- A new EU directive will require public disclosure of tax and financial information for operations in EU member states and “non-cooperative jurisdictions” by multinational groups with a global revenue over €750 million that have an EU parent or, for non-EU parented groups (e.g. UK groups), substantial EU subsidiaries/branches.
- The “safeguard clause” in the directive (to be adopted at member states’ discretion) provides for the possibility of a deferral of certain reporting requirements, but the rules are very prescriptive. The deferral is limited to five years, the existence of the deferral and a reasoned explanation must be disclosed, and it cannot apply to information concerning jurisdictions listed by the EU as non-cooperative for tax purposes (Annex I and Annex II).
- EU subsidiaries and branches of non-EU headed groups must request the required information from their non-EU parent, and if such information is not provided, the fact must be disclosed, alongside all information in their possession.
- EU-headquartered banking groups may, under certain conditions, be exempt from the requirements of the directive.
- The European Commission (EC) has recently launched a consultation on a common template and electronic reporting formats for the EU PCBCR.
- Timing: in force from 21 December 2021. Member states had until June 2023 to transpose the directive into domestic law. However, two member states have not yet done so (Cyprus and Slovenia) and risk to be referred to the Court of Justice of the EU, following the EC's reasoned opinion on 23 May 2024. Application, at the latest, is from the start date of the first financial year beginning on or after 22 June 2024. Some EU member states have chosen to apply the rules earlier than required by the directive, such as Romania which has the earliest application from 1 January 2023, Croatia (1 January 2024) and Sweden (31 May 2024). The EC consultation on the EU PCBCR reporting mechanism closed on 6 September 2024 and the EC expects to release the final template and an electronic reporting format in Q3 2024.
Resources (click to open)
- Tax paid by multinationals – template and electronic formats for ‘country by country’ reports (European Commission, August 2024)
- Final text of EU public CbC reporting directive published (Deloitte tax@hand, December 2021)
