Last Updated on June 13, 2025 by Arnaud Collignon

Source: Directive (EU) 2021/2101 of the European Parliament and of the Council of 24 November 2021 amending Directive 2013/34/EU as regards the disclosure of income tax information by certain undertakings and branches.

Date of Directive: 24 November 2021

Effective Date for Transposition: Member States must transpose by 22 June 2023.

Application Date: Applicable for financial years starting on or after 22 June 2024.

I. Executive Summary

Directive (EU) 2021/2101 mandates public country-by-country reporting (public CbCR) for certain large multinational enterprises (MNEs) and standalone undertakings operating in the European Union. The primary objective is to enhance corporate transparency and public scrutiny of corporate income tax paid by these entities, fostering fairness, accountability, and an informed public debate regarding tax compliance and its impact on the real economy. This directive extends existing transparency requirements from specific sectors (banking, extractive, forestry) to a broader range of large companies, aiming to position the EU as a global leader in financial and corporate transparency.

II. Core Objectives and Rationale

The Directive is driven by a strong commitment to transparency, fairness, and accountability:

Enhancing Transparency: “La transparence est essentielle au bon fonctionnement du marché intérieur.” (Transparency is essential for the proper functioning of the internal market.) The Commission prioritized responding to citizens’ calls for fairness and transparency, and for the Union to act as a global benchmark. (Recital 1)
Public Scrutiny and Accountability: The directive aims to “renforcer le contrôle par le public de l’impôt sur les revenus des sociétés supporté par les entreprises multinationales exerçant des activités dans l’Union, afin d’encourager davantage la transparence et la responsabilité des entreprises, et de contribuer ainsi à la prospérité de nos sociétés.” (strengthen public scrutiny of corporate income tax borne by multinational enterprises operating in the Union, to further encourage corporate transparency and accountability, and thus contribute to the prosperity of our societies.) (Recital 2)
Informed Public Debate: Public scrutiny is deemed “nécessaire pour favoriser un débat public plus éclairé concernant en particulier le niveau de respect des obligations fiscales de certaines entreprises multinationales actives dans l’Union et l’incidence du respect des obligations fiscales sur l’économie réelle.” (necessary to foster a more informed public debate concerning, in particular, the level of compliance with tax obligations of certain multinational enterprises active in the Union and the impact of compliance with tax obligations on the real economy.) (Recital 2)
Restoring Trust: Common rules for corporate income tax transparency will “contribuer ainsi à rétablir la confiance des citoyens de l’Union dans l’équité des systèmes fiscaux nationaux.” (thus contribute to restoring the trust of Union citizens in the fairness of national tax systems.) (Recital 2)
Benefits Beyond Tax: Public CbCR is expected to “avoir des effets positifs sur les droits des salariés à l’information et à la consultation” (have positive effects on employees’ rights to information and consultation) and improve shareholder ability to assess risks and develop informed investment strategies. (Recital 4, 3)
Global Leadership: By introducing this requirement, the EU demonstrates its role as a “acteur mondial de premier plan dans la promotion de la transparence financière et de la transparence des entreprises.” (leading global player in promoting financial and corporate transparency.) (Recital 7)

III. Scope and Applicability

The Directive amends Directive 2013/34/EU and applies to:

