a permanent establishment shall be noted.
               2.2.   Tax jurisdiction of organisation or incorporation if different from tax jurisdiction of residence
               The reporting MNE shall report the name of the tax jurisdiction under whose laws the Constituent Entity of the MNE Group is organised or incorporated if it is different from the tax jurisdiction of residence.
               2.3.   Main business activity(ies)
               The reporting MNE shall determine the nature of the main business activity(ies) carried out by the Constituent Entity in the relevant tax jurisdiction, by ticking one or more of the appropriate boxes.’

            (1)  Please specify the nature of the activity of the Constituent Entity in the “Additional information”


Avis juridique important

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31975L0268

Council Directive 75/268/EEC of 28 April 1975 on mountain and hill farming and farming in certain less- favoured areas

Official Journal L 128 , 19/05/1975 P. 0001 - 0007 Finnish special edition: Chapter 3 Volume 6 P. 0074  Greek special edition: Chapter 03 Volume 12 P. 0095  Swedish special edition: Chapter 3 Volume 6 P. 0074  Spanish special edition: Chapter 03 Volume 8 P. 0153  Portuguese special edition Chapter 03 Volume 8 P. 0153

COUNCIL DIRECTIVE  of 28 April 1975  on mountain and hill farming and farming in certain less-favoured areas  (75/268/EEC)  THE COUNCIL OF THE EUROPEAN COMMUNITIES,  Having regard to the Treaty establishing the European Economic Community, and in particular Articles 42 and 43 thereof;  Having regard to the proposal from the Commission;  Having regard to the Opinion of the European Parliament (1);  Having regard to the Opinion of the Economic and Social Committee (2);  Whereas Article 39 (2) (a) of the Treaty provides that account shall be taken of the social structure of agriculture and of the structural and natural disparities between the various agricultural regions in working out the common agricultural policy;  Whereas, in order to attain the objectives of the common agricultural policy set out in Article 39 (1) (a) and (b), special provisions should be adopted at Community level which are suited to those agricultural areas in which natural production conditions are least favourable;  Whereas the statement made by the Community concerning hill farming (3) annexed to the Treaty of Accession declares that special conditions obtain in hill farming areas as compared with other areas of the United Kingdom and that differences, at times very marked, exist between areas in the Member States of the original Community, and also that the special conditions obtaining in certain areas of the enlarged Community may require action with a view to attempting to resolve the problems raised by these special conditions, and in particular to maintain reasonable incomes for farmers in such areas;  Whereas it is necessary that steps be taken to ensure the continued conservation of the countryside in mountain areas and in certain other less-favoured areas ; whereas the Member States have already taken or plan to take positive measures for this purpose and these efforts should be encouraged ; whereas farming performs a fundamental function in this respect;  Whereas the steady decline in agricultural incomes in these areas as compared with other regions of the Community, and the particularly poor working conditions prevalent in such areas are causing large-scale depopulation of farming and rural areas, which will eventually lead to the abandonment of land which was previously maintained, and moreover jeopardizing the viability and continued habitation of those areas the population of which is predominantly dependent on an agricultural economy;  (1)OJ No C 37, 4.6.1973, p. 55 and OJ No C 32, 11.2. 1975, p. 30. (2)OJ No C 100, 22.11.1973, p. 20 and OJ No C 62, 15.3.1975, p. 19. (3)OJ No L 73, 27.3.1972, p. 201.   Whereas, in adopting provisions allowing Member States to apply for the assistance of farming in the less-favoured areas, all or some of the measures making up a particular system of aids designed to meet the particular needs of these areas, the Community would be supporting the efforts made by the Member States to maintain a farming industry in such areas;  Whereas the permanent natural handicaps existing in such areas, which are due chiefly to the poor quality of the soil, the degree of slope of the land and the short growing season, and which can be overcome only by operations the cost of which would be exorbitant, lead to high production costs and prevent farms from achieving a level of income similar to that enjoyed by farms of a comparable type in other regions;  Whereas, furthermore, farms in the less-favoured areas, as a result of handicaps and because in certain cases farming is associated with tourist and craft activities which are particularly well suited to such areas, are inadequately covered by