Public country-by-country reporting is set to be implemented across the EU (including for non-EU headquartered groups) by early 2023 to take effect, at the latest, for the first financial year starting on or after early 2024.
On Monday, 14 June 2021, the relevant Committees of the European Parliament endorsed the text of a draft directive which had been provisionally agreed between the European Parliament and the Council on 1 June 2021. The measure is expected to be formally approved by the Council and European Parliament by early autumn and gives Member States 18 months to transpose it into national law. Member States' implementing legislation is required to take effect, at the latest, from the beginning of the first financial year that falls on or after the first anniversary of the implementation deadline.
Who has to report? Groups and standalone undertakings with revenues exceeding EUR 750m for two consecutive years fall within the scope of the reporting obligation, unless they don't operate in more than one country. The reporting obligation falls on the group's parent or the standalone undertaking, if it is established in a Member State. Otherwise, the reporting obligation passes to its EU subsidiaries or branches and, in that case, it includes a back-up requirement to publish, where necessary, a statement that the parent or standalone undertaking has not made available the information required for a complete report.
What is to be reported? Details of the parent (or standalone) undertaking and, where applicable, of subsidiaries that are consolidated in the parent's financial statement and established in the EU or a jurisdiction that the EU has designated non-cooperative and their activities, the number of employees on a full time basis, figures for revenue, pre-tax profit or loss, the amount of income tax accrued and the amount of cash tax paid, and accumulated earnings at the end of the relevant financial year. The information must be disaggregated for EU Member States and non-cooperative jurisdictions.
How and when to report? The European Commission will set a common template and electronic reporting formats. Reports will have to be published on the parent (or standalone) undertaking's website, or, where the reporting obligation is passed on, the relevant subsidiary's or branch's website, within 12 months of the balance sheet date for the reporting year (although Member States may allow the publication of commercially sensitive information to be delayed by up to five years). Statutory auditors will be required to confirm in their audit reports whether or not a reporting obligation applies.