IRS Form 8975 Guide: Complete Country-by-Country Report

Introduction – What Is Form 8975?

IRS Form 8975, titled Country-by-Country Report, is an annual international tax reporting document administered by the Internal Revenue Service (IRS) and the U.S. Department of the Treasury. It is governed by Treasury Regulation Section 1.6038-4.

This form is used by the ultimate parent companies of large U.S. multinational enterprise (MNE) groups to report their global financial metrics, profits, taxes paid, and economic activities on a country-by-country basis. Form 8975 serves as the master cover return, while its attached schedules provide detailed breakdowns for every foreign country where the group conducts business.

Purpose of the Form – Why Does Form 8975 Exist?

Form 8975 was established as part of the international Base Erosion and Profit Shifting (BEPS) Action 13 initiative led by the Organisation for Economic Co-operation and Development (OECD) and supported by the G20. In the past, tax authorities lacked visibility into how massive multinational corporations structured their global operations, making it easy for companies to shift profits into low-tax jurisdictions while booking deductions in high-tax countries.

Form 8975 solves this global transparency problem by providing tax administrations with a high-level overview of an enterprise’s global footprint. Through bilateral tax treaties and tax information exchange agreements, the IRS securely shares Form 8975 data with foreign tax authorities, helping governments evaluate transfer pricing risks and ensure global corporate income is taxed fairly.

Who Needs to File This Form?

You must file Form 8975 if your company is the Ultimate Parent Entity (UPE) of a U.S. Multinational Enterprise group that meets the federal revenue threshold. An organization must file if it satisfies the following criteria:

• Ultimate Parent Status: The business is a domestic entity that directly or indirectly controls a group of business entities, and it is not controlled by any other entity higher in the corporate ownership structure.
• Revenue Threshold: The U.S. MNE group had total consolidated group revenue of $850 million or more in the immediately preceding annual accounting period.
• Foreign Business Operations: The corporate group includes at least one foreign business entity, foreign subsidiary, or foreign permanent establishment.
• Designated Surrogate Entities: In specific authorized arrangements, a domestic entity designated as a surrogate parent entity by a foreign parent may file Form 8975 in the United States.

Who Is Exempt / Not Required to File?

Most American businesses do not meet the massive revenue requirements of Country-by-Country reporting. You are exempt or not required to submit Form 8975 if:

• Revenue Under $850 Million: Mid-sized and smaller multinational businesses whose preceding-year gross revenue fell below the $850 million statutory threshold.
• Purely Domestic Enterprises: Companies that generate billions of dollars in revenue but operate strictly within the United States with no foreign entities, foreign branches, or international permanent establishments.
• U.S. Subsidiaries of Foreign Parents: American companies owned by a foreign parent corporation do not file Form 8975 if their foreign parent files a Country-by-Country report in its home country and that country shares data with the United States.
• Individuals and Partnerships: Private individuals, trusts, standard small business owners, and non-parent partnerships never file Form 8975.

When to File Form 8975

Form 8975 is an annual tax schedule that is filed directly with the ultimate parent entity’s primary federal income tax return (typically Form 1120 for corporations).

The filing deadline matches the due date of your corporate income tax return, including approved extensions:

• Calendar-Year Corporations: Typically April 15 (or October 15 if a six-month extension is requested on Form 7004).
• Fiscal-Year Corporations: The 15th day of the fourth month following the close of the parent company’s fiscal accounting year (plus applicable extensions).

Where and How to File

Because Form 8975 data must conform to strict international XML data exchange formats, electronic filing is mandatory. The parent entity must submit Form 8975 and all accompanying Schedules A electronically through the IRS Modernized e-File (MeF) system as part of its annual Form 1120 filing package.

Paper filing is permitted only under rare circumstances where an entity has requested and received an approved electronic filing hardship waiver from the IRS. If a hardship waiver is granted, the physical forms must be mailed along with the corporate return to the designated IRS address as per instructions for Form 1120.

Step-by-Step Instructions to Fill Form 8975

Form 8975 consists of the master parent form and multiple attached copies of Schedule A (Form 8975). While Form 8975 identifies the parent company, you must attach a separate Schedule A for every country in which the enterprise operates.

Master Form 8975 Breakdown

Part & Section	Form Focus	Filing Directions
Accounting Period	Reporting Dates	Enter the beginning and ending dates of the annual accounting period of the U.S. MNE group reported on this filing.
Part I (Lines 1–4)	Ultimate Parent Entity	Enter the legal business name, U.S. Employer Identification Number (EIN), physical corporate address, and country of organization for the parent company.
Part I (Line 5)	Surrogate Parent Checkbox	Check this box only if the filing entity is a designated surrogate parent entity filing on behalf of a foreign group.
Part II (Line 6)	Additional Information	Provide a concise narrative describing group-level accounting policies, exchange rates used, changes in corporate structure, or other contextual notes explaining the global data.
Schedule A Attachments	Tax Jurisdiction Schedules	Complete and attach a separate Schedule A for each tax jurisdiction (country) where the group operates, plus a schedule for stateless entities.

Required Documents and Information Needed Before Filling

Compiling Country-by-Country reporting data requires extensive global coordination across finance, legal, and human resources departments. Gather the following records before preparing Form 8975:

• Consolidated Audited Financial Statements: The parent group’s global balance sheets, trial balances, and consolidation schedules.
• Entity Structure Charts: Worldwide corporate charts listing every direct and indirect subsidiary, branch, joint venture, and foreign partnership.
• Local Statutory Tax Returns: Copies of foreign corporate tax filings and official tax payment receipts confirming income taxes paid on a cash basis and accrued income tax expense.
• Global HR Headcount Data: Audited payroll records establishing employee headcounts or Full-Time Equivalent (FTE) numbers per foreign jurisdiction.
• Completed Schedules A: Finalized copies of Schedule A (Form 8975) for every country where the MNE maintains operations.

Common Mistakes to Avoid

Errors on Form 8975 can create international audit exposure across dozens of foreign subsidiaries. Watch out for these frequent mistakes:

• Failing to File Electronically: Attempting to mail paper forms without an approved IRS hardship waiver. The IRS electronic filing system requires XML schemas to transmit CbC data across international borders.
• Using Current-Year Revenue for Eligibility: Checking current-year revenue rather than preceding-year revenue. The $850 million threshold applies to the consolidated revenue of the immediately preceding annual accounting period.
• Omitting Operating Jurisdictions: Forgetting to attach a Schedule A for a minor foreign branch or sales office. Every sovereign territory with a constituent entity requires its own schedule.
• Leaving Part II Blank When Explanations Are Needed: Failing to use Part II to explain unique accounting rules, foreign currency exchange methodologies, or major corporate acquisitions.
• Missing the Parent Return Deadline: Forgetting that Form 8975 must be submitted with Form 1120. If Form 1120 is extended using Form 7004, Form 8975 is automatically extended as well.

Penalties for Non-Filing or Errors

Failing to fulfill Form 8975 requirements carries severe consequences both in the United States and abroad:

• Domestic IRS Penalties (IRC Section 6038): Failing to file Form 8975 carries a baseline penalty of $10,000. If the failure continues for more than 90 days after IRS notification, additional penalties accrue at $10,000 for each 30-day period, up to an additional $50,000 per return.
• Foreign Local Filing Trigger: Under OECD BEPS regulations, if the U.S. parent fails to submit Form 8975, foreign tax authorities in countries where subsidiaries operate can force those local subsidiaries to file the report locally.
• Foreign Fines and Inquiries: Triggering foreign local filing often exposes overseas subsidiaries to significant local penalties, reputational damage, and mandatory transfer pricing audits by foreign governments.

Related Forms and Schedules

Form 8975 coordinates with a broad network of international tax schedules and federal returns:

• Schedule A (Form 8975): Tax Jurisdiction Information (the essential attachment filed for each country).
• Form 1120: U.S. Corporation Income Tax Return (the master return where Form 8975 is attached).
• Form 5471: Information Return of U.S. Persons With Respect to Certain Foreign Corporations.
• Form 8858: Information Return of U.S. Persons With Respect to Foreign Disregarded Entities and Foreign Branches.
• Form 8865: Return of U.S. Persons With Respect to Certain Foreign Partnerships.

Frequently Asked Questions

What is an Ultimate Parent Entity (UPE)?

An Ultimate Parent Entity is a legal entity that owns a controlling interest in one or more other business entities, is required to prepare consolidated financial statements under applicable accounting principles, and is not directly or indirectly controlled by any other business entity.

What is the revenue threshold for filing Form 8975?

A U.S. MNE group must file Form 8975 if its total consolidated group revenue was $850 million or more in the immediately preceding annual accounting period.

Is Form 8975 available to the general public?

No. Form 8975 is confidential tax return information protected under IRC Section 6103. It is shared strictly between the IRS and authorized foreign tax authorities under government-to-government tax treaties and information exchange agreements.

How does Form 8975 differ from Schedule A (Form 8975)?

Form 8975 is the parent return that identifies the ultimate parent entity and provides group-level narrative notes. Schedule A is the supporting schedule completed separately for each individual country to report local revenues, taxes, employees, and assets.

Can a company voluntarily file Form 8975 if its revenue is under $850 million?

Yes. A U.S. MNE group with revenues below $850 million may file Form 8975 voluntarily. Companies often do this to satisfy foreign country CbC requirements and prevent their foreign subsidiaries from having to complete complex local filings overseas.

What currency must be used on Form 8975?

All financial amounts reported on Form 8975 and its attached Schedules A must be converted and reported in U.S. dollars using consistent exchange rates across the entire filing.

Conclusion – Key Takeaways Summarized

IRS Form 8975 is the primary reporting vehicle for large U.S. multinational groups participating in the global Country-by-Country reporting framework. By detailing how revenue, taxes, and employees are distributed across international jurisdictions, it supports global transfer pricing transparency.

To ensure total compliance, verify that your preceding-year revenue meets the $850 million threshold, compile verified financial trial balances across all global subsidiaries, complete a separate Schedule A for each foreign country, and transmit the entire filing package electronically alongside your corporate Form 1120.