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Friday, 18 June 2021

International Tax update: EU Agreement with regard to Public country-by-country reporting for certain undertakings

On 1 June 2021 the EU Council negotiators and the negotiation team of the European Parliament reached a provisional political agreement on a proposed directive on the disclosure of income tax information by certain undertakings, also known as the public country-by-country reporting (CBCR) directive.

Already in 2016, the European Commission released a proposal to introduce public country-by-country reporting. The objective of the initiative is to enable public scrutiny of income taxes born by multinational undertakings carrying out activities within the EU.

The text now agreed foresees in an amendment of the Directive 2013/34/EU on the annual financial statements and requires multinational groups and certain standalone undertakings to provide the public with additional financial information. In particular a report on income tax information should be published, when they have a worldwide total consolidated revenue of more than €750 million in each of the last two consecutive financial years. The obligation to disclose information will not only apply to groups that are headquartered in the EU. Groups with a headquarter outside of the EU may also be obliged to report income tax information when they have EU subsidiaries and/or branches.

The report on income tax should in particular include information regarding the nature of the company’s activities, the number of employees, the amount of revenues and of profit or loss before income tax, the amount of accrued and paid income tax (or losses) and the amount of accumulated earnings.

The information should be provided with a high level of detail and should be broken down by Member State. The same should be done for tax jurisdictions that are listed in the EU list of non-cooperative jurisdictions for tax purposes (so called EU ‘black’ and ‘grey lists’). For other tax jurisdictions the information may be provided on an aggregated basis. A common EU template should be used – also for comparability reasons. Also, and perhaps above all, these reports have to be made public via the company websites. And remain so for at least five consecutive years. However, in certain cases the disclosure of income tax information may be omitted when it could be seriously prejudicial to the commercial position of an undertaking. In such a case, the undertaking shall have the possibility to defer disclosing certain information for a limited number of years; in the agreed text a deferral period of maximum 5 years is foreseen.

As a next step, the text will have to be submitted to the EU institutions for political endorsement. Subsequently  the EU Council and European Parliament will have to endorse the text. After the directive – potentially in a modified version – is adopted, the Member States will have to transpose it into their domestic law within a period of 18 months. As always, this brings with it the risk of slight deviations between different member states.

As this proposal must be expected to result in a final directive relatively soon, the European legislature will add another reporting obligation to an already impressive – and growing – list. Companies will, again, be faced with additional compliance obligations and the administrative costs attached to it. Even though the proposal argues that no undue administrative burden should be expected. So, it is probably wise to start assessing now and act accordingly.

Rik Smet - Associate (

Delphine Weyens - Associate (

Tiberghien’s international tax team will continue to monitor these and other tax developments relevant for Belgium / Luxembourg based multinational enterprises. Our editorial board consists of:

In case you have further questions on this publication or want to discuss a tax query, please do not hesitate to contact the author(s) or one of the members of the editorial board.

This newsflash is for information purposes only and cannot be relied upon as legal advice.

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