More than five years after it was first tabled in April 2016, the EU directive on the disclosure of income tax information, commonly known as the public country-by-country reporting (CBCR) directive, was published in the Official Journal of the European Union on 1 December 2021. The directive will enter into force 20 days after publication–on 21 December 2021—and the EU member states will then have 18 months—until 22 June 2023-- to implement and transpose the directive into domestic law.
Directive (EU) 2021//2101 amends the EU Accounting Directive to impose additional reporting requirements on some large multinational enterprises. The new rules are aimed at enhancing tax transparency and require companies within its scope to publicly disclose certain tax-related information in the form of a country-by-country report. The directive is the EU’s response to Action 13 of the OECD Base Erosion and Profit Shifting project, which promotes the use of these rules to better measure the effects of tax avoidance.
The directive applies to multinational enterprises with a worldwide consolidated net revenue of more than EUR 750 million that are active in one or more EU member states. This includes non-EU multinationals with EU subsidiaries or branches. The ultimate parent undertaking of a multinational group subject to the new rules must draw up a report in which it provides information on its business activities and tax positions, including information on income tax accrued and actually paid in a financial year. The information must be provided for each member state individually as well as for third-country jurisdictions that the EU has identified as not (sufficiently) cooperative for tax purposes. For all other third-country jurisdictions the information is to be disclosed on an aggregated basis.
Companies will have 12 months from the end of a financial year to publish the report that relates to that particular year. The report must be made accessible on the company’s website, free of charge, and must remain accessible for at least five consecutive years. The responsibility for drawing up, publishing and making the report accessible rests collectively with the members of the administrative, management and supervisory boards of the ultimate parent undertaking.
The new rules will apply, at the latest, to financial years starting on or after the 30th month following the day of entry into force. Given that the directive will enter into force on 21 December 2021, the requirements must apply, at the latest, from the first day of the first financial year starting on or after 22 June 2024.
Niek de Haan