Progress and Implications of EU Public Country-by-Country Reporting for Multinational Enterprises

August 21, 20230


The enforcement of the EU Public Country-by-Country (CbC) Reporting Directive on December 21, 2021, announced a groundbreaking step towards increased transparency in the area of multinational taxation. This directive necessitates multinational groups operating within the EU and surpassing specific revenue thresholds to reveal detailed information pertaining to their tax operations. The process of transposing the directive into domestic law by EU Member States has set off a series of significant changes and strategic considerations for impacted entities. 


Scope and Applicability 

The directive casts its net over multinational groups whose total consolidated revenues exceed EUR 750 million in each of the preceding two fiscal years. This covers groups with an ultimate parent company based either within the EU or a third-country entity operating within the EU through a qualifying subsidiary or branch. Furthermore, the directive extends its reach to encompass standalone undertakings in the EU that meet the revenue threshold, while it excludes entities solely established in a single Member State. 


Required Disclosures 

The directive mandates an extensive array of disclosures that delve beyond mere financial data. In addition to the ultimate parent undertaking’s name, the financial year in question, the reporting currency, and a list of consolidated subsidiary undertakings, the report must encompass the following dimensions: 

  1. A concise overview of the group’s activities. 
  2. Total employee count. 
  3. Net turnover, inclusive of related-party turnover. 
  4. Pre-tax profit or loss. 
  5. Accrued taxes. 
  6. Taxes actually paid. 
  7. Cumulative earnings. 

Furthermore, the directive allows, and sometimes demands, an explanation for any noteworthy disparities between the income taxes accrued and paid throughout the reporting year, incorporating the preceding year’s figures as well. This departure from existing CbC reporting norms, which previously required information on stated capital and tangible assets, introduces a fresh perspective on tax transparency. 


Geographical Dimension 

An intriguing aspect of the directive lies in the geographical scope of reporting. The mandated information must be separately provided for each EU Member State where the group operates and for jurisdictions designated as non-cooperative or listed in the EU’s “grey” list. Information concerning other jurisdictions can be aggregated under a “rest of the world” category. 


Publication and Implementation 

The directive stipulates distinct reporting obligations contingent on the parent company’s location. For EU-based parent companies, reports are to be submitted to publicly accessible commercial registers and group websites. Non-EU parented groups, on the other hand, require EU subsidiaries and branches to provide information on their behalf. Nevertheless, an exemption exists for non-EU parented groups that have already published the report on their website and designated an EU subsidiary or branch to file it with the national commercial registry. 


Member State Variations 

The implementation of the directive has paved the way for a diverse array of approaches across EU Member States. While some have promptly adopted legislation, including Croatia, Denmark, France, Germany, Hungary, Ireland, Lithuania, Luxembourg, Romania, Slovakia, Spain, and Sweden, others are in the process of drafting or have yet to initiate the transposition process. The individualized stances towards safeguard clauses, website publication exemptions, and implementation timelines contribute to the intricate regulatory mosaic. 


Country-Specific Insights 


  • Croatia: On July 20, 2023, legislation to transpose the directive into domestic law was published, closely aligning with the directive’s text. Croatia adopted the “safeguard clause” and the website publication exemption. 
  • Czech Republic: Draft legislation was published, setting forth thresholds and the “safeguard clause.” The Czech Republic, however, chose not to adopt the website publication exemption. 
  • France: An implementing ordinance and decree were issued on June 21 and 22, 2023, largely aligned with the directive’s text. France extended provisions applicable to EU Member States to those in the European Economic Area (EEA). 
  • Germany: The law was published on June 21, 2023, closely mirroring the directive. Germany adopted the “safeguard clause” but limited its application to four years instead of five. 
  • Hungary: In May 2023, Hungary transposed the directive, adopting the “safeguard clause” and requiring explanations for significant tax differences. 
  • Ireland: Legislation was published on June 23, 2023, closely aligned with the directive. Ireland embraced the “safeguard clause” and the website publication exemption. 
  • Lithuania: On June 15, 2023, Lithuania adopted the directive, including the “safeguard clause” and the website publication exemption. 
  • Luxembourg: The bill was approved in July 2023, with provisions aligned with the directive. Luxembourg embraced the “safeguard clause” and the website publication exemption. 
  • Netherlands: Draft legislation was published on July 5, 2022, closely mirroring the directive, yet without clarity on the “safeguard clause.” The Netherlands required website publication.
  • Poland: Draft legislation dated March 29, 2023, closely aligns with the directive, with certain thresholds and an extended scope. Poland proposed criminal liability for non-compliance. 
  • Romania: Early adoption of the directive was effective from January 1, 2023, with thresholds and exemptions in line with the directive. Romania implemented the “safeguard clause” and the website publication exemption. 
  • Slovakia: The directive was transposed into domestic law, with no “safeguard clause” adoption and a website publication exemption. 
  • Spain: Legislation was published on December 22, 2022, closely aligned with the directive. Spain mandated a six-month timeline for report approval and publication. 
  • Sweden: On June 7, 2023, Sweden transposed the directive, expanding provisions applicable to EU Member States to the EEA. 



The EU Public CbC Reporting Directive marks a pivotal shift toward heightened tax transparency and accountability for multinational groups operating within the EU. The multifaceted implementation strategies among Member States foster a complex landscape necessitating meticulous tracking and adherence. Impacted entities must ensure compliance with directive requirements while vigilantly monitoring evolving legislative dynamics in the domain of international taxation. The intricate provisions of the directive underscore the necessity for robust internal reporting mechanisms capable of accommodating these newfound obligations and navigating diverse national regulations. 

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