2021-09-28-KPMG-Euro_Tax_Flash_from_KPMG_s_EU_Tax_Centre_4页_133kb

Summary of EU Public Country-by-Country Reporting Directive Progress

Background

The European Commission proposed the EU public Country-by-Country (CbCR) Reporting directive in April 2016, requiring multinational groups with consolidated revenue of at least EUR 750 million to disclose country-specific tax information. The initiative faced a deadlock due to disagreements on its legal basis: whether it should be based on Article 50 TFEU (ordinary legislative procedure, requiring qualified majority voting) or Article 115 TFEU (special legislative procedure, requiring unanimous approval). This dispute was resolved in February 2021 when countries agreed to support the proposal, leading to trilogue negotiations that resulted in a provisional political agreement in June 2021. In September 2021, the Council of the EU adopted this compromise text via qualified majority voting, with support from 21 members, opposition from Cyprus and Sweden, and abstention from Czech Republic, Ireland, Luxembourg, and Malta.

COMPET Vote

On September 28, 2021, the Competitiveness Council (COMPET) approved the compromise text based on qualified majority voting. The vote confirmed that the text reflects the interinstitutional negotiations, with the final approval also received by European Parliament committees in June 2021 without amendments. Member States voting against or abstaining expressed opposition to the legal basis choice, citing concerns specific to tax-related provisions under Article 115 TFEU.

Next Steps

The European Parliament is expected to approve the Council's position in October 2021 via a plenary session without amendments. The directive will enter into force 20 days after publication in the Official Journal of the EU. Member States have an 18-month transposition period to implement the directive into national law. If approved in October 2021, this could lead to implementation deadlines around May 2023 and applicability from May 2024, with reporting obligations for financial year 2025 (report due 12 months after balance sheet date). Member States may apply the rules earlier than required.

EU Tax Centre Comment

The directive involves a debate on legal basis, with some members opposing Article 50 TFEU and favoring Article 115 TFEU for tax matters. The European Parliament's approval is expected in one of October's plenary sessions, pending the exact adoption date in October or November. The implementation timeline differs per Member State, and taxpayers should monitor progress due to potential staggered adoption. For further inquiries, contact KPMG's EU Tax Centre or local advisors.

Impact and Deadlines

The CbCR directive aims to enhance tax transparency. Effective dates and reporting obligations vary based on adoption timing, with potential early application. Member States must comply with transposition by law, affecting financial reporting for multinational groups.