European Council advances directive on public country-by-country tax reporting

By Doug Connolly, MNE Tax

The Council of the European Union on September 28 adopted its position on the proposed directive that would require large multinationals operating in the EU to publicly disclose certain information on the income taxes they pay on a country-by-country basis.

The Council had reached a provisional agreement with the European Parliament on the proposed directive on June 1 – five years after the proposed directive was first tabled. The European Parliament must now formally approve the agreement before the directive can enter into force.

The reporting requirement would apply to certain multinationals with total consolidated revenues of EUR 750 million (approximately USD 875 million), regardless of whether they are based in the EU. Such multinationals operating in more than one country in the EU would be required to publicly disclose income tax information on a country-by-country basis for EU member states and also for non-EU “black list” and “gray list” jurisdictions.

EU member states would have 18 months to transpose the directive into national law once it is approved and enters into force. The reporting would be due within one year of the end of the fiscal year being reported, although the directive would allow companies to defer reporting certain information for up to five under specified conditions.

Similar requirements are under consideration in the US, where advocates last week pushed for public country-by-country reporting requirements to be imposed via accounting standards. The US Financial Accounting Standards Board had indicated in June that it is looking into such enhanced disclosures to provide more information to investors on global tax risks.