Directive (EU) 2021/2101 amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches

Summary:

Directive (EU) 2021/2101 - signed by the co-legislators on 24 November 2021 - introducing amendments to Directive 2013/34/EU relating to the relating to the disclosure of income tax information by multinational enterprises. It is commonly known as the public Country-By-Country Reporting (CBCR) Directive. This is a text with EEA relevance.

Further information:

Directive 2013/34/EU - also known as the Accounting Directive - aims to ensure the clarity and comparability of financial statements, other than international financial reporting standards (IFRS). It aims to limit administrative burdens and provide for simple and robust accounting rules. It also aims to increase transparency of the payments made by the mining and logging industries to governments.

The draft law was tabled by the European Commission on 12 April 2016 as part of its Action Plan on a Fairer Corporate Tax System. The aim was to introduce public reporting requirements for the largest companies operating in the European Union (EU). The draft law required enterprises with global revenues exceeding €750 million a year to public key information on where they make their profits and where they pay their tax in the EU on a country-by-country basis (CBCR). The same rules would apply to non-European multinationals doing business across the EU. In addition, companies would have to publish an aggregate figure for total taxes paid outside the European Union.

This initiative was a result of a consultation conducted by the Commission on public reporting and further tax transparency in 2015, and it was closely linked to the revision of the so-called Administrative Cooperation Directive. The European Parliament adopted a mandate for negotiations on 4 July 2017, and a first-reading position on 27 March 2019. Despite a number of discussions on the matter, the Council of the European Union took a number of years to adopt a negotiating approach on this file. Member State representatives eventually adopted a negotiating mandate on 3 March 2021. An informal agreement between the co-legislators on a compromise text for the draft law was reached on 1 June. This was formally endorsed by the Council on 28 September and by the Parliament on 11 November. The Act was published in the Official Journal on 1 December 2021.

Official

EUR-LEX: COM(2016)198: Proposal for a Directive amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches (CBCR) http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2016:198:FIN

EUR-Lex: SWD(2016)117: Staff Working Document accompanying the Proposal - Impact assessment http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=SWD:2016:117:FIN

EUR-Lex: SWD(2016)118: Staff Working Document accompanying the Proposal - Executive summary of the impact assessment http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2016:118:FIN

European Parliament: Legislative Observatory: Procedure File for Proposal on Disclosure of income tax information by certain undertakings and branches (2016/0107(COD)) https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2016/0107(COD)

European Parliament: Legislative Train Schedule: Proposal on disclosure of income tax information by certain undertakings and branches - public country-by-country reporting https://www.europarl.europa.eu/legislative-train/theme-economic-and-monetary-affairs-econ/file-public-country-by-country-reporting

European Commission: Public country-by-country reporting https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/public-country-country-reporting_en

European Commission: Press Release, 12/04/2016: European Commission proposes public tax transparency rules for multinationals https://ec.europa.eu/commission/presscorner/detail/en/IP_16_1349

European Commission: Fact Sheet, 12/04/2016: Introducing public country-by-country reporting for multinational enterprises - Questions & Answers https://ec.europa.eu/commission/presscorner/detail/en/MEMO_16_1351

European Commission: Remarks by Commissioner Jonathan Hill on tax transparency rules for multinationals, 12 April 2016 https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_16_1365

European Parliament: Press Release, 04/07/2017: Multinationals should disclose tax information in each country they operate https://www.europarl.europa.eu/news/en/press-room/20170629IPR78639/

European Parliament: Legislative Observatory: Resolution on the state of play on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches (2016/0107(COD)), known as public country-by-country reporting https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2019/2882(RSP)

European Parliament: Press Release, 24/10/2019: Get multinationals to disclose where they pay taxes, MEPs tell member states https://www.europarl.europa.eu/news/en/press-room/20191017IPR64572/

Party of European Socialists: News, 24/02/2021: PES ministers urge EU to take a step forward on combating tax evasion and fraud, call for corporate tax transparency https://www.pes.eu/de/news-events/news/detail/PES-ministers-urge-EU-to-take-a-step-forward-on-combating-tax-evasion-and-fraud-call-for-corporate-tax-transparency/

Portuguese Council Presidency: News, 26/02/2021: Have you heard of CBCR? https://www.2021portugal.eu/en/news/have-you-heard-of-cbcr-learn-what-it-is-and-how-it-can-contribute-to-increased-fiscal-transparency-in-the-european-union/

Council of the European Union: Press Release, 03/03/2021: Council approves greater corporate transparency for big multinationals https://www.consilium.europa.eu/en/press/press-releases/2021/03/03/council-approves-greater-corporate-transparency-for-big-multinationals/