Council Directive No 72/159/EEC (1) of 17 April 1972 on the modernization of farms (hereinafter referred to as "Directive No 72/159/EEC") ; whereas farmers who operate in such areas might find themselves ineligible to receive the investment aids provided for, primarily because it is difficult for them to attain the required level of income, a level which is in any case essential if farming is to be maintained in the long term;  Whereas it is for the Member States to notify to the Commission the boundaries of the less-favoured areas in which they propose to apply all or some of the special system of aids, and all information relating thereto;  Whereas in view of the nature and scope of the aforesaid system, provision should be made for the list of less-favoured farming areas satisfying specific conditions to be drawn up in accordance with Article 43 of the Treaty;  Whereas it may be essential, if the objectives assigned to farming in the less-favoured areas are to be attained, that farmers permanently engaged in agriculture in such areas be paid annual compensatory allowances ; whereas it should be left to the Member States to fix the amount of such allowances according to the severity of the handicaps involved within the limits and conditions fixed for the different types of areas, both as to the amounts which may be paid and the types of production which may be covered;  Whereas the objectives of Directive No 72/159/EEC should also be pursued in the less-favoured areas, though the shortage of capital and the high cost of investment by farms in such areas justifies more favourable financing terms;  Whereas the same reasons justify an improvement in the system of incentives provided for in Article 10 of Directive No 72/159/EEC to encourage farms to concentrate on the production of beef, veal, mutton and lamb, although without this resulting in assistance which is excessive in relation to livestock numbers;  Whereas the compensatory allowances may be regarded as forming an integral part of farm incomes ; whereas, having regard to Article 2 (2) of Directive No 72/159/EEC, a farmer submitting a development plan should consequently be allowed to include the amount of such allowances in his calculation of the earned income to be attained upon completion of the plan;  Whereas in view, in particular, of the special problems of less-favoured farming areas, it is desirable to make it easier for farmers in such areas to achieve comparable incomes by permitting them to include in their calculation of future income a larger proportion of income from non-agricultural sources than is allowed under Directive No 72/159/EEC ; whereas for the same reason it is desirable that in those less-favoured farming areas which are suitable for the development of a tourist or craft industry the incentives to investment under the development plan should also be available in respect of limited investments for tourism or craft industry purposes;  Whereas the rationalization of farms and the need to conserve the countryside necessitate the granting of aids for joint investment schemes in respect of fodder production, for land improvement and jointly-owned capital equipment for pasture and hill grazing;  Whereas the criteria used to define areas eligible for Community aid may also be used to define areas in which Member States may grant special investment aid to farms which do not present a development plan ; whereas, in order not to interfere with the implementation of the farm modernization programme, the arrangements for which have been adjusted, such aid should be limited;  (1)OJ No L 96, 23.4.1972, p. 1.   Whereas, as a result of the foregoing recitals, the measures envisaged constitute the adaptations and the complements to the measures provided for in Directive No 72/159/EEC, which are essential for the achievement of the objectives of that Directive in the areas concerned ; whereas, the financial and general provisions of that Directive must therefore be applied, account being taken of any necessary modifications;  Whereas the Directive should be adopted taking into account certain amendments made to a previous text adopted by the Council on 21 January 1974,  HAS ADOPTED THIS DIRECTIVE:    TITLE I Introduction of a special system of aids to assist the less-favoured farming areas  Article 1 In order to ensure the continuation of farming, thereby maintaining a minimum population level or conserving the countryside in certain less-favoured areas the list of which is determined in accordance with the procedure laid down in Article 2, Member States are authorized to introduce the special system of aids provided for in Article 4 to encourage farming and to raise farm incomes in these areas.  The application of the measures provided for in this system should take into account the situation and development objectives particular to each region.   