🇪🇺EU Public Country-by-Country Reporting: The EUR 750 Million Threshold and the Aggregated Line

Concept

Directive (EU) 2021/2101 of 24 November 2021 inserted a new Chapter 10a — Articles 48a to 48h — into the Accounting Directive 2013/34/EU. Transposition was due by 22 June 2023, and the rules apply at the latest from the commencement of the first financial year starting on or after 22 June 2024 (Article 48g). For a calendar-year group this means financial year 2025, published during 2026.

Mechanically the exercise mirrors the country-by-country report under BEPS Action 13, with one change of addressee. The non-public country-by-country report is filed with a tax authority and circulates between States through automatic exchange; inspectors read it, and they read it as a risk assessment tool. The public report goes into the commercial register and onto the company's website, and anyone may read it — a journalist, a trade union, a competitor, a fund analyst, a tax inspector in a third State with no access to the exchange. The legal character of the obligation remains corporate: this is public corporate reporting for which the members of the administrative, management and supervisory bodies answer; it is not a tax return, and the statutory auditor engages with it only to the extent of stating whether it was required and whether it was published.

That produces the one genuinely new problem. While the group's country picture stayed non-public, any tension between it and the local files prepared for transfer pricing purposes was a conversation with a single administration. Publication makes that picture generally available and fixes it in place for five years, and every administration where the group has a presence gains a free entry point into the question of why profit is allocated the way it is.

Who falls within scope

One threshold runs through the whole construction: consolidated revenue on the balance sheet date exceeded EUR 750 000 000 in each of the last two consecutive financial years (Article 48b(1)). The symmetry is spelled out: the obligation ceases where revenue falls below the threshold in each of the last two years, and revives on a renewed excess. Member States outside the euro area may convert the threshold at the exchange rate of 21 December 2021, with rounding of up to 5% (Article 48c(9)) — Hungary arrived at HUF 275 000 million.

The obligation is distributed across four figures, and the difference between them is not merely technical: which figure publishes determines both the volume of data and what happens when the ultimate parent refuses to cooperate.

The branch route is subsidiary only: the branch rules apply solely where the non-EU ultimate parent has no medium-sized or large EU subsidiary (Article 48b(5), sixth subparagraph, point (b)). The Article 3(2) figures are those set by Delegated Directive (EU) 2023/2775 of 17 October 2023 and apply to financial years beginning on or after 1 January 2024; Member States may raise them to EUR 7.5 million and EUR 15 million, so the operative branch threshold and the "not small" test for a subsidiary have to be read in the national text.

Two exemptions remove the obligation altogether. The first is purely domestic presence: the rule does not apply where the undertaking and all its affiliated undertakings, including branches, are established or have their fixed place of business or permanent business activity within a single Member State and in no other tax jurisdiction (Article 48b(2)). The second is banking: a group disclosing a report under Article 89 of Directive 2013/36/EU that encompasses all of its activities and those of all consolidated undertakings falls outside Chapter 10a (Article 48b(3)).

Then there is the construction that brings non-EU headquartered groups to the table. Article 48b(6) relieves the subsidiary and the branch where the non-EU ultimate parent itself draws up a report consistent with Article 48c and makes it accessible free of charge, in a machine-readable electronic reporting format, on its own website, in at least one official language of the Union, within twelve months of the balance sheet date, and identifies in that report a single EU subsidiary or branch that has published under Article 48d(1). The mechanism works: the group publishes one English-language document on the corporate website instead of twenty local disclosures. It carries two traps. Spain cut the twelve-month period for this option to six (Eleventh Additional Provision of Law 22/2015, Primero, point 6.a.iii), so a non-EU parent working to the general deadline loses the exemption in Spain specifically. And the condition that a single subsidiary or branch be identified means a local publication still has to happen: the exemption removes the multiplicity of disclosures, the publication itself remains.

The closing provision is Article 48b(7): subsidiaries and branches not formally caught by paragraphs 4 and 5 must publish a report where they serve no other objective than to circumvent the requirements of the Chapter. This is a direct anti-circumvention rule, and it closes the obvious manoeuvre of splitting the European presence into structures below the thresholds.

