On 11 November the European Union’s Parliament voted to pass amendments to the EU Accounting Directive (2013/34/EU) on financial reporting of certain types of undertakings. The amendments would introduce public country-by-country reporting requirements.
Companies or multinational groups with a total consolidated revenue of at least EUR 750 million, measured over two consecutive financial years, would be required to publicly disclose the corporate income tax they pay in each EU Member State plus the corporate income tax paid in countries that are either on the EU list of non-cooperative jurisdictions for tax purposes (EU blacklist), or included for two consecutive years on the EU’s grey list of jurisdictions that are not yet compliant with all the international tax standards but are committed to passing the appropriate reforms.
The amended Directive will now be published in the Official Journal and will enter into force 20 days after its publication. The EU Member States are given a period of 18 months to include the provisions of the Directive in their domestic legislation. The additional disclosure requirements are likely to become applicable in mid-2024 and will be applicable to periods commencing after the effective date.
The Directive provides that businesses would be able to defer the disclosure of certain information for a certain limited number of years, if this deferral of information is disclosed clearly and a reasoned explanation for the deferral is given in the report. The Member States may choose whether to allow businesses this deferral when the Directive is included in their domestic law.
Information could only be deferred by a business if the public disclosure of the information could seriously prejudice the commercial position of the business, potentially allowing its competitors to draw significant conclusions about its current activities. A reasoned explanation covering the reasons why the omission of information is necessary must be included with the report.