Article 2 1. Member States shall communicate to the Commission the boundaries of the areas in which they propose to apply the special system of aids provided for in Article 4, and which, in the light of the characteristics specified in Article 3, are eligible for inclusion in the Community list of less-favoured farming areas. Member States shall at the same time submit all relevant information concerning the characteristics of these areas and the measures which they propose to apply in those areas under the special system of aids.  2. The Council, acting in accordance with the procedure laid down in Article 43 of the Treaty, shall adopt the Community list of less-favoured farming areas within the meaning of Article 3 in which Member States are authorized to introduce the special system of aids provided for in Article 4.  3. However, at the request of a Member State, submitted in accordance with paragraph 1, amendments may be made to the limits of the areas in accordance with the procedure laid down in Article 18 of Directive No 72/159/EEC. These amendments may not have the effect of increasing the effective amount of agricultural land of all the areas in the Member States concerned by more than 0.5 % of the total affective agricultural area of that State.   Article 3 1. The less-favoured farming areas shall include mountain areas, in which farming is necessary to protect the countryside, particularly for reasons of protection against erosion or in order to meet leisure needs ; they shall also include other areas where the maintenance of a minimum population or the conservation of the countryside are not assured.  2. These areas must have adequate infrastructures, including access roads to farms, electricity and drinking water and, in tourist and recreation areas, disposal of sewage. Should such amenities be lacking, their provision should be envisaged in the near future in public amenity programmes.  3. Mountain areas shall be made up of local government districts or parts thereof characterized by a considerable limitation of the possibilities for using the land and an appreciable increase in the cost of working it, due:    - either to the existence, because of the altitude, of very difficult climatic conditions the effect of which is substantially to shorten the growing season,       - or, at a lower altitude, to the presence, over the greater part of the district in question, of slopes too steep for the use of machinery or requiring the use of very expensive special equipment,       - or to the combination of these two factors, where the handicap resulting from each taken separately is less acute, provided that this combination gives rise to a handicap equivalent to that caused by the situation referred to in the first two indents.          4. Less-favoured areas in danger of depopulation and where the conservation of the countryside is necessary, shall be made up of farming areas which are homogeneous from the point of view of natural production conditions and must simultaneously exhibit all the following characteristics:    (a) the presence of infertile land, unsuitable for cultivation or intensification, with a limited potential which cannot be increased except at excessive cost, and mainly suitable for extensive livestock farming;       (b) because of this low productivity of the environment, results which are appreciably lower than the mean as regards the main indices characterizing the economic situation in agriculture;       (c) either a low or dwindling population predominantly dependent on agricultural activity, and the accelerated decline of which would jeopardize the viability of the area concerned and its continued habitation.         5. Less-favoured areas within the meaning of this Article may include : small areas affected by specific handicaps and in which farming must be continued in order to conserve the countryside and to preserve the tourist potential of the area or in order to protect the coastline. The total extent of such areas may not in any Member State exceed 2.5 % of the area of the State concerned.   Article 4 1. The special system of aids referred to in Article 1 includes the following measures:    - the granting, under the conditions laid down in Title II, of an allowance to compensate for permanent natural handicaps;       - the granting, under the conditions laid down in Title III, of the aids referred to in Articles 8 and 10 of Directive No 72/159/EEC to farms suitable for development,       - the granting of the aids to joint investment provided for in Article 11;       - the granting, under the terms laid down in Article 12, of national aids to farms for the purpose of attaining the objectives set out in Article 1.         2. Member States shall be free to apply only some of the measures specified in paragraph 1.   TITLE II Compensatory allowance  Article 5 Member States may, within the limits and subject to the conditions laid down in Articles 6 and 7, grant an annual compensatory allowance for the permanent natural handicaps to assist farming activities specified in Article 3.  