What has to be disclosed

The content of the report is a closed list in Article 48c(2) and covers all activities of the group, including all affiliated undertakings consolidated in the parent's financial statements: the name of the ultimate parent or standalone undertaking, the financial year, the presentation currency; a list of all consolidated subsidiaries established in the Union or in tax jurisdictions in Annexes I and II to the Council conclusions on the EU list of non-cooperative jurisdictions; a brief description of the nature of activities; the number of employees on a full-time equivalent basis; revenues; profit or loss before income tax; income tax accrued; income tax paid; accumulated earnings.

Three of these definitions are drawn narrowly, and they are what creates divergence from every other figure the group publishes about itself. Revenues are the sum of net turnover, other operating income, income from participating interests excluding dividends received from affiliated undertakings, income from other investments and loans forming part of the fixed assets, and other interest receivable and similar income — and they include transactions with related parties. Income tax accrued is the current tax expense recognised on the taxable profits or losses of the year only; deferred taxes and provisions for uncertain tax liabilities are excluded. Income tax paid is the cash figure for the year and includes withholding taxes paid by other undertakings with respect to payments to undertakings and branches within the group. Accumulated earnings are the sum of profits of past years and of the current year whose distribution has not yet been decided; for a branch, the accumulated earnings of the undertaking that opened it are taken.

The preparer chooses between two bases. The first is the definitions in the Directive itself. The second is the reporting instructions in Section III, Parts B and C, of Annex III to Directive 2011/16/EU — precisely the instructions used to prepare the non-public country-by-country report (Article 48c(3)). The report must specify which of the two bases was used (Article 48c(10)), and the chosen basis applies consistently throughout.

The form is set by Commission Implementing Regulation (EU) 2024/2952 of 29 November 2024 and applies to reports for financial years starting on or after 1 January 2025. The Annex I template has five sections: general information with an explicit yes-or-no question on whether the tax reporting instructions were used; the country table; the list of subsidiaries with the nature of activities; omitted information; and a non-mandatory section explaining material discrepancies between income tax paid and accrued. The format is XHTML with Inline XBRL mark-up against the core taxonomy, and amounts are reported down to the unit with no scaling. A non-EU ultimate parent relying on Article 48b(6) need not use the template, but its report must be machine-readable and must identify the specific European entity that published locally.

The nature of activities is described differently depending on the basis: under the Directive's own definitions, by reference to the NACE classification (Regulation (EC) No 1893/2006); under the tax reporting instructions, by a closed list of thirteen main business activities running from "Research and Development" to "Dormant" and "Other". This is the first point at which the two bases produce visibly different documents from identical facts.

The breakdown: named jurisdictions and the single line

The breakdown mechanism is the substantive heart of the Directive, and it operates on three levels (Article 48c(5)).

Level one: separately for each EU Member State. Where a Member State comprises several tax jurisdictions, the information is aggregated at Member State level.

Level two: separately for each tax jurisdiction listed in Annex I to the Council conclusions on the revised EU list of non-cooperative jurisdictions as at 1 March of the financial year for which the report is drawn up. And separately for each Annex II jurisdiction, but only where it was mentioned there both on 1 March of the reporting year and on 1 March of the preceding year. The double condition for the grey list is deliberate: it excludes jurisdictions added to Annex II immediately before the balance sheet date.

The cut-off date does not work the way it is usually read. The list is taken as at 1 March of the reporting financial year, not at the date of publication. For a financial year 2025 report published at the end of 2026, the applicable list is the one following the update of 18 February 2025 — eleven Annex I jurisdictions: American Samoa, Anguilla, Fiji, Guam, Palau, Panama, the Russian Federation, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu (European Commission, update of 18.02.2025). Later updates do not affect that report, and the converse also holds: a jurisdiction delisted in February 2026 is still disclosed by name in the 2025 report.

