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European Union

13 April 2016

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European Commission Issues Proposed Directive for Public CbC Reports

On 12 April 2016, the European Commission issued the proposed Directive for public Country-by-Country (CbC) reporting requirements in the EU. The requirements are similar to, but separate from the non-public CbC reporting requirements based on Action 13 of the OECD BEPS Project. The new public CbC requirement will apply under the EU Accounting Directive (Directive 2013/34/EU), which will be amended by the proposed Directive for this purpose. According to the explanatory memorandum included with proposed Directive, at least 6,000 MNE groups will be subject to the public CbC reporting requirement, with around 4,000 being non-EU MNE groups.

Public CbC Reporting Requirement

The requirement to publish public CbC reports will generally apply to all MNE groups operating in the EU with consolidated annual group revenue exceeding EUR 750 million. When the consolidated financial statements of the group are presented in a currency other than the euro, the EUR 750 million threshold is to be converted to an equivalent amount in the currency used by applying the exchange rate applicable on the date the proposed Directive enters into force, rounded off to the nearest thousand.

When required, the public CbC reports are to be filed with an official EU business register and made publically available on the website of the group member(s) responsible for the report for at least five consecutive years.

Entities Required to Publish/File

For EU headquartered MNEs, the public CbC reporting requirement is met by the ultimate parent located in the EU. For non-EU headquartered MNEs, two options apply:

  1. The subsidiaries and/or branches of the MNE in the EU publish the report on their websites and file with the relevant EU business registers on behalf of the non-EU parent; or
  2. The non-EU parent publishes the report on its website, and designates one of the EU subsidiaries to file with an EU business register on its behalf.

However, an exemption applies for non-EU headquartered MNEs having only branches considered small undertakings in the EU. For this purpose, the definition of small undertakings provided under the Accounting Directive is used, which includes undertakings not exceeding two or more of the following:

  • Balance sheet total: EUR 4 million;
  • Net turnover: EUR 8 million;
  • Average number of employees during the financial year: 50

The balance sheet and net turnover thresholds for small undertakings vary by Member State depending on their implementation of the Accounting Directive, meaning the thresholds may be up to EUR 6 million and EUR 12 million respectively.

Public CbC Report Content

The public CbC report must include the following information on a per-country basis for each EU Member State in which the MNE group operates, as well as for each non-EU tax jurisdictions that is considered a tax haven in a yet to be finalized common EU list:

  • A brief description of the nature of the activities;
  • The number of employees;
  • The amount of the net turnover, which includes the turnover made with related parties;
  • The amount of profit or loss before income tax;
  • The amount of income tax accrued (current year) which is the current tax expense recognized on taxable profits or losses of the financial year by undertakings and branches resident for tax purposes in the relevant tax jurisdiction;
  • The amount of income tax paid which is the amount of income tax paid during the relevant financial year by undertakings and branches resident for tax purposes in the relevant tax jurisdiction; and
  • The amount of accumulated earnings.

The information for all other tax jurisdiction in which the MNE group operates must also be included, but may be presented on an aggregated basis.

The report should also include an overall narrative providing explanations on material discrepancies between the amounts disclosed for income tax accrued and income tax paid, if any, taking into account corresponding amounts concerning previous financial years.

The currency used in the report should be the currency in which the consolidated financial statements are presented. Individual Member States are not allowed to require the use of another currency.


The penalties that will apply for failing to publish the public CbC report when required are those provided for by each Member State in accordance with the Accounting Directive. Individual Member States are not allowed to impose domestic penalties outside the scope of the Accounting Directive.

Next Steps

The proposed Directive for public CbC reporting is now submitted to the European Parliament and the Council of the EU for adoption. Once adopted, the proposed Directive will enter into force 20 days after it is published in the Official Journal of the European Union. Individual Member States will have one year after its entry into force to bring into force the laws, regulations and administrative provisions necessary to comply with the new requirements.

Click the following links for the associated press release, a factsheet on the public CbC requirements, and a provisional version of the proposed Directive.

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