Under an existing EU directive[1], since 2016 large multinational groups have been required to file a country-by-country report with tax authorities in the EU providing a breakdown of the amount of revenue, profits, taxes and other indicators of economic activities for each tax jurisdiction in which the group operates. The requirement applies to multinational groups with annual consolidated group revenue of €750m or more in the preceding financial year.

This new development relates to a proposal to make country-by-country financial and tax information of certain multinational groups or standalone entities publicly available.


Based on press releases by the European Council and the European Parliament, the requirement would apply to both EU-based and foreign enterprises, which are active in a member state and at least one other tax jurisdiction, with a global consolidated revenue of more than €750m as reflected in its consolidated financial statements in each of the last two consecutive financial years.

Where the ultimate parent is outside the EU, it is expected that a medium or large subsidiary[2] in the EU will be required to publish that parent’s report if it can obtain the information. Where it cannot obtain the information it should explain the reasons for the omission. Alternatively, the non-EU ultimate parent would have the option to publish the required information.

If a subsidiary or branch of a non-EU headquartered company exceeds a revenue of €750m for each of the last two consecutive financial years, it will be subject to individual reporting requirements.


The reporting entity would be required to publish and make accessible its report on its website, using a common template and a machine-readable format. Alternatively, the information may be published on the member state’s central register, commercial register or companies register.

The country-by-country report for an accounting period would be due within 12 months of the end of that accounting period.

The information to be reported would include:

  • the nature of the company’s activities;
  • the number of full-time employees;
  • the amount of profit or loss before income tax;
  • the amount of income tax paid;
  • the amount of income tax accrued for the year; and
  • accumulated earnings.

Companies which come within the scope of the Directive would have to publicly disclose this information for each EU member state they operate in, as well as non-EU member states included in the EU list of non-cooperative jurisdictions known as the EU “black list” and those countries that have been included for two consecutive years in the EU “grey list”.

Countries currently on these lists are as follows:

EU black list EU grey list
American Samoa Australia
Anguilla Barbados
Dominica Botswana
Fiji Eswatini
Guam Jamaica
Palau Jordan
Panama Maldives
Samoa Thailand
Seychelles Turkey
Trinidad and Tobago
US Virgin Islands

The report should present the information on an aggregated basis for any other jurisdictions.

Companies may be able to defer disclosing certain information for five years, provided they clearly disclose the deferral and give a reasoned explanation for it in the report. This deferral is expected to apply where the disclosure of such information would be seriously prejudicial to the commercial position of a company. This deferral option will not apply to information in respect of jurisdictions included in the EU list of non-cooperative jurisdictions.

Next steps

The provisionally agreed draft Directive will now be submitted to the relevant bodies of the European Council and of the European Parliament for political endorsement. If such endorsement takes place, the European Council will adopt its position which the European Parliament should then approve and the Directive will be deemed to have been adopted.

EU member states would then have eighteen months to transpose the Directive into national law and it is expected that member states will commence application of the Directive within one year after the transposition deadline.


The legal basis under which this disclosure obligation has been enacted is under article 50 of the Treaty on the Functioning of the European Union (“TFEU”), which requires a qualified majority.  If the legal basis had been classified as a tax proposal under article 115 TFEU, then unanimity would have been required.  In substance, this is a tax measure so, in our view, the more intellectually honest approach would have been to seek to enact this as a tax matter.  It is disappointing, however, that the measure has been pushed through in a manner that only requires qualified majority voting, but it seems to be part of a wider Commission project of incremental corporate tax harmonisation by the back door.

The measure is intended to drive behaviour by providing public information to provoke public debate and ultimately generate political pressure for further changes in law.  It is noted that few of the major factors that, under transfer pricing rules, require multi-nationals to record profit and revenue in a jurisdiction are required to be disclosed, e.g. bare numbers of employees is different from an analysis of seniority, technical expertise and value added.  As a result, the measure seems to be designed to result in the publication of data showing a different allocation of profit, tax and revenue than is required under normal tax rules.  Accordingly, the measure will likely confuse public debate rather than clarify it.

If you would like to discuss this matter in more detail, please contact a member of our Tax team.

[1] Council Directive (EU) 2016/881 (known as “DAC 4”), which amends Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation, was adopted on 25 May 2016.

[2] As defined in article 3(3) and (4) of Directive 2013/34/EU (available here).