Level three: the entire remaining tax map of the world on a single aggregated line. In the template it is headed "All other tax jurisdictions (aggregated basis)", and the Regulation requires it to be shown even when empty: where the jurisdictions disclosed line by line cover all activities, the aggregated line is reported as a zero figure or "nil". Where the tax reporting instructions are used, undertakings deemed not to be resident in any tax jurisdiction are also included on that line.

Why this line is the most consequential part of the report was demonstrated by the first empirical work. According to the EU Tax Observatory study "Comply, Refuse, or Defer" of 8 July 2026, in the Romanian data the aggregated "Others" category absorbs 71% of profits and 74% of revenues (EU Tax Observatory). A typical non-EU group therefore discloses its European entities and the listed jurisdictions by name, while three quarters of the group's economics disappear into one figure that cannot be decomposed. Switzerland, the United Kingdom, the United States, the UAE, Singapore and Hong Kong all sit on that line, which is why it will be read as the residual left after everything visible has been subtracted.

The Commission is aware of the problem. The review clause (Article 48h) requires a report by 22 June 2027 on compliance with and the impact of the obligation, and specifically an assessment of how the aggregated presentation of third-country data and the temporary omission mechanism affect the effectiveness of the Directive; the recitals separately raise the possibility of full disaggregation. A wider breakdown is a scenario worth preparing for where the group's non-European perimeter is material.

Deadlines

The general deadline runs from the balance sheet date rather than from approval of the accounts: twelve months (Article 48d(1) and (2)). Within those twelve months the report must both be published in accordance with Articles 14 to 28 of Directive (EU) 2017/1132, that is through the commercial register, and be made accessible free of charge on a website in at least one official language of the Union. The recitals dispose of a likely misunderstanding directly: shorter periods for the publication of financial statements do not apply to the report on income tax information. The report must remain accessible on the website for at least five consecutive years (Article 48d(4)). A Member State may exempt undertakings from the website requirement where the register itself makes the report accessible in a machine-readable format, free of charge to any third party located within the Union, in which case the company's website must carry information on that exemption and a reference to the register (Article 48d(3)).

That is the general rule. National texts depart from it, and they depart downwards.

The practical effect of the Spanish and Hungarian compression reaches beyond those two countries. A group with a Spanish or Hungarian subsidiary must have its country picture ready six months ahead of the EU-wide deadline, and that picture is a single one for the whole group. The group's operative deadline is set by the shortest period anywhere in its European perimeter, and the preparation calendar is built backwards from there.

The same arithmetic sets the schedule of the first wave. The Romanian episode is the only completed one: reports for 2023 appeared by the end of 2024, and all available empirical work rests on them. The EU-wide first wave falls in 2026: for a calendar-year group the reporting year is 2025, the Spanish and Hungarian deadlines expired on 30 June 2026, and the general deadline expires on 31 December 2026. As at the date of this article the wave is still running and its final statistics are not yet in.

The safeguard clause and its limits

Article 48c(6) permits one or more specific items of information to be temporarily omitted from the report where their disclosure would be seriously prejudicial to the commercial position of the undertakings to which the report relates. The wording is narrow along three axes at once, and each constrains the clause more than its name suggests.

Axis one is who holds the choice. The clause is a Member State option: the Directive says "Member States may allow", and a Member State may decline to transpose it. Hungary declined: Chapter VI/B of the Accounting Act, which houses Sections 134/D to 134/H, contains no provision on temporary omission. According to the PwC tracker as at 26 June 2026 the clause is also absent in Belgium, Greece and Italy (PwC, EU public country-by-country reporting tracker). For a group this means omission is available exactly in those States that enacted the option — and since the report is a single document for the whole group, the clause is usable in practice only where every relevant European publication jurisdiction allows it.

Axis two is subject matter and standard. What may be omitted is specific items of information; a whole line or a whole jurisdiction is not within the clause. The standard is high as well: serious prejudice to the commercial position of the undertakings to which the report relates, and commercial sensitivity alone does not reach it. Any omission must be clearly indicated in the report together with a duly reasoned explanation.

