In this week’s transfer pricing talks, we dive into Public Country-By-Country Reporting, a relatively new (transfer pricing) reporting obligation for multinationals. Below, we’ve summarized some points for some light weekend reading.
Public Country-by-Country Reporting : A Step Towards Transparency and Accountability
The Public Country-by-Country Reporting (“PCbCR”) directive is a key initiative aimed at enhancing transparency and accountability among multinational enterprises (“MNEs”) concerning their tax practices. Introduced through EU Directive 2021/2101, this initiative requires certain companies to publish annual financial and tax information, broken down by the countries in which they operate.
Scope and Applicability
The PCbCR directive applies to MNEs with consolidated revenues exceeding €750 million in each of the last two consecutive financial years. It covers both EU-based companies and non-EU businesses with significant activities within the EU.
The requirement came into effect for financial years starting on or after June 22, 2024, with companies given up to 12 months after the end of the financial year to publish their reports. In other words, for MNEs with a financial year equal to the calendar year, the PCbCR directive came into effect as of 1 January 2025. Note that local deviations from the Directive might be applicable.
Reporting Requirements
MNEs are required to disclose a range of financial and operational data, comparable to data required for traditional CbCR though there are some differences. All these details must be presented in a standardized format to ensure transparency and facilitate cross-border comparisons.
Publication and Accessibility
The EU parent company (or in case of a Non-EU parented group, the EU subsidiary meeting the thresholds) must publish the report on its own website, ensuring it remains accessible for at least five years. Additionally, the report must be submitted to the relevant authorities in the jurisdiction of the reporting entity (e.g., Chamber of Commerce).
Implementation in Member States
While the directive provides a uniform framework, EU member states have some discretion in its implementation. Businesses operating across multiple jurisdictions must be mindful of these national variations.
Conclusion
The PCbCR directive represents a significant milestone in creating a more transparent tax landscape. Companies should proactively prepare to meet these reporting obligations and prioritize transparency in their tax strategies.
Does your organization need assistance in implementing the PCbCR requirements? Contact us for tailored advice and support!