The granting of such a compensatory allowance which exceeds those limits or which fails to satisfy those conditions, shall be prohibited in the areas appearing on the list adopted in accordance with the procedure laid down in Article 2 (2).   Article 6 1. Where Member States grant a compensatory allowance, farmers with at least three hectares of utilized agricultural area who undertake to pursue a farming activity in accordance with the aims of this Directive for at least five years shall be eligible for such an allowance. However, where a farmer gives up agriculture in accordance with Article 2 (1) of Council Directive No 72/160/EEC (1) of 17 April 1972 concerning measures to encourage the cessation of farming and the reallocation of utilized agricultural areas for the purpose of structural improvement, in cases of force majeure or, for example where his property is subject to compulsory purchase or is purchased in the public interest, he shall be released from such undertaking.  Farmers in receipt of a retirement pension shall be released from the undertaking referred to in the preceding paragraph.  2. Member States may lay down additional or restrictive conditions for granting the compensatory allowance.   Article 7 1. Member States shall fix the amounts of the compensatory allowance according to the severity of the permanent natural handicaps affecting farming activities and having regard to the limits set out below. No allowance may be less than 15 units of account per livestock unit or, where appropriate, in the areas referred to in Article 3 (3), per hectare:  (1)OJ No L 96, 23.4.1972, p. 9.     (a) in the case of cattle, sheep and goats, the allowance shall be calculated in relation to livestock numbers. The allowance may not exceed 50 units of account per livestock unit. The total amount of the allowance granted may not exceed 50 units of account per hectare of the total forage area of the farm. A conversion table for expressing cattle, sheep and goats as livestock units appears in the Annex.  Cows whose milk is intended for marketing may only be taken into consideration for the calculation of the compensatory allowance in the areas defined in Article 3 (3) and in the areas defined in Article 3 (4) and (5) where dairy products form an important part of farming activity.  When Member States exercise this right in the areas defined in Article 3 (4) and (5), the compensatory allowance may not exceed 80 % of the unit amount of the compensatory allowance granted to other livestock units in the area, and the number of dairy cows per eligible farmer to be taken into consideration for the calculation of the compensatory allowance may not amount to more than 10 livestock units.       (b) in the case of production other than of cattle, sheep and goats in the areas referred to in Article 3 (3), the allowance shall be calculated in relation to the area farmed, less the area required for feeding livestock, that given over to wheat growing and any area above 50 ares per farm comprising fully planted apple, pear or peach orchards. The allowance may not exceed 50 units of account per hectare.         2. Member States are entitled not to grant the compensatory allowance for some or all of the products which may benefit under the provisions of paragraph 1 (b).  3. Member States shall, when fixing rules for the implementation of this Article, provide themselves with the means of effectively controlling the bases for calculating the allowances paid to the recipients.   TITLE III Special measures for farms suitable for development  Article 8 Where Member States implement the measure laid down in the second indent of Article 4 (1), Articles 9 and 10 shall apply.   Article 9 1. The minimum charge borne by the recipient of the incentives provided for in Article 8 of Directive No 72/159/EEC for farmers submitting development plans complying with Articles 2 and 4 of that Directive shall be reduced in relation to the minimum charge applied in the other regions. It may not, however, be less than 2 %.  The interest rate subsidy, or the equivalent in the form of a capital grant or deferred repayment terms, shall be increased in relation to that applied in the other regions. It may not, however, exceed 7 %.  2. The amount of the guidance premium provided for in Article 10 of Directive No 72/159/EEC and the ceilings per farm laid down in Council Directive No 73/131/EEC (1) of 15 May 1973 on the guidance premium provided for in Article 10 of the Directive of 17 April 1972 on the modernization of farms, may be increased by one third. Such increase shall apply only to farms with more than 0.5 livestock units per hectare of forage area.  3. The recipient of a compensatory allowance paid under Article 5 may include the compensatory allowance in the level of earned income, within the meaning of Article 4 (1) of Directive No 72/159/EEC, to be attained upon completion of his development plan.   