EU: “Public” country-by-country reporting for multinational enterprises advances

EU: “Public” country-by-country reporting

A proposal in the European Union to require the public release by multinational enterprises on a country-by-country basis of the amount of taxes paid and to require public disclosure of relevant tax information relating to transactions in countries that are identified as “tax haven” jurisdictions advanced today with its official publication by the European Commission. Today's proposal would amend the Accounting Directive (Directive 2013/34/EU) and require certain multinational companies to publish annually a report disclosing the profit and the tax accrued and paid in each EU Member State on a country-by-country basis. This information would remain available for five years.

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As noted in today’s EC release, the proposal would require large multinational companies to disclose publicly the income tax they pay within the European Union, on a country-by-country (CbC) basis. In addition, these companies would be required to disclose how much tax they pay on the business they conduct outside the European Union. For those tax jurisdictions that do not abide by tax good governance standards (“tax havens”), this information would have to be disclosed on a disaggregated basis. 

Any multinational company—whether European or not—that is currently active in the EU’s single market with a permanent presence in the EU and that has a turnover in excess of €750 million would have to comply with these additional transparency requirements. It is estimated that this requirement would affect approximately 6,000 multinational enterprises that are active in the EU.

Information for public disclosure on CbC basis

The public CbC reporting would also require some additional information apart from tax paid, and this would include:

  • The nature of the activities
  • The number of employees
  • The total net turnover made, which includes the turnover made with third parties as well as between companies within a group
  • The profit made before tax
  • The amount of income tax due in the country as a reason of the profits made in the current year in that country
  • The amount of tax actually paid during that year
  • The accumulated earnings

This information would have to be disclosed for each EU country in which a company is active, as well as for the tax havens. Aggregate figures would also have to be provided for operations in other tax jurisdictions in the rest of the world.

Reporting would also include explanations on discrepancies between the amounts of income tax actually paid and income tax accrued.

This information would have to be made available in a stand-alone report accessible to the public for at least five years on the company’s website. Companies would also have to file the report with a business register in the EU. 

What’s next?

The proposal is now to be submitted to the European Parliament and Council for consideration and final adoption by qualified majority of the Council. Once adopted, the new measures would have to be transposed into national legislation by all EU Member States, within one year after its entry in force.


Read an April 2016 report prepared by KPMG’s EU Tax Centre: Commission
announcement on public Country-by-Country Reporting

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