European Commission proposes public Country-by-Country Reporting (CbCR) rules for EU multinational enterprises

Written by Jonas Van de Gucht 13 April 2016


On 12 April 2016, the European Commission (EC) introduced a legislative proposal on public reporting requirements for certain EU enterprises, being multinational groups with a consolidated turnover exceeding EUR 750 million. The proposal is founded on the EC’s determination to address corporate tax avoidance in Europe, of which the cost for the EU Member States is estimated to amount to up to EUR 70 billion a year.

The Commission’s Vice-President, Valdis Dombrovskis, re-emphasized that “the fight against tax avoidance is a key priority of the Commission”, and “close cooperation between tax authorities must go hand in hand with public transparency”. In a nutshell, the proposal entails the obligation to provide the information listed below in an understandable and a comprehensive way and to refer to an enterprise’s activities in each EU Member State. The information must be provided for each Member State and for each tax jurisdiction included in a list of jurisdictions deemed by the EU not to meet certain criteria for good standards of tax governance. Data for all other non-EU tax jurisdictions may be aggregated.

The following data must be disclosed:

  • the nature of the enterprise’s activity;
  • the number of persons employed;
  • the net turnover – including that with related parties;
  • the profit/loss before tax;
  • the current year corporate income tax accrued and corporate income tax paid (differences between amounts of tax paid and tax accrued at group level must be explained);
  • the amount of accumulated earnings.

The EC proposal goes further than OECD BEPS Action 13 requirements regarding the disclosure of information to tax authorities. This report must be published and made accessible on the corporate website in at least one of the official languages of the EU and filed with the appropriate business register.

For multinational groups having their headquarters in the EU, the obligation to provide this information lies with the ultimate parent enterprise in the EU. For groups headquartered outside the EU, the obligation falls on their medium and large sized subsidiaries and branches within the Union. In short, the EC proposal introduces a reporting obligation for MNEs regardless of whether their HQ is located inside or outside the EU, and applies to all industry sectors except those financial institutions that already prepare public CbCR under the Capital Requirements Directive.

This “public CbCR” initiative comes in the form of a proposal to amend the Accounting Directive (Directive 2013/34/EU of the European Parliament and the Council). In order for the proposal to be approved, both the Council and the Parliament will have to agree on a final compromise text. Subsequently, it will have to be transposed into the Member States’ national legislation within one year following its entry into force.

Read the full press release here.

It is imperative that organisations can comply with the detailed data requests and act now to risk assess the data to be disclosed. For more insights on CbCR and to understand the implications for your organisation, please contact Jonas Van de Gucht.