The directive provides that ultimate parent undertakings or stand-alone undertakings with a total consolidated revenue of 750 million euro over the last 2 consecutive financial years should make certain (tax) information public.
In principle, reporting should be done by the ultimate parent undertaking. For groups which carry out activities within the EU solely via subsidiary undertakings or branches, the responsibility to publish the information and make it accessible lies with medium-sized and large subsidiary undertakings and medium-sized and large branches as defined in Directive 2013/34/EU. Balance sheet total, net turnover and average number of employees are relevant criteria to determine the size of the undertaking or branch.
If the information is not available or the ultimate parent undertaking does not provide all the required information, the subsidiary undertaking or the branch should publish the information that they have, accompanied by a statement specifying that their ultimate parent company has not made the necessary information available.
The required information should be published no later than 12 months after the balance sheet date of the year concerned on the website of:
- the ultimate parent undertaking or stand-alone undertaking;
- the subsidiary or affiliated undertaking; or
- the branch or the undertaking which opened the branch or an affiliated undertaking.
In order to avoid double reporting for the banking sector, the directive does not apply to that ultimate parent undertakings or stand-alone undertakings where such undertakings or their affiliated undertakings disclose a report in accordance Directive 2013/36/EU.
Information to be provided
The information to be disclosed under the directive includes the following:
- the name of the ultimate parent or stand-alone undertaking, the financial year concerned and the currency used, and, where applicable, a list of all the subsidiary undertakings;
- a brief description of the nature of the activities;
- the number of employees on a full-time equivalent basis;
- revenue which includes:
the sum of the net turnover, other operating income, income from participating interests, excluding dividends received from affiliated undertakings, income from other investments and loans forming part of the fixed assets, any other interest receivable and similar income; or
the income as defined by or within the meaning of the financial reporting framework on the basis of which financial statements are prepared excluding value adjustments and dividends received from affiliated undertakings;
- the amount of profit or loss before income tax;
- the amount of income tax accrued during the relevant financial year which is the current tax expense recognized on taxable profits or losses of the financial year by undertakings and branches in the relevant tax jurisdiction;
- the amount of income tax paid on cash basis which is the amount of income tax paid (including withholding tax paid by other undertakings) during the relevant financial year by undertakings and branches in the relevant tax jurisdiction; and
- the amount of accumulated earnings at the end of the relevant financial year.
In order to avoid creating an administrative burden Member States shall permit the information listed above to be reported on the basis of the existing reporting instructions that already apply for country-by-country reporting. The information shall be presented using a common template and electronic reporting formats which are machine-readable.
Disclosure per country or group of countries
The information must be disclosed on a disaggregated basis, that is, on a country-by-country basis for:
- each Member State;
- countries that are mentioned in annex 1 of the Council conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes from their meeting of 5 October 2021 (these black listed countries are currently: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands, Vanuatu);
- countries that are mentioned in annex 2 of the Council conclusions, if the country is on the list for 2 consecutive years (these grey listed countries are currently: Botswana, Jordan, Thailand and Turkey).
The information related to other countries may be disclosed on an aggregated basis.
When the financial accounts are audited, they should contain a statement by the statutory auditor, for the financial year preceding the financial year for which the statements under audit were prepared, whether a public country-by-country report should have been drawn up. The report does not need to be audited.
By 22 June 2023, Member States should implement the directive into domestic legislation. The legislation should apply at the latest from the commencement date of the first financial year starting on or after 22 June 2024.
Please contact us for further information on public country-by-country reporting.