Transfer Pricing

Public CbC reporting for multinational enterprises unlocked

Following a video conference on 25 February 2021, a majority in the EU Council of Ministers is emerging in favour of the implementation of a directive on public country-by-country reporting for multinational enterprises, after some Member States abandoned their opposition to it.

In 2016, the EU Commission had already presented a draft directive for public country-by-country reporting for multinational enterprises (COM/2016/0198 final - 2016/0107 (COD)). However, the adoption of the directive has so far been blocked by disagreement over whether it should be based on Article 50 (ordinary legislative procedure, qualified majority) or Article 115 (special legislative procedure, unanimity) of the EU Treaty. A majority of the competent ministers of the Member States now voted in favour of a compromise proposal by the Portuguese Council Presidency to break this deadlock.

The disclosure requirements would affect multinational enterprises that operate in the European single market, have a permanent presence in the EU (ultimate parent undertaking, subsidiary, permanent establishment) and achieve consolidated annual revenues of more than €750 million.

The public country-by-country report shall include the following information:

  1. brief description of the nature of the activities,
  2. number of employees,
  3. revenues, including sales to related parties,
  4. amount of profit or loss before income tax,
  5. amount of income tax accrued during the relevant financial year,
  6. amount of income tax paid on cash basis during the relevant financial year
  7. amount of accumulated earnings at the end of the relevant financial year.

The information would have to be disclosed separately for each Member State. The same applies to states and tax jurisdictions on the EU list of non-cooperative jurisdictions for tax purposes. For all other states and tax jurisdictions, consolidated reporting is envisaged.

Publication is to take place no later than 12 months after the balance sheet date in a central or commercial or companies register as well as on the websites of the companies concerned and shall remain accessible there for a minimum of 5 consecutive years.

In view of the expected heterogeneity of the reports due to inconsistent implementation in companies and states and the resulting difficulties of interpretation as well as the assessment of the adequacy of the data to be reported by an "interested public" with a lack of expertise, public country-by-country reports should be provided with further explanations in order to avoid unjustified damage to reputation.

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