globaltaxnews.ey.comSign up for tax alert emailsPrintDownload

03 December 2024

European Commission adopts final implementing regulation on template and electronic reporting formats for public CbCR

  • The European Commission has adopted the final implementing regulation providing the common template and electronic reporting formats for presenting income tax information in the context of public CbCR.
  • Reportable groups whose Ultimate Parent Entity is incorporated in a Member State should prepare their report in XHTML and Inline XBRL.
  • The implementing regulation will be applicable for public CbC reports corresponding to financial years starting on or after 1 January 2025.
 

Executive summary

On 29 November 2024, the European Commission (Commission) adopted Implementing Regulation 2024/2952.

The implementing regulation is aimed at standardizing the presentation of income tax information for public country-by-country reporting (CbCR), as mandated by Directive 2013/34/EU. It introduces a common template and electronic formats for public CbC reports in the form of detailed Extensible Business Reporting Language (XBRL)1 specifications for financial data, requirements for report filing and a taxonomy defining the reportable data.

The implementing regulation was published in the Official Journal of the European Union on 2 December 2024 and will come into effect for financial years starting on or after 1 January 2025. It emphasizes the use of Extensible Hypertext Markup Language (XHTML)2 and Inline XBRL,3 which is intended to enhance the accessibility and precision of the reporting.

Detailed discussion

Background

On 1 August 2024, the European Commission released a draft implementing regulation with four annexes aimed at standardizing the presentation of income tax information for public CbCR, as stipulated by Directive 2013/34/EU.

The Commission opened a public consultation under which feedback was invited before 6 September 2024 (see EY Global Tax Alert, EU seeks input on the ATAD and public CbCR reporting formats, dated 7 August 2024). In response to the consultation, 33 submissions were received, including an EY submission.

On 21 October 2024, the Commission released a revised draft of the draft implementing regulation (revised draft implementing regulation) with four annexes.

The Commission introduced relatively minor changes in the revised draft implementing regulation, compared to the earlier draft from August. A small change was the clarification that Ultimate Parent Entities (UPE) not incorporated in a Member State, and their reporting subsidiaries, would not be required to use the template, although they would be expected to publish their report in a machine-readable form.

Final Implementing Regulation — template and electronic formats for public CbCR

Following its approval by the European Commission, the implementing regulation was published in the Official Journal of the European Union on 2 December 2024, which is the final step of the legislative procedure on this topic.

The provisions of the Implementing Regulation do not differ substantially from the revised draft implementing regulation.

The EU's public CbCR rules provide that Member States shall require UPEs to prepare, publish and make accessible a report on income tax information regarding the latter of the two consecutive financial years for which the consolidated revenue on the UPE's balance sheet date exceeded a total of €750m. Directive 2013/34/EU mandated the Commission to provide, in an implementing regulation, the common template and electronic reporting formats, which are to be machine-readable.

The implementing regulation includes a set of four annexes that provide the structural details for the new reporting requirements. Annex I introduces a common template for the public CbC reports, which is intended to ensure uniformity in the presentation of tax information. Annex II specifies the XBRL standards for the electronic communication of financial data. Annex III sets out the requirements for marking up and filing the reports, which is intended to ensure that the data is both machine-readable and adheres to a consistent format. Lastly, Annex IV defines the taxonomy elements that determine the scope of data to be reported, which is intended to provide clarity on the information that needs to be disclosed.

To facilitate accessibility and readability, the implementing regulation mandates the use of XHTML for structuring the reports. Additionally, it requires the use of Inline XBRL to embed detailed financial data within the reports, aligning with the technical specifications in Annex II.

Recognizing the need for a transition period for adaptation to the new reporting formats, the implementing regulation is set to be applicable for public CbC reports corresponding to financial years commencing on or after 1 January 2025.

Implications

The proposed standardization of tax reporting under the implementing regulation for public CbCR aims to enhance transparency and comparability of tax-related information.

The requirement for Member State-based reportable groups to use XHTML and Inline XBRL for reporting will necessitate changes to the way financial data is structured and disclosed.

In-scope businesses will need to prepare for the transition period leading up to the 1 January 2025 applicability date to ensure that their reporting systems are compliant with the new electronic formats.

Although under the implementing regulation in-scope groups should utilize the prescribed format to report regarding financial years starting on or after 1 January 2025, the regulation leaves the existing local public CbCR timelines unaffected. For this reason, businesses should pay close attention to relevant Member States' local rules, including the early reporting timelines applicable in some Member States. The first groups that are required to report in Romania, for example, are required to publish their first report by the end of this month (December 2024).

* * * * * * * * * *
Endnotes

1 XBRL, eXtensible Business Reporting Language, is used to exchange business information.

2 XHTML refers to eXtensible HyperText Markup Language, a stricter version of HTML.

3 Inline XBRL is a structured data language, readable both by humans and machines, which makes it possible for filers to prepare a single document (e.g., financial statement) rather than multiple versions.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young Belastingadviseurs LLP, Rotterdam

Ernst & Young SA, Porto

Ernst & Young LLP (United States), Washington, DC

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2024-2187

 
 

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.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more