Over the last years the global focus shifted to fair taxation and transparency. As a result additional reporting requirements such as Country-by-Country Reporting (CbCR) were implemented. Recently steps were made to take CbCR further, requiring certain multinational enterprises (MNEs) to publicly disclose CbCR data.
The current CbCR rules have been in effect since 2016 and bring the obligation to MNEs with a consolidated group revenue of EUR 750 million to submit additional tax-related information to tax authorities.
The original proposal for public CbCR dates back to 2016 as part of a plan for a fairer corporate tax system. Recently proposed changes were endorsed by EU member states, paving the way for formal approval by the European Parliament. After publication, the directive enters into force after which member states have 18 months to transpose the directive into national law. Public reports must then be filed within 12 months after the end of the reporting period.
In short, the current proposal requires MNEs with a total consolidated revenue of more than EUR 750 million in the last two consecutive financial years, headquartered in or outside of the EU or with EU subsidiaries or branches and who are active in multiple countries to publish tax related information. The report contains information such as a description of activities, number of employees, revenue, profit, taxes accrued and income taxes paid. The report should be broken down for each member state and some additional jurisdictions.
The public report should be published on the companies’ website and in a member states’ trade register for at least five years. Those responsible for filing are defined in the proposal, as well as penalties to ensure compliance. The current proposal both broadens the entities that should file the report and the information that should be disclosed.
At Taxvibes we understand retrieving and filing the required data for CbCR correctly can be challenging. Luckily, we can make life easier. We developed solutions to automate the process and to integrate CbCR seamlessly into existing Enterprise Performance Management (EPM) software and we can help exchanging CbCR data with the tax authorities. This minimizes manual work of highly skilled tax employees, allowing them to focus on adding value to the company.
We have years of experience helping businesses with their CbCR requirements. Together with our partner Finext we were the first to file a Country-by-Country report in 2016 and we have filed many reports since.