Background and objectives
The report outlines the EU Public Country-by-Country Reporting (CbCR) Directive, focusing on its objectives, scope, and implications for multinational corporations (MNCs) operating within the EU. The CbCR Directive, which becomes mandatory for fiscal years starting on or after June 22, 2024, requires MNCs with consolidated revenues above €750 million to disclose tax and financial data specific to each EU Member State and certain non-cooperative jurisdictions. This data includes revenue, profit before tax, income tax accrued, and other metrics to offer stakeholders insights into an MNC’s tax footprint and foster corporate transparency.
Key Implementation Aspects
- Scope and Reporting Requirements: The directive applies to both EU and non-EU headquartered MNCs with significant operations within the EU. For non-EU MNCs, EU branches or subsidiaries must report if the group meets the revenue threshold. Some industry-specific exemptions exist, but these are limited, affecting sectors already subject to similar EU directives (e.g., banking).
- Reporting Obligations and Exemptions: Reports must be filed annually within 12 months of the fiscal year-end and remain accessible online for five years. For non-EU entities, EU-based branches or subsidiaries may use a “comply or explain” approach if the parent does not provide the data. Additionally, a "safeguard clause" allows companies to defer some sensitive disclosures for up to five years, depending on Member State policies.
- Compliance Challenges: Companies will need to integrate new data collection and reporting processes to align with the directive’s requirements, particularly as some Member States may impose stricter or additional reporting standards. Ensuring consistent, reliable data for CbCR compliance will be essential, alongside alignment with broader ESG and transparency goals.
Grant Thornton’s Role
Grant Thornton offers a full range of services to assist companies in navigating these new obligations. Support includes scoping assessments to determine eligibility, data extraction, audit preparations, and advice on reporting strategy to ensure comprehensive compliance. Additionally, the firm provides guidance on integrating ESG and transparency elements, helping companies present a well-rounded view of their financial and tax activities to the public.
This report underscores the strategic significance of early preparation and accurate reporting for MNCs, positioning CbCR compliance as both a regulatory obligation and a means of strengthening corporate transparency.