Ultimate Parent Undertakings (MNEs) within the EU:Required to establish, publish, and make accessible a tax information statement if their consolidated turnover exceeded EUR 750,000,000 for each of the last two consecutive financial years. (Article 48 ter, para 1)
Exemption: If the MNE and its related undertakings are established and operate exclusively within a single Member State and no other tax jurisdiction. (Article 48 ter, para 2)
Exemption: If they already publish a report under Directive 2013/36/EU (banking sector) that covers all their activities. (Article 48 ter, para 3)
Standalone Undertakings within the EU:Required to establish, publish, and make accessible a tax information statement if their turnover exceeded EUR 750,000,000 for each of the last two consecutive financial years. (Article 48 ter, para 1)
Exemptions similar to MNEs (single Member State operation, banking sector reporting). (Article 48 ter, para 2, 3)
Medium and Large Subsidiary Undertakings within the EU controlled by a Non-EU Ultimate Parent:Required to publish the tax information statement of their ultimate parent if the parent’s consolidated turnover exceeded EUR 750,000,000 for the last two consecutive financial years. (Article 48 ter, para 4)
If the parent’s statement is unavailable or incomplete, the subsidiary must compile and publish a statement with all information in its possession, along with a declaration that the parent did not provide the necessary information. (Article 48 ter, para 4)
Branches within the EU of Non-EU Undertakings:Required to publish the tax information statement of the ultimate parent or standalone undertaking if the parent’s/undertaking’s consolidated turnover exceeded EUR 750,000,000 for the last two consecutive financial years. (Article 48 ter, para 5)
This applies only to branches whose net turnover exceeded the threshold transposed in accordance with Article 3, para 2 (medium/large size) for the last two consecutive financial years. (Article 48 ter, para 5)
Similar to subsidiaries, if the information is unavailable, the branch must publish a partial statement with an explanatory declaration. (Article 48 ter, para 5)
The obligation for branches applies only if the non-EU parent/undertaking does not have a medium or large subsidiary in an EU Member State subject to reporting. (Article 48 ter, para 5)

Anti-Circumvention Rule: Subsidiaries or branches not otherwise subject to reporting must publish a statement if their sole purpose is to circumvent the reporting obligations. (Article 48 ter, para 7)

Key Threshold: The consolidated turnover threshold for MNEs and standalone undertakings is EUR 750,000,000 for two consecutive financial years. (Article 48 ter)

IV. Content of the Tax Information Statement (Article 48 quater)

The statement must include information for all activities of the standalone undertaking or the ultimate parent undertaking (including all consolidated related undertakings) for the relevant financial year.

Mandatory Information:

Name of the ultimate parent or standalone undertaking, financial year, currency used, and (if applicable) a list of all subsidiaries in the EU or in listed non-cooperative tax jurisdictions (Annexes I & II of Council conclusions on EU list of non-cooperative jurisdictions). (Article 48 quater, para 2a)
A brief description of the nature of their activities. (Article 48 quater, para 2b)
Number of employees (full-time equivalent). (Article 48 quater, para 2c)
Turnover: Defined broadly to include net turnover, other operating income, income from participating interests, and other similar income, including related party transactions. (Article 48 quater, para 2d)
Amount of profit or loss before income tax. (Article 48 quater, para 2e)
Amount of income tax accrued during the financial year (current tax expense on taxable profits/losses, excluding deferred tax and uncertain tax provisions). (Article 48 quater, para 2f)
Amount of income tax paid (actual payments, including withholding taxes). (Article 48 quater, para 2g)
Amount of accumulated earnings at the end of the financial year. (Article 48 quater, para 2h)

Geographical Breakdown:

Information must be presented separately for each Member State. (Article 48 quater, para 5)
Information must be presented separately for each tax jurisdiction listed in Annex I of the Council conclusions on the EU list of non-cooperative tax jurisdictions (the “blacklist”) at the start of the financial year. (Article 48 quater, para 5)
Information must be presented separately for each tax jurisdiction mentioned in Annex II of the Council conclusions (jurisdictions cooperating with the EU on tax good governance) at the start of the current and previous financial year. (Article 48 quater, para 5)
For all other third-country tax jurisdictions, information should be provided on an aggregated basis, unless the company chooses to provide more detailed information. (Article 48 quater, para 5)

Temporary Omission:

Member States may allow the temporary omission of specific information if its disclosure would “porterait gravement préjudice à la position commerciale des entreprises” (seriously prejudice the commercial position of the undertakings). (Article 48 quater, para 6)
Any omission must be clearly indicated with a reasoned explanation. (Article 48 quater, para 6)
Omitted information must be published in a subsequent statement within five years of the initial omission. (Article 48 quater, para 6)
Crucially, information relating to tax jurisdictions in Annexes I and II (non-cooperative and cooperating on tax good governance) can NEVER be omitted. (Article 48 quater, para 6)

Optional Explanations:

The statement may include a general overview explaining significant discrepancies between tax accrued and tax paid, considering previous financial years. (Article 48 quater, para 7)

Format and Publication:

Information must be presented using a common template and machine-readable electronic formats to be established by the Commission. (Article 48 quater, para 4)
The statement must be published within 12 months of the balance sheet date for the financial year concerned. (Article 48 quinquies, para 1)
It must be made publicly accessible free of charge on the company’s website (or subsidiary/branch website) in at least one official EU language, and remain accessible for at least five consecutive years. (Article 48 quinquies, para 2, 4)
Member States can grant an exemption if the statement is simultaneously made available free of charge in a machine-readable format on the website of the relevant national register. (Article 48 quinquies, para 3)

V. Responsibilities and Oversight

Collective Responsibility: Members of the administrative, management, and supervisory bodies of ultimate parent undertakings or standalone undertakings are collectively responsible for ensuring the statement is prepared, published, and made accessible in accordance with the Directive. (Article 48 sexies, para 1)
For subsidiaries and branches of non-EU parents, their management (or persons responsible for publication for branches) are collectively responsible, “au mieux de leurs connaissances et de leurs moyens,” (to the best of their knowledge and ability) to ensure the parent’s statement is made public, or that they publish all information in their possession if the parent’s information is not provided. (Article 48 sexies, para 2)
Auditor’s Role: Statutory auditors and audit firms must indicate in their audit report whether the undertaking was required to publish a tax information statement and, if so, whether it was published. (Article 48 septies)
Sanctions: Member States are required to provide for sanctions and take all necessary measures to ensure their enforcement in case of violations of the national provisions transposing this Directive. (Recital 21)

VI. Review Clause (Article 48 nonies)

The Commission is required to present a report to the European Parliament and the Council by 22 June 2027 on the compliance with the reporting obligations and their impact. This report will specifically assess:

The appropriateness of extending the reporting obligation to large undertakings and large groups (as defined in Directive 2013/34/EU, Article 3, paragraphs 4 and 7).
The appropriateness of extending the content of the tax information statement to other elements.
The impact of aggregated reporting for third-country tax jurisdictions and the temporary omission of information on the effectiveness of the Directive.
This review will take into account developments at the OECD level, the need for sufficient transparency, and the need to preserve a competitive environment for businesses and private investments.
The report may be accompanied by a legislative proposal.

VII. Broader Implications

Market Functioning and Trust: The Directive underscores the belief that enhanced transparency contributes to the proper functioning of the internal market and restores public trust in national tax systems.
Corporate Social Responsibility (CSR): The Directive aligns with the Commission’s strategy on CSR, which defines it as “la responsabilité des entreprises vis-à-vis des effets qu’elles produisent sur la société.” (the responsibility of businesses for the effects they have on society.) It supports companies integrating social, environmental, ethical, consumer, and human rights concerns into their strategies. (Recital 9)
Protection of Third Parties: The legal basis (Article 50(1) TFEU) emphasizes protecting the interests of “tiers” (third parties) in general, not just investors and creditors, but also competitors and the general public. (Recital 22)
No Tax Harmonization: The Directive explicitly clarifies that it concerns only the obligation to publish tax information statements and does not concern tax harmonization. (Recital 22)
Proportionality and Subsidiarity: The Directive asserts that its objectives cannot be sufficiently achieved by Member States alone and are better achieved at the Union level, while respecting the principle of proportionality and not imposing undue administrative burdens on businesses. (Recital 24, 25)