Article 10 1. The system of incentives provided for in Articles 8 and 10 of Directive No 72/159/EEC, and adapted by Article 9 (1) and (2) of this Directive, shall also apply where the development plan does not satisfy the condition imposed by Article 4 (4) (b) of that Directive, which limits the percentage of income from non-agricultural activities to 20 % ; such percentage may not, however, exceed 50 %.  Furthermore, as regards the areas referred to in Article 3 (3) the system of incentives laid down in Articles 8 and 10 of Directive No 72/159/EEC, and adapted by Article 9 (1) and (2) of this Directive, shall also apply when the development plan does not satisfy the conditions imposed by Article 4 (4) (b) of that Directive to the effect that the earned income from agricultural activities must correspond at least to the comparable earned income for one  (1)OJ No L 153, 9.6.1973, p. 24.   man-work unit ; in this case, however, the income from agricultural activities must equal at least 70 % of the comparable earned income for one man-work unit.  2. In less-favoured farming areas which are suitable for the development of a tourist or craft industry, the system of incentives provided for in Article 8 of Directive No 72/159/EEC, and adapted by Article 9 (1) of this Directive, may also be applied to investment on farms, for tourist or craft industry purposes, of a total amount not exceeding 10 000 units of account per farm.   TITLE IV Other measures to aid investment  Article 11 Member States may grant aids to joint investment schemes for fodder production and to improvement and equipment schemes for pasture and hill grazing land which is farmed jointly.   Article 12 1. Without prejudice to the provisions of Article 14 of Directive No 72/159/EEC other than those of paragraph 2 (b), Member States may grant investment aids to farms which are not capable of attaining the level of earned income laid down under Article 4 of that Directive, as adapted by Articles 9 (3) and 10 (1) of this Directive.  2. The aids referred to in paragraph 1 may not be granted on conditions more favourable than those granted by the Member State outside the areas specified in Article 3 to farms fulfilling the conditions of Articles 2 and 4 of Directive No 72/159/EEC. However, the selective character of the modernization incentive within the areas specified in Article 3 must be ensured.  In the case of investments for land improvement, aid may not be granted on conditions more favourable than those granted by the Member State in respect of investments having the same aim, to farms in the same area fulfilling the conditions of Articles 2 and 4 of Directive No 72/159/EEC, as adapted by Articles 9 (3) and 10 (1) of this Directive.  3. When a Member State applies the system of aids referred to in paragraph 1 in a less favoured area, it must apply the provisions of Article 9 (1).   TITLE V Financial and general provisions  Article 13 The series of measures provided for by this Directive forms part of the common measures according to Article 15 of Directive No 72/159/EEC, the financial and general provisions of which apply to this Directive, taking into account the following provisions.   Article 14 The estimated total cost of the common measures referred to in Article 15 of Directive No 72/159/EEC shall be increased to 254.4 million units of account for the first three years.   Article 15 Expenditure by Member States in respect of measures taken under Articles 5 to 11 shall be eligible for assistance from the Guidance Section of the EAGGF, as provided for in Article 19 of Directive No 72/159/EEC. The Guidance Section of the EAGGF shall reimburse to Member States 25 % of eligible expenditure for the compensatory allowance referred to under Title II. However, this expenditure shall not be eligible for reimbursement where the farmer receives a retirement pension.  The Community contribution towards eligible expenditure for the aid provided for in Article 11 may not exceed 20 000 units of account per joint investment scheme and 100 units of account per hectare of pasture or mountain land improved or provided with equipment.   Article 16 1. The authorization referred to in Article 1 shall take effect from 1 October 1974.  2. However, the financial contribution of the Community towards eligible expenditure for aids provided  for under Articles 5 and 11 shall only be incurred for the aids granted during 1975 and thereafter.   Article 17 Member States shall take the necessary measures to conform to the provisions of this Directive within one year from the date of its notification.   Article 18 This Directive is addressed to the Member States.     Done at Brussels, 28 April 1975.  For the Council  The President  M.A. CLINTON    ANNEX Table for converting bovine, ovine and capric animals into livestock units referred to in Article 7 (1) (a) >PIC FILE= "T0006742">