European Union: Draft Regulation on Corporate Income Tax Reporting establishes Common Template and Electronic Formats

Large multinational corporations operating in the EU must disclose information on the corporate taxes they pay, along with other information, in the form of annual ‘country by country’ reports. 

European Commission recently published a draft Implementing regulation introducing a common template and electronic formats for these reports. 

The European Commission has proposed a new regulation to standardize the reporting of income tax information under Directive 2013/34/EU. This draft regulation aims to unify reporting practices across Member States, thereby improving transparency and comparability in financial disclosures.

This draft act is open for feedback from 01 August 2024 to 29 August 2024 (midnight Brussels time).

KEY PROVISIONS

• Reporting Requirement: Member States will be required to mandate that undertakings prepare, publish, and make accessible reports on income tax information if their consolidated revenue exceeds EUR 750 million for the last two consecutive financial years.

• Exemptions: Undertakings that disclose reports under Article 89 of Directive 2013/36/EU will be exempt from this new requirement.

• Common Template and Format: The draft regulation introduces a standardized template and machine-readable electronic reporting formats, including XHTML and Inline XBRL. These formats are intended to facilitate automated data processing and ensure consistency across reports.

• Taxonomy and Markup: A core taxonomy will be specified to convert human-readable text into machine-readable data, enhancing the accessibility and usability of the information reported.

• Preparation Instructions: Reports should be prepared according to the tax reporting instructions outlined in Section III, Parts B and C of Annex III to Council Directive 2011/16/EU.

• Subsidiary and Branch Reporting: Medium-sized and large subsidiaries, as well as branches of non-EU parent undertakings, must publish reports or statements if their ultimate parent fails to provide the required information.

• Transitional Provisions: The new regulation is set to apply to financial years starting on or after January 1, 2025.

• Implementation

The draft regulation will come into effect 20 days after its publication in the Official Journal of the European Union. Once adopted, it will be binding and directly applicable across all Member States.

SOURCE/ RECOMMENDED READ: 

• Tax paid by multinationals – template and electronic formats for ‘country by country’ reports (europa.eu)