EU public Country-by-Country Reporting (CbCR): A new era
The European Union has launched a groundbreaking transparency initiative aimed at combating tax avoidance and aggressive tax planning and fostering fair competition. The implementation of EU Directive (EU) 2021/2101 has introduced public Country-by-Country Reporting (pCbCR). Ecovis advisors explain the details.
The directive, in force since June 2024, requires both EU-based and non-EU multinational groups to publicly disclose tax-related data for all EU member states, as well as certain non-EU “non-cooperative” jurisdictions. This obligation generally applies to groups with total consolidated turnover exceeding EUR 750 million in each of the past two consecutive financial years. Other legal criteria may also apply, depending on specific group structures and national legislative adoption.
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What must be reported?
The published report must include data on:
- Nature of business activities
- Number of employees
- Turnover
- Profit or loss before tax
- Amount of income tax paid and accrued
- Accumulated earnings
These details must be broken down per country, enabling stakeholders and the public to see where profits and taxes arise and where not. This represents a significant step beyond the private CbCR previously required for tax authorities only.
Public country-by-country reporting is more than a compliance exercise – it marks a new level of tax transparency that multinational groups should prepare for now.
Thilo Marenbach, Wirtschaftsprüfer und Steuerberater, ECOVIS KSO, Dusseldorf, Germany
Who is affected – and how?
The reporting obligation applies to large multinational groups, regardless of whether their headquarters are inside or outside the EU, with a significant presence within the EU. Certain stand-alone firms (not part of a group) are also covered when they are established in the EU, have operations in at least one other tax jurisdiction and their annual consolidated turnover exceeded EUR 750 million in each of the last two consecutive financial years. The report must be published in at least one official EU language either on the company’s website or, if exempted, via an official register website in a machine-readable electronic format (iXBRL). It must be freely accessible to the public and kept available for at least five years.
Companies should note that national law may provide additional requirements or classify further jurisdictions as “non-cooperative”. Companies in Germany, for example, should review section 342 of the German commercial code (HGB) carefully.
Sanctions and recommendations for action
Non-compliance can result in fines and reputational risks. Crucially, the directive includes a ‘comply or explain’ mechanism: if a non-EU parent company fails to provide the data, its EU subsidiaries are legally required to publish a statement noting this refusal. Therefore, groups should review their internal reporting systems early and be prepared to discuss published figures with investors, the media and NGOs.
The new EU rules increase transparency and public scrutiny regarding where profits are made and taxes are paid. Multinational groups active in the EU must act now to ensure timely and accurate reporting because the first reports are already due in 2026.
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