Milestone EU agreement on public country-by-country tax reporting

Posted on June 18, 2021 by Editor

After several years of negotiations, the European Council and European Parliament have reached political agreement on disclosure by multinational companies of the tax they pay in each country. Their draft proposal is referred to as the public country-by-country reporting (CBCR) directive and is part of a range of measures being developed to reform certain international tax arrangements.

The deal aims to increase transparency and provide better information to public and tax authorities, and will apply to multinationals and their subsidiaries with annual revenues of over €750 million that are active in more than one country. The detailed disclosures required include the nature of the company’s activities, the number of full-time employees, the amount of profit or loss before income tax, the amount of accumulated and paid income tax and accumulated earnings.

This process will be digital and consistent from the start, with the announcement confirming that “the information will also need to be made available on the internet, using a common template, and in a machine-readable format.” While it is not yet clear exactly what form the disclosures will take, it seems highly desirable that the EU’s experience in implementing XBRL reporting in other areas should be leveraged here.

We humbly suggest that both xBRL-CSV and the Inline XBRL-based European Single Electronic Format (ESEF) should be considered as implementation options, and the disclosures be included in the European Single Access Point (ESAP) for maximum utility.

Read more here and here.

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