Axis three is time and the absolute prohibition. All omitted information must be made public in a later report within no more than five years of the date of the original omission. Information on jurisdictions in Annexes I and II to the Council conclusions may never be omitted — which removes from the clause precisely the part of the report most often targeted for concealment.

The template makes any use of the clause maximally visible. Section 4 has two boxes: information omitted this year, with a description of each item and a reasoned explanation, and information omitted in previous years and disclosed now, indicating for each item the year in which it was omitted. The design means the clause shows up twice: when the data is withheld and again when it appears. Deferred disclosure arrives paired with the date that reveals how long it was held back.

The EU Tax Observatory identifies safeguard clause invocations as one of the two principal causes of incomplete reports, alongside parent-company refusal to cooperate. The practical conclusion is short: the clause offers little protection and almost always sends a signal.

Evidence from the first wave

The only completed wave is the Romanian one, and there are two independent measurements of it. Both concern groups caught by the Romanian perimeter, and their proportions transfer to the EU-wide wave only as an indication.

The Fair Tax Foundation, publishing on 1 July 2025, examined 137 reports, predominantly for financial year 2023. Around 60% were assessed as good, solid attempts to implement the legislation; in 7% of instances companies disclosed activities in tax havens only; in 26% Romanian subsidiaries reported that their parent company would not provide the information. By headquarters country, good implementation stood at 43% for the United States, 44% for Switzerland and 75% each for Japan and the United Kingdom; the weakest sector was pharmaceuticals at 33% (Fair Tax Foundation).

The EU Tax Observatory paper "Comply, Refuse, or Defer" of 8 July 2026 (Giulia Aliprandi, Teona Cretu and Vytautas Valuta) measured something else: the share that reported at all. Of an estimated 569 non-EU multinationals in scope of the Romanian implementation, only 20% published a report. The authors analysed 164 reports from 144 groups across 24 headquarters countries for financial years 2023 and 2024; 38% of reports are incomplete, most commonly limited to Romania only. The main causes of incompleteness are parent-company refusal to cooperate and invocations of the safeguard clause.

Together the two measurements point to something worth holding in mind when planning. The dominant problem of the first wave was the absence of disclosure altogether: four groups in five within the Romanian perimeter published nothing. Enforcement was left to Member States (the recitals refer back to the general penalty regime of Directive 2013/34/EU), and in the first wave it barely operated. The second wave should not be planned on that basis: the Article 48f mechanism is now live — the audit report must state whether the undertaking was required to publish a report for the preceding financial year and, if so, whether it was published. That converts non-compliance from invisible into documented by a third party.

Consistency: the public report, the non-public report and the local file

The Directive created the point of contact itself. Article 48c(3) allows the public report to be prepared on the basis of the reporting instructions in Section III, Parts B and C, of Annex III to Directive 2011/16/EU — the same instructions used for the non-public country-by-country report that reaches tax authorities through automatic exchange. A group choosing that basis publishes, in substance, the table it has already filed, in a truncated geography: EU Member States and listed jurisdictions by name, everything else on one line.

Three reconciliations follow, each with its own character of divergence.

The public report against the non-public country-by-country report. On the tax basis the figures should match line by line for EU Member States and listed jurisdictions, and the aggregated line should be the sum of the remaining lines of the non-public report. Any deviation is either an error or an application of the safeguard clause, which must be disclosed in Section 4. On the Directive's own definitions divergence is expected and explicable, but it will have to be explained: the definitions of revenues, tax accrued and accumulated earnings in Chapter 10a and in Annex III to the DAC are not identical. That is why Article 48c(10) requires the basis to be stated — it turns part of the divergence from suspicious into anticipated.

The public report against the local file. The local file describes the functions, assets and risks of a specific legal entity and justifies why its return is what it is. The public report shows the outcome by jurisdiction. Conflict arises where the local file characterises a jurisdiction as carrying limited functions and risks while the public line shows profit incompatible with that characterisation — or the reverse, where a jurisdiction is described as a value-creation centre and shows almost no profit. An examiner no longer needs to request the country-by-country report to raise the question: half the material is now in the public domain. The three-tier documentation model and the place of the country-by-country report within it are set out in transfer pricing.

