With public country-by-country reporting (CbCR) becoming a reality in many jurisdictions, businesses need to be ready — not just to report the numbers, but to explain them clearly to a broad and diverse audience.
Since 2016, multinational companies have been required to submit country-by-country tax data to tax authorities in an expanding number of jurisdictions. Designed to give tax authorities deeper insight into the global footprint and profit allocation of multinational businesses, this information — much of it commercially sensitive — is protected by confidentiality rules and shared only between tax administrations.
But the transparency landscape is shifting.
Under the EU’s Public CbCR Directive, large multinationals (MNEs) are now required to make this information publicly available.
CbCR goes public
The new rules apply to both EU-headquartered and non-EU-based multinationals operating in the EU, provided they have global consolidated revenues exceeding €750 million. These businesses must disclose income taxes paid, along with other key data on a country-by-country basis for all 27 EU Member States and jurisdictions on the EU’s list of non-cooperative tax jurisdictions.
EU-headquartered MNEs are required to follow the rules of their home due to the legislative differences in member states’ rules. However, for non-EU-headquartered groups, compliance with the EU CbCR Directive is an extra challenge due to the legislative differences between jurisdictions. Non-EU headquartered groups must comply with the rules of each jurisdiction in which they have a subsidiary, rather than just their home jurisdiction.
Although the majority of EU member states will begin applying the public CbCR rules from 2026, covering accounting periods ending on or after June 2025, multinational groups should remain vigilant, explains Chris Danes, international tax partner at MHA.
“Several countries, such as Romania and Croatia, have adopted accelerated timelines, which could catch businesses off guard.
“Additionally, many multinationals may have concerns about the public disclosure of sensitive country-by-country data. There is a risk that such information could be over-analysed or misinterpreted by stakeholders, customers and suppliers.”
Proactive communication and contextual explanation, Mr Danes notes, will be key to managing reputational risk.
Who do the rules apply to?
The public CbCR rules generally apply to MNE groups with consolidated global revenues exceeding €750 million for each of the last two consecutive financial years. The rules cover:
- EU-headquartered groups
- non-EU headquartered groups with a significant EU presence, defined as having medium or large subsidiaries or branches in the EU. These are typically entities that meet at least two of the following criteria:
- total assets of over €5 million
- net turnover of over €10 million
- more than 50 employees.
Implementation timeline
Most EU countries will begin applying these rules for financial years starting on or after 22 June 2024. So, for calendar year-end companies, the first reports will be due by 31 December 2026.
However, some countries have accelerated timelines:
- Romania: first reporting year was 2023, with reports due by 31 December 2024
- Croatia: first reporting year was 2024, with reports due by 31 December 2025
- Sweden: effective for financial years beginning after 31 May 2024.
Other countries such as Spain and Hungary have also introduced earlier publication deadlines, so local rules must be carefully monitored to ensure compliance.
Read the full details on reporting requirements and the penalties for non-compliance.
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