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Public CbCR: Disclosure of tax-relevant data in the EU

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published on 22 Juni 2021
 

After 5 years of discussion, representatives of the EU states and the European Parliament agreed on a directive on public Country-by-Country Reporting on Tuesday evening (1 June 2021). The negotiating team of the European Parliament has now reached a preliminary political agreement to further increase tax transparency to make it more difficult for multinational groups to shift profits.
 

 

Content of the Directive on the Disclosure of Country-by-Country Reporting

The directive affects groups operating in the EU with a consolidated turnover of at least 750 million euros per fiscal year. The contents of the Country-by-Country Reporting (CbCR), including sales, the number of employees, the amount of taxes paid and the distributed profits, are to be publicly accessible in the future. The CbCR only includes aggregated information on group companies that are either domiciled in an EU member state or are on the so-called “black list” of tax havens drawn up by the EU. This also includes countries that have been on the gray list for two years, currently Turkey, for example.

 

Implementation of the public CbCR

The Public Country-by-Country Reporting Directive is expected to provide more detailed information on implementation. Still pending are final approval from Parliament and the Council of Ministers in the fall, which is likely to be a formality.  According to current information, the member states will have 18 months to transpose the directive into national law. The future notification of the additional “EU CbCR” is to be made within 12 months after the end of the financial year, analogous to the existing CbCR rules.

 

Be one step ahead

The publication of tax-related data can be seen as a significant pressure on multinational corporate groups. Increasing transparency threatens groups with a public debate about profit distribution and taxation. In this respect, it is of particular importance to evaluate the (mis)interpretation possibilities in advance by means of a suitable CbCR Risk Assessment (page in German).

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