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September 28, 2021

EU Member States adopt public CbCR Directive

Executive summary

On 28 September 2021, the Council of the European Union (EU), i.e., the EU Member States, formally adopted its position at first reading on the proposed public country-by-country reporting (CbCR) directive (the Directive). This follows a provisional agreement reached by representatives of EU institutions, i.e., Council of the EU, European Parliament and European Commission, on 1 June 2021.1 For the adoption process to be complete, the European Parliament will need to approve the Council’s position in the plenary in second reading. After this approval, the Directive will be published in the Official Journal of the EU and will enter into force on the 20th day following that publication. After entry into force, Member States will have 18 months to transpose the Directive into national legislation.

The Directive would require both EU-based multinational enterprises (MNEs) and non-EU based MNEs doing business in the EU through a branch or subsidiary with total consolidated revenue of more than €750 million in each of the last two consecutive financial years to disclose publicly the income taxes paid and other tax-related information such as a breakdown of profits, revenues and employees per country. Such information needs to be disclosed for all 27 EU Member States and all jurisdictions included in the Annex I and Annex II of the Council conclusions on the EU list of non-cooperative jurisdictions for tax purposes (so-called EU black list and grey list). For all other jurisdictions, it is sufficient for aggregated data to be disclosed.

Detailed discussion


On 12 April 2016, the European Commission (the Commission) proposed to amend the Accounting directive (directive 2013/34/EU). The proposal built upon the Base Erosion and Profit Shifting (BEPS) work of the Organisation for Economic Co-operation and Development (OECD) and G20, in particular on Action 13 regarding CbCR. However, it went beyond the OECD/G20 BEPS standards, requiring large MNEs with operations in the EU and stand-alone undertakings established in the EU to draw up and publicly disclose in the public register and on their website income tax information, including a breakdown of profits, revenues, taxes paid and employees per country.

The Commission’s proposal was presented under Article 50(1) of the Treaty on the Functioning of the European Union (TFEU), which concerns the right of establishment and is the regular legal basis for initiatives in the areas of company law, accounting and corporate financial reporting. Proposals put forward under this article are subject to qualified majority voting in Council (the ordinary legislative procedure under Article 114 TFEU), not unanimity as is the case for legislation dealing with the harmonization of tax rules (the special legislative procedure under Article 115 TFEU). Moreover, for tax legislation, the European Parliament only has an advisory role, while for proposals based on Article 50(1) TFEU, the Parliament has co-legislative powers together with the Council.

In 2019, during the Competitiveness Council (COMPET) meeting, no qualified majority of Member States supported public CbCR.2 Prior to the COMPET meeting, 10 Member States issued a joint statement opposing the proposal, asserting that the introduction of this legislation would require unanimity among EU Member States as it should be considered a taxation proposal.

Portugal, who held the Council Presidency for the first semester of 2021, issued a new compromise text and brought up the proposal for discussion during the 25 February COMPET meeting.3 This meeting concluded with a qualified majority of Member States supporting the proposal. Austria and Slovenia, who were against the proposal in 2019, reversed their position and expressed their support for the proposal.

Following that, trilogues (i.e., between Commission, Parliament and Council) started in March 2021 during which co-legislators continued their discussions based on their respective negotiation mandates. Co-legislators reached a provisional compromise deal on the proposal during a final round of negotiations on 1 June 2021. Following this agreement, formal adoption of the proposal by the Council and the European Parliament was set in motion.

Council formally adopts public CbCR Directive

On 28 September 2021, the Council formally adopted its position on public CbCR at first reading during its Competitiveness Council meeting. In addition to the Council’s position, an explanatory statement including Council’s reasons on the adoption was also published in advance of the meeting.

The adopted Council’s position is broadly in line with the compromise text provisionally agreed on 1 June 2021 and most of the changes are linguistic. The two main updates on the text of the Directive following Council’s adoption that may have an impact are summarized below.

Disaggregation of data

The compromise text of 1 June mentioned that the information should be disclosed on a country-by-country basis, and thus be disaggregated, for all 27 EU Member States and all jurisdictions included in the Annex I and Annex II of the Council conclusions on the EU list of non-cooperative jurisdictions for tax purposes. For Annex I, the jurisdictions in scope must have been listed on the first of March of the financial year for which the report should be drawn up. For Annex II, the jurisdictions in scope must have been mentioned on the first of March of the financial year for which the report should be drawn up for two years consecutively. For all other third jurisdictions, the information should be disclosed on an aggregated basis.

The requirement for jurisdictions to be mentioned in Annex II on 1 March for two consecutive years gave rise to uncertainties as to the interpretation of the consecutive nature of the listing. The updated Council’s position has now clarified that for Annex II, the jurisdictions that are in scope are those that were mentioned in that Annex on 1 March of the financial year for which the report on income tax information is to be drawn up and on 1 March of the preceding financial year.

