What is Country-by-Country Reporting (CbCR)?

Country-by-Country Reporting (CbCR) is a tool used by multinational enterprises (MNEs) to report information about their global operations to a country’s tax administration. The goal of CbCR is to combat tax avoidance and evasion by MNEs by giving the tax administration access to comprehensive and detailed information about MNEs’ business activities in different countries.

CbCR requires MNEs to submit information on sales, profits, taxes paid, number of employees, assets, and other metrics for each jurisdiction in which they operate. This information is then used by the tax authorities of the countries concerned to ensure that MNEs comply with their tax obligations and to detect potential tax evasion and avoidance.

CbCR was first introduced by the Organization for Economic Cooperation and Development (OECD) as part of its BEPS (Base Erosion and Profit Shifting) project to combat tax avoidance and evasion by MNEs. Meanwhile, many countries have included CbCR in their tax legislation or require MNEs to prepare and file CbCR reports.

For whom is