Currently, ‘non-public’ country-by-country reporting (‘𝐍𝐨𝐧-𝐏𝐮𝐛𝐥𝐢𝐜 𝐂𝐛𝐂𝐑’) already exists in many jurisdictions. In the EU, Non-Public CbCR requires MNEs with a consolidated turnover of at least EUR 750 million (the ‘𝐂𝐛𝐂 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 𝐓𝐡𝐫𝐞𝐬𝐡𝐨𝐥𝐝’) to prepare and submit a report that includes certain data points to help tax authorities assess transfer pricing risks. Those reports are automatically exchanged among EU Member States (‘𝐌𝐒’).

The Directive requires MNEs to publicly disclose certain information (including income tax paid) in (i) each EU MS, (ii) each jurisdiction that is on the EU black or grey list on relevant dates and (iii) all other jurisdictions on an aggregated basis. The goal of Public CbCR is to enhance public scrutiny of income taxes borne by MNEs with activities in the EU, whereas Non-Public CbCR seeks to combat tax avoidance.

Public CbCR applies to MNEs that meet the CbC Revenue Threshold in two consecutive years and are EU headquartered or non-EU headquartered with one or more EU subsidiaries or branches. An exception is provided for “small” EU subsidiaries and branches. For subsidiaries, this exception generally applies if they do not exceed at least two of the three following criteria in two consecutive years: a balance sheet total of EUR 4 million, a net turnover of EUR 8 million and 50 employees. US MNEs with (material) active EU operations will thus likely become subject to Public CbCR, but this may be different for US MNEs whose EU subsidiaries have a holding function only.

Pursuant to the Directive, 2025 is the first reporting year for MNEs that apply a financial year that equals the calendar year. Publication must occur within 12 months after the end of a reporting year, and the report must be published in the relevant EU business register(s) and on the relevant corporate website(s) of the MNEs. The Directive allows disclosure deferral for commercially sensitive information. EU MS may implement the Directive more strictly or sooner (e.g., Romania applies 2023 as first reporting year).

It is important for US MNEs with EU presence to verify whether they may face Public CbCR in the EU. Also, it’s recommended to assess Public CbCR in the context of broader tax transparency policies and to ensure that the information disclosed under Public CbCR aligns with other information, such as Non-Public CbCR and Pillar 2 reporting.

Want to know more about this topic? Reach out to one of our colleagues mentioned below.