The updates on the EU list is a dynamic process, taking place twice per year. The next update of the EU list is expected on 5 October 2021.

Commencement date

The commencement date for reporting was described in the compromise text of 1 June as at the latest as of the first financial year starting on or after one year after the transposition deadline. The Council’s position has amended the wording to at the latest as of the first financial year starting on or after two years and six months after the date of entry into force of the Directive.

This amendment could imply that different times of transposition of the Directive by individual Member States would not affect the commencement date of the rules anymore as now the triggering point is the entry into force of the Directive and not the transposition deadline. However, the use of “at the latest” also in the updated text may mean that Member States would still have the opportunity to apply the rules sooner if they consciously choose to do so.

Overview of public CbCR Directive4

Who is covered

  • EU-based (headquartered) MNE with total (global) consolidated revenue exceeding €750 million for each of the last two financial years and that is active in more than one jurisdiction.

  • Non EU-based MNE with total (global) consolidated revenue exceeding €750 million for each of the last two financial years and controlling: (i) A "medium-sized" or "large" subsidiary "governed by the national laws" of a Member State; or (ii) A qualifying branch in any of the Member States in the EU.

  • Financial institutions established in the EU are already required to publish CbCR under Directive 2013/36/EU. Where these are MNEs which fall within the scope of public CbCR, they will be exempted from reporting. 

What to publish

  • Information to be disclosed would include:

    • Name of the ultimate parent undertaking or the standalone undertaking, the financial year concerned and the currency used

    • Nature of the activities

    • Number of employees

    • Total net turnover made

    • Profit made before tax

    • Amount of income tax due in the country by reason of the profits made in the current year in that country

    • Amount of tax actually paid during that year

    • Accumulated earnings

Where to publish

  • The report should be made accessible on the public registry of the relevant Member State and on the company website free of charge for a minimum of five consecutive years.

  • There is the option for Member States to exempt companies from publishing on their websites if the access to the report in the public registry is free of charge to any third party located in the EU.

When to publish

  • Within 12 months after the balance sheet date and made available for five years.

Optional deferral

  • Member States may allow for one or more specific items of information to be omitted when its disclosure would be seriously prejudicial to the commercial position of the group. 

  • Any information omitted shall be made public in a later report within no more than five years from the date of its original omission.

  • Information concerning tax jurisdictions listed in the EU list of non-cooperative jurisdictions may never be omitted.


  • Non-compliance with any of the obligations may give rise to a penalty. Member States can decide the type/amount of penalties imposed under domestic law. This means that there could not be uniform penalties among the Member States.

Audit requirement

  • The statutory auditor of an (EU based) undertaking that is required to produce audited financial statements shall state in the audit report whether the undertaking was required to draw up a report on income tax information, and if so, whether this report was published.

  • The audit can only perform a factual check of publication of the report, and not on its content.

Next steps

Following the formal adoption by the Council, approval of the Council’s position by the European Parliament in plenary is required. The exact time of the vote in plenary is yet unknown, but it will possibly take place later in autumn 2021.

Once the European Parliament approves Council’s position, the next steps would be:

  • Publication of the Directive in the Official Journal of the EU
  • Entry into force of the Directive on the 20th day following the publication in the Official Journal of the EU
  • Member States will have 18 months to transpose the directive into national law following its entry into force. However, Member States may transpose the Directive earlier than the transposition deadline date
  • The first financial year of reporting on income tax information will be the year starting on or after two years and six months after the date into force of the Directive
  • The reporting will take place within 12 months from the date of the balance sheet of the financial year in question

In practical terms, this means that if the Directive is formally adopted in November 2021 and enters into force on 20 December 2021, the first financial year of reporting on income tax information will be the year starting on or after two years and six months following the entry into force of the directive, i.e., the first financial year starting on or after 20 June 2024.


Once adopted, the public CbCR Directive will have a significant impact on both EU-based MNEs and non-EU based MNEs doing business in the EU. Moreover, it comes on top of a trend where voluntary Non-Financial Reporting Standards (such as the GRI), investors and the public ask for more public tax reporting by businesses.

Companies should closely monitor the progress on the adoption process and assess the impact of the Directive on their business and in particular their broader public tax reporting strategy.


For additional information with respect to this Alert, please contact the following:

EY Société d’Avocats, Paris

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Munich

Ernst & Young Belastingadviseurs LLP, Rotterdam

Ernst & Young Belastingadviseurs LLP, Amsterdam

Ernst & Young LLP (United States), Global Tax Desk Network, New York



  1. See EY Global Tax Alert, EU co-legislators reach agreement on public CbCR, dated 2 June 2021.
  2. See EY Global Tax Alert, EU: Public CbCR fails to move forward in latest European vote, dated 4 December 2019.
  3. See EY Global Tax Alert, EU negotiations on public CbCR move forward as majority of Member States back proposal, dated 26 February 2021.
  4. Based on Council’s position adopted on 29 September 2021.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


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