Posted: 07 Jun. 2021

Public Country-by-Country Reporting (CbCR): Corporations in the EU will have to disclose their profits and taxes in future & the US parliament puts forward a similar proposal

On Tuesday evening of last week, negotiators from the EU states and the European Parliament reached a preliminary agreement on the core of the new directive on “Public Country-by-Country Reporting”. The final approval of the Parliament and the Council of Ministers is considered a formality.

Similarly, on 12 May, the US parliament had brought forward a proposal that would direct the Securities and Exchange Commission (SEC) to require large publicly traded corporations to disclose certain tax and non-tax information on a country-by-country basis.

EU Public CbCR requirements

Multinational groups operating in the EU with a turnover of at least EUR 750 million in the last two consecutive years will be affected by the new law. Tax income information for each EU member state and countries on the EU's "blacklist" of tax havens would need to be disclosed on a country-by-country basis and would include the following: 

  • Nature of the activities;
  • Number of employees;
  • Total net turnover (derived from both third party and intragroup transactions);
  • Profit before tax;
  • Amount of income tax payable in the country as a result of the profits derived in the current year in that country;
  • Amount of income tax actually paid during the year; and
  • Accumulated earnings.

The information would need to be made available in a specific report according to a common EU template and made accessible to the public for at least five years on the company’s website. Companies would also have to file the report with a business register within the EU.

Should the EU proposal go through, which is pretty certain, member states will have eighteen months to transpose the directive into national law.

US proposal

On 12 May the US House Financial Services Committee voted to approve legislation that would direct the SEC to require publicly traded corporations with annual revenues of USD 850 million or more to disclose certain tax and non-tax information on a country-by-country basis.

It is unclear when the House's proposal will be brought to the floor for a vote by the entire chamber or if it will be considered as a stand-alone measure or as part of a larger tax package. Also unclear is when—or whether—the Senate version will be taken up in the Committee on Banking, Housing, and Urban Affairs.

For more information, please do not hesitate to reach out.

Key contacts

Salim Damji

Partner, Transfer Pricing

sdamji@deloitte.ch

Martin Krivinskas

Partner, Transfer Pricing

martinkrivinskas@deloitte.ch

Kayla Eberli

Senior Manager, Transfer Pricing

keberli@deloitte.ch

Aleksandra Skiba

Senior Consultant, Transfer Pricing

askiba@deloitte.ch

Florian Hildbrand

Consultant, Transfer Pricing

fhildbrand@deloitte.ch