Companies to disclose income tax payment information

The European Commission has published a draft directive on the mandatory disclosure of information on income tax payments in individual member states and non-cooperative jurisdictions (public country-by-country reporting). The duty will apply to companies belonging to a corporate group controlled by a company established in or outside the EU with a consolidated turnover exceeding EUR 750 million.

The Council and the Parliament of the EU have arrived at a political consensus regarding the legislative wording of a directive introducing the duty to disclose a report of income tax payments (the so-called public country-by-country reporting) via an amendment to Directive 2013/34/EU, on annual financial statements and consolidated financial statements. 

Income tax payment reports will have to be published by corporate groups controlled by a company established in or outside the EU with a consolidated turnover exceeding 750 million and activities in more than one member state. Where a corporate group is controlled by an entity established outside the EU, this group must have a subsidiary undertaking established in the EU with a turnover of at least EUR 8 million or total assets exceeding EUR 4 million or 50 employees (at least two of the above conditions must be met). 

Income tax payment reports will contain selected information for all group companies that have their registered office in an EU member state or a country listed among non-cooperative jurisdictions (including grey-listed countries, i.e. those being monitored by the EU). Reports shall disclose certain information such as information about business activity, number of employees, results of operations before taxation, and current and deferred corporate income tax, including comparable information for branches. Reports should be published on the companies’ websites or in public commercial registers. 

The final approval of the directive on the EU level is expected before the end of this year. The directive will then be published in the EU Official Journal and enter into effect on the 20th day after its promulgation. The EU member states will have 18 months to transpose it into their national legislations. If the directive enters into effect on, e.g., 1 October 2021, member states should implement it before 1 April 2023. In this case, income tax payment reports would have to be published for accounting periods started 1 April 2024.


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