The public report against the consolidated financial statements. The reporting currency is that of the ultimate parent's consolidated financial statements (Article 48c(8)), and Member States may not require publication in another currency; the exception is a subsidiary preparing the report itself after a parent refusal, where its own reporting currency is used. Aggregate figures need not tie line by line to the consolidated statements: the perimeter is all consolidated undertakings, but revenues follow the specific definition in Article 48c(2)(d), which excludes dividends received from affiliated undertakings, and profit is taken before tax. Divergence here is normal; unexplained divergence is not.

A separate line runs to Pillar Two. Both regimes measure effective tax by jurisdiction and both start from the same EUR 750 million threshold, but they compute it under different rules: the public report takes current tax expense with deferred tax excluded, while the GloBE calculation is built on adjusted covered taxes, which include a deferred component. A low-rate line in the public table therefore implies neither a top-up nor its absence; divergence between the two pictures is expected and calls for a coherent explanation if asked. The mechanics of the minimum tax are set out in Pillar Two.

Voluntary transparency and investor expectations

Public country-by-country reporting did not arrive on empty ground. GRI 207: Tax 2019, effective for reports published on or after 1 January 2021, comprises four disclosures: approach to tax (207-1), tax governance, control and risk management (207-2), stakeholder engagement and management of concerns (207-3) and country-by-country reporting (207-4).

Comparing 207-4 with the Directive shows where the mandatory floor ends and voluntary expectation begins.

European sustainability reporting contains no dedicated tax standard. Annex I to Delegated Regulation (EU) 2023/2772 sets out twelve ESRS — ESRS 1 and 2, five environmental, four social and ESRS G1 Business conduct; the last of these covers business ethics and corporate culture, including anti-corruption and anti-bribery, whistleblower protection and animal welfare, the management of supplier relationships including payment practices, and political influence and lobbying. Tax is not among the topics. The practical consequence is that tax transparency in the EU lives in two non-overlapping places: mandatory public country-by-country reporting under Chapter 10a, and voluntary disclosure under GRI 207 that a company includes in its sustainability statement at its own election.

GRI has measured the scale of the voluntary practice itself. Its 2024 study of the 1,000 largest public companies worldwide found that 26% mention the GRI 207 Tax Standard in their reporting; mentions are roughly even across the four disclosures, from a high of 28% for 207-1 to a low of 22% for 207-4, so full country-by-country disclosure is reached voluntarily by about one company in five out of the thousand. Europe leads by region, capital markets lead by sector at 58%, and by country Switzerland leads at 52% ahead of Italy at 43% (GRI, Global adoption trends for the GRI Tax Standard). The same study records the investor channel: PRI advises institutional investors to signal in their policies the criteria that would trigger support for shareholder resolutions requesting disclosure in line with GRI 207, and such resolutions are already being filed.

For a group publishing under the Directive for the first time this produces a predictable sequence. Mandatory disclosure makes the tax picture visible but incomplete — with an aggregated line and without explanations. The question about what is missing then passes from the legislator to the analyst and the shareholder, and it is answered by voluntary disclosure whose extent the group sets itself. The wider movement from banking secrecy to mandatory publicity is set out in tax transparency.

How the published picture reads

The indicators below are orientation points for how an external reader — an examiner, an analyst, a journalist — will read the published report. None of them is a breach or proof of anything on its own; each is tested against the facts of the particular group.

The most underestimated row is the statement that the ultimate parent did not make the necessary information available under Article 48b(4). It is mandatory and is published together with the truncated report; for a non-EU headquartered group it is a document in which the European subsidiary formally tells the world that its own group refused to give it information about itself. In the Romanian sample studied by the Fair Tax Foundation this scenario materialised in 26% of cases. It is removed in advance and in one way only — by a decision at parent level that the group publishes a full report, taken before the first deadline falls and before the European subsidiary has to send a formal request.