25 October 2021

European Union:
Income tax information report to be public in future and subject to audit (country-by-country reporting)

On 28 September 2021, the European Council approved a proposal to amend the Accounting Directive (2013/34/EU) as regards disclosure of income tax information by certain undertakings and branches at first reading.

In particular, the proposals provide that

  • obligated ultimate parent undertakings must prepare, disclose and make publicly available an income tax information report if consolidated turnover exceeds EUR 750 million on the balance sheet date for each of the last two consecutive financial years (Art. 48b);
  • the income tax information report contains, among other things, the following information:
    • a brief description of the nature of their activities,
    • the number of employees on a full-time equivalent basis,
    • total net turnover, other operating income, income from investments, etc.,
    • profit or loss before income tax,
    • the amount of income tax still payable in the relevant tax jurisdiction, etc. (Art. 48c);
  • the income tax information report is disclosed within twelve months of the balance sheet date (Art. 48d);
  • where the financial statements are required to be audited by an auditor, state in the audit report whether the report has been disclosed (Art. 48f).
  • The European Parliament still has to approve the project. The amendment will become effective 20 days after publication in the Official Journal of the European Union. Member States will then have 18 months to transpose the new requirements into national law.


Since 2016, a domestic undertaking that prepares or is required to prepare consolidated financial statements has to prepare a country-by-country report for this group in accordance with Section 138a of the German Fiscal Code (AO) and submit it to the Federal Central Tax Office (Bundeszentralamt für Steuern) if

  1. the consolidated financial statements include at least one company with its registered office and management abroad (foreign company) or a foreign permanent establishment, and
  2. the consolidated turnover reported in the consolidated accounts for the preceding financial year is at least EUR 750 million.