2016-04-13-KPMG-Euro_Tax_Flash_from_KPMG_s_EU_Tax_Centre_4页_341kb

Euro Tax Flash: Commission Announces Proposal for Public Country-by-Country Reporting

Announcement and Effective Date

On April 12, 2016, European Commission Commissioner Jonathan Hill officially proposed public Country-by-Country Reporting (CbCR). This applies to multinational groups with total consolidated revenue exceeding €750 million if they are EU parented or if they have EU subsidiaries or branches.

Key Requirements

Multinational groups affected must report detailed information on:

• Brief description of activities
• Number of employees
• Net turnover (including related party turnover)
• Profit or loss before tax
• Income tax accrued and paid
• Accumulated earnings
  Information must be provided for each EU Member State where the group operates and reported at a minimum for jurisdictions outside the EU. Disaggregated reporting is mandatory for jurisdictions listed on a 'Common Union list' that do not meet international tax cooperation standards.

Threshold and Exceptions

• Only groups with consolidated revenue exceeding €750 million must comply.
• Exceptions apply to 'small' subsidiaries and branches, and financial sector groups reporting under CRD IV rules, provided certain conditions are met.

Further Details on Reporting

• The report must explain significant discrepancies between accrued and paid income tax.
• Reports must be published in business registers and on company websites for at least five years.
• For groups not with an EU parent, the EU subsidiary or branch must prepare the report unless the ultimate parent issues one.

Next Steps

• The proposal must be approved by Member States’ finance ministers and the European Parliament.
• Tax related legislation requires unanimity at ECOFIN level, but this proposal would require a qualified majority due to amending the 'Accounting' Directive.
• Effective date depends on adoption of the directive and will apply from two years after the date.

Aim and Context

• Focused on combatting tax avoidance and aligning tax with economic activity.
• Available jurisdictions outside the EU will initially be aggregated, but the 'Common Union list' will enforce reporting changes for non-compliant jurisdictions.

KPMG Comment

KPMG's EU Tax Centre noted that the proposal may present challenges including public disclosure risks and potential administrative burdens due to inconsistent reporting standards across jurisdictions.

Contact: KPMG's EU Tax Centre or your local KPMG tax advisor for further assistance.