European Parliament: Press Release, 04/03/2021: Delay is over: Work begins to shine spotlight on where companies pay their taxes https://www.europarl.europa.eu/news/en/press-room/20210301IPR98959/

Council of the European Union: Press Release, 01/06/2021: Public country-by-country reporting by big multinationals: EU co-legislators reach political agreement https://www.consilium.europa.eu/en/press/press-releases/2021/06/01/public-country-by-country-reporting-by-big-multinationals-eu-co-legislators-reach-political-agreement/

European Parliament: Press Release, 01/06/2021: EU lawmakers strike milestone deal for corporate tax transparency https://www.europarl.europa.eu/news/en/press-room/20210527IPR04913/

Portuguese Council Presidency: News, 02/06/2021: Agreement reached on greater tax transparency for multinationals in the EU https://www.2021portugal.eu/en/news/agreement-reached-on-greater-tax-transparency-for-multinationals-in-the-eu/

GUE/NGL: News, 02/06/2021: Corporate tax transparency deal opens door for shifting practices to tax havens https://www.guengl.eu/corporate-tax-transparency-deal-opens-door-for-shifting-practices-to-tax-havens/

Council of the European Union: Press Release, 28/09/2021: Public country-by-country reporting: Council paves the way for greater corporate transparency for big multinationals https://www.consilium.europa.eu/en/press/press-releases/2021/09/28/public-country-by-country-reporting-council-paves-the-way-for-greater-corporate-transparency-for-big-multinationals/

S&D EP Group: Newsroom, 10/11/2021: Under S&D leadership, European Parliament to adopt pioneering financial transparency rules https://www.socialistsanddemocrats.eu/newsroom/under-sd-leadership-european-parliament-adopt-pioneering-financial-transparency-rules

European Parliament: Press Release, 11/11/2021: Corporate tax transparency: MEPs okay new country-by-country reporting rules https://www.europarl.europa.eu/news/en/press-room/20211108IPR16839/

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News

Politico, 12/04/2016: Commission announces tax transparency rules for multinationals https://www.politico.eu/article/commission-announces-tax-transparency-rules-for-multinationals/

BBC News, 12/04/2016: EU seeks more tax details from big firms https://www.bbc.co.uk/news/business-36025133

EurActiv, 12/04/2016: EU’s new tax haven blacklist doomed to failure, warn campaigners https://www.euractiv.com/section/euro-finance/news/eus-new-tax-haven-blacklist-doomed-to-failure-warn-campaigners/

EUObserver, 12/04/2016: EU commission wants tax haven blacklist https://euobserver.com/economic/133019

EUObserver, 12/04/2016: EU to toughen corporate tax disclosures https://euobserver.com/economic/133010

The Guardian, 26/02/2021: EU states back plan to expose big companies' tax avoidance https://www.theguardian.com/world/2021/feb/26/eu-states-back-plan-to-expose-big-companies-tax-avoidance

EurActiv, 26/02/2021: Portugal wins EU support for corporate tax transparency law https://www.euractiv.com/section/eu-council-presidency/news/portugal-wins-eu-support-for-corporate-tax-transparency-law/

Malta Today, 04/03/2021: MEPs get ready to lock horns in Council talks on tax disclosure for multinationals https://www.maltatoday.com.mt/news/ewropej/108111/meps_get_ready_to_lock_horns_in_council_talks_on_tax_disclosure_for_multinationals#.YEDSXI77SUk

The Irish Times, 01/06/2021: EU reaches deal to force multinationals to report profits by country https://www.irishtimes.com/business/innovation/eu-reaches-deal-to-force-multinationals-to-report-profits-by-country-1.4581445

Bloomberg, 01/06/2021: EU to Force Multinationals to Report Revenue in Each Country https://www.bloomberg.com/news/articles/2021-06-01/eu-to-force-multinationals-report-their-revenue-in-each-country

RTÉ News, 01/06/2021: EU agrees rules for corporate tax transparency https://www.rte.ie/news/business/2021/0601/1225476-eu-tax-multinationals/

Reuters, 02/06/2021: EU reaches deal on tax transparency for multinational firms https://www.reuters.com/business/eu-reaches-deal-tax-transparency-multinational-firms-2021-06-01/

Deutsche Welle, 02/06/2021: EU agrees to new tax transparency rules for multinationals https://p.dw.com/p/3uJoL

The Guardian, 02/06/2021: EU agrees to force multinationals to disclose tax, piling pressure on UK https://www.theguardian.com/business/2021/jun/02/eu-agrees-to-force-multinationals-to-disclose-tax-piling-pressure-on-uk

Delano, 29/09/2021: EU edges towards corporate transparency, Luxembourg abstains https://delano.lu/article/european-union-edges-towards-c

