In April 2016, the European Commission proposed an amendment to Directive 2013/34 / EU (Accounting Directive) regarding the publication of information on corporate income tax of certain companies and branches as part of the Action Plan for a fairer corporate income tax system. Directive 2021/2101 was adopted on 24 November 2021 and entered into force on 21 December 2021. Country-by-country reporting is an effective and appropriate tool to increase transparency regarding the activities of multinational companies and to enable the public to assess the impact of these activities on the real economy. Public reporting by country also improves the ability of shareholders to properly evaluate the risks to which companies are exposed, leads to investment strategies based on accurate information and increases the ability of policy makers to assess the effectiveness and impact of national legislation.

Member States are required to implement Directive 2021/2101 into national law by 22 June 2023 and to communicate to the European Commission the text of the implemented provisions. Member States shall ensure that the laws, regulations and administrative provisions transposing Articles 2021/2101 into national law apply no later than the beginning of the first financial year beginning on or after 22 June 2024.

Greater transparency and accountability

The European Commission, the Council of the EU and the European Parliament consider it necessary to introduce public oversight of corporate income tax, which is payable by multinational companies operating in the EU, in order to increase transparency and accountability. Provision of such oversight is also needed to promote a more informed public debate, especially regarding the level of tax discipline of certain multinational companies operating in the EU and the impact of tax discipline on the real economy. By introducing country-by-country public reporting by this Directive, the Union is becoming a global leader in promoting financial and corporate transparency.

Establishing common rules on corporate tax transparency would also serve the general economic interest by providing equivalent safeguards at EU level to protect investors, creditors and other third parties, thus helping to restore EU citizens' confidence in the fairness of national tax systems. Such public oversight can be exercised through the Corporate Income Tax Information Report (hereinafter: the Report), regardless of where the ultimate parent company of the multinational group is established. Directive 2021/2101 aims to increase transparency and public oversight of corporate tax information provided by multinational companies.

To whom does the reporting apply?

The reporting obligation only applies if the above companies exceed the revenue threshold of EUR 750 million for two consecutive years. Also, in the same way, the reporting obligation would cease to apply only if revenues for two consecutive years are below the specified threshold. Exceptions are groups or companies that are not multinational companies and credit institutions that are already covered by the obligation to compile the Report in accordance with the provisions of Directive 2013/36 / EU.

Subsidiaries and branch offices are required to publish and make available the Report of the ultimate parent company. If the Ultimate Parent Company Report is not available, subsidiaries and branch offices are required to prepare a Statement stating that their Ultimate Parent Company has not made the necessary information available.