Tax Policy Alert: European Parliament votes to pass public country-by-country reporting – Courtesy of PwC
Following a final debate between MEPs in the European Parliament plenary session, a majority of MEPs voted on 11 November to pass changes to amend Directive 2013/34/EU, which deals with financial reporting of certain types of undertakings (the EU Accounting Directive). This vote (and the adopted text of the proposal available here) follows the political agreement reached with the Council in June and a further updated text that was agreed in September 2021, available here . The amendments have become known as public country-by-country reporting (pCbCR) requirements.
The agreed changes to the EU Accounting Directive will require multinational groups or standalone undertakings with a total consolidated revenue of at least €750m, over a period of two consecutive financial years, whether headquartered within the European Union or not, to publicly disclose the corporate income tax they pay in each EU Member State plus in each of the countries that are either on the EU list of non-cooperative jurisdictions for tax purposes (the ‘EU’s blacklist’), or listed for two consecutive years on the list of jurisdictions that do not yet comply with all international tax standards but have committed to reform (the ‘EU’s grey list’). The vote marks the passage of the final political hurdle for this measure. The next step will be the publication of the amended Directive in the Official Journal. The Directive will enter into force 20 days after publication in the Official Journal. EU Member States will then have 18 months to transpose the Directive into domestic legislation. It is possible Member States could transpose it in a shorter time, and, thus, that it could be effective earlier. But, if transposition does not occur ahead of the mandated timeline, businesses can expect that the additional disclosure requirements will become applicable in mid-2024, that they will apply to accounting periods beginning after that date, and that disclosure will first be required in the latter part of 2025 (or, more likely, 2026 for those with a 31 December accounting year end).
Our previous Tax Policy Bulletin on the pCbCR proposal (available here), outlines further information on the measure and our observations on the impact of this for in-scope businesses.