Provisional agreement on EU public country by country reporting
Tax transparency is here to stay.
Reporting is more or less settling in. However, even before the final BEPS Action 13 report (transfer pricing documentation and CbC reporting) was published, there have been widespread calls for CbC information to be made public. In January 2016, the European Commission indicated in its Anti-Tax Avoidance Package that it was analysing how certain CbC tax information could be made available publicly. The aim is to reach agreement before the end of the Portuguese presidency of the European Council on 30 June 2021. On 1 June 2021, a provisional political agreement was reached on the EU public CbC reporting directive.
The proposal is that multinational groups with total consolidated revenue of more than €750m (for each of the last two consecutive financial years) will be required to publish specified tax, financial and functional information broken down for each member state in which the group is active, and for countries on the EU’s lists of non-cooperative and monitored jurisdictions.
The requirement will also affect non-EU parented groups. In such cases, the reporting will generally have to be done by the EU subsidiaries or branches, unless the ultimate parent publishes a report including those subsidiaries and branches. There are certain conditions under which a company may defer disclosure of certain elements for five years.
Public CbC reporting brings additional concerns to be weighed against the perceived benefits. For multinationals, the risks include whether the final rules will lead to additional compliance because of different data points, whether they could result in the disclosure of confidential business information, or whether it will lead to reputational damage through misinterpretation of ‘one size fits all’ disclosure formats.
The provisionally agreed text will now be submitted to the relevant bodies of the Council and of the European Parliament for political endorsement. Once approved by both, the directive will be treated as adopted. Member states will then have 18 months to incorporate the directive into national law. Assuming a deadline for adoption into national law of 1 January 2023, the rules could become applicable from 1 January 2024, with the first reporting potentially due by December 2025.
Member states can nevertheless choose to adopt the rules earlier than the set deadline.
Home >Articles > Provisional agreement on EU public country by country reporting
Provisional agreement on EU public country by country reporting
Tax transparency is here to stay.
Reporting is more or less settling in. However, even before the final BEPS Action 13 report (transfer pricing documentation and CbC reporting) was published, there have been widespread calls for CbC information to be made public. In January 2016, the European Commission indicated in its Anti-Tax Avoidance Package that it was analysing how certain CbC tax information could be made available publicly. The aim is to reach agreement before the end of the Portuguese presidency of the European Council on 30 June 2021. On 1 June 2021, a provisional political agreement was reached on the EU public CbC reporting directive.
The proposal is that multinational groups with total consolidated revenue of more than €750m (for each of the last two consecutive financial years) will be required to publish specified tax, financial and functional information broken down for each member state in which the group is active, and for countries on the EU’s lists of non-cooperative and monitored jurisdictions.
The requirement will also affect non-EU parented groups. In such cases, the reporting will generally have to be done by the EU subsidiaries or branches, unless the ultimate parent publishes a report including those subsidiaries and branches. There are certain conditions under which a company may defer disclosure of certain elements for five years.
Public CbC reporting brings additional concerns to be weighed against the perceived benefits. For multinationals, the risks include whether the final rules will lead to additional compliance because of different data points, whether they could result in the disclosure of confidential business information, or whether it will lead to reputational damage through misinterpretation of ‘one size fits all’ disclosure formats.
The provisionally agreed text will now be submitted to the relevant bodies of the Council and of the European Parliament for political endorsement. Once approved by both, the directive will be treated as adopted. Member states will then have 18 months to incorporate the directive into national law. Assuming a deadline for adoption into national law of 1 January 2023, the rules could become applicable from 1 January 2024, with the first reporting potentially due by December 2025.
Member states can nevertheless choose to adopt the rules earlier than the set deadline.