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Commentary and Analysis

The Conversation, 13/04/2016: The new tax laws planned in wake of Panama Papers – and the crucial role of public opinion https://theconversation.com/the-new-tax-laws-planned-in-wake-of-panama-papers-and-the-crucial-role-of-public-opinion-57696

Euro|topics, April 2016: EU Commission reacts to Panama Papers https://www.eurotopics.net/en/156836/

EPRS: Briefing, July 2016: Publishing corporate tax information Country-by-country reporting for multinational enterprise groups [Initial Appraisal of a European Commission Impact Assessment] https://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_BRI(2016)581420

EY: Global Tax Alert, 07/07/2017: European Parliament votes in favor of public Country-by-Country reporting in first reading https://www.ey.com/gl/en/services/tax/international-tax/alert--european-parliament-votes-in-favor-of-public-country-by-country-reporting-in-first-reading

Deloitte: Insights, August 2017: An Update on Public Country by Country Reporting (CbCR) https://www2.deloitte.com/ie/en/pages/tax/articles/cbcr-update.html

International Tax Review, 24/08/2018: European Union: Public country-by-country reporting in the EU off the tracks, for now https://www.internationaltaxreview.com/article/b1f7n0rbqw37gc/european-union-public-countrybycountry-reporting-in-the-eu-off-the-tracks-for-now

Global Alliance for Tax Justice: Letter, 31/10/2018: Lack of progress of EU negotiations on European Commission’s proposal for public country by country reporting https://www.globaltaxjustice.org/sites/default/files/Public%20CBCR_Brief_BMF_3110.pdf

EPRS: Briefing, April 2019: Public country-by-country reporting by multinational enterprises https://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_BRI(2017)595867

OKFN Blog, 13/05/2019: Two years on, little action from the EU on public country-by-country reporting https://blog.okfn.org/2019/05/13/two-years-on-little-action-from-the-eu-on-public-country-by-country-reporting/

EUObserver, 08/02/2021: Portugal vs Germany clash on EU corporate tax avoidance https://euobserver.com/economic/150831

Ernst&Young: Tax Alerts, 26/02/2021: EU negotiations on public CbCR move forward as majority of Member States back proposal https://www.ey.com/en_gl/tax-alerts/eu-negotiations-on-public-cbcr-move-forward-as-majority-of-member-states-back-proposal

KPMG: Insights, 26/02/2021: Ministers discuss public Country-by-Country Reporting proposal https://home.kpmg/xx/en/home/insights/2021/02/etf-443-ministers-discuss-public-country-by-country-reporting-proposal.html

CSR Europe: News, 23/03/2021: Greater Corporate Tax Transparency with the Country-By-Country Reporting Directive https://www.csreurope.org/newsbundle-articles/greater-corporate-tax-transparency-with-the-country-by-country-reporting-directive

Social Europe, 05/05/2021: Pay your taxes where your profit is https://socialeurope.eu/pay-your-taxes-where-your-profit-is

Eurodad: Press Release, 01/06/2021: EU fails to introduce real public country by country reporting https://www.eurodad.org/eu_fails_to_introduce_real_public_country_by_country_reporting

ICIJ: Paradise Papers, 02/06/2021: EU tax transparency rules leave tax justice advocates craving more ambitious reforms https://www.icij.org/investigations/paradise-papers/eu-tax-transparency-rules-leave-tax-justice-advocates-craving-more-ambitious-reforms/

Ernst&Young, 09/06/2021: EU co-legislators reach agreement on public CbCR https://www.ey.com/en_lu/tax/eu-co-legislators-reach-agreement-on-public-cbcr

PwC: Tax Policy Bulletin, 22/06/2021: EU Parliament and Member States agree on public country-by-country reporting https://www.pwc.com/gx/en/tax/newsletters/tax-policy-bulletin/assets/pwc-eu-parliament-and-member-states-agree-on-public-cbcr.pdf

KPMG: EU Tax Centre, August 2021: CBCR overview. An EU perspective on country-by-country reporting https://assets.kpmg/content/dam/kpmg/xx/pdf/2021/07/country-by-country-reporting-eu-perspective.pdf

Ernst&Young, 28/09/2021: EU Member States adopt public CbCR Directive https://www.ey.com/en_gl/tax-alerts/eu-member-states-adopt-public-cbcr-directive

Deloitte: Blog, 01/10/2021: EU public Country-by-Country Reporting: Next hurdle taken and final approval expected in November https://blogs.deloitte.ch/tax/2021/10/eu-public-country-by-country-reporting-next-hurdle-taken-and-final-approval-expected-in-november-.html

Eurodad: Press Release, 11/11/2021: Missed Opportunity: EU Parliament rubber stamps Directive that promises tax transparency, but fails to deliver https://www.eurodad.org/eu_parliament_rubber_stamps_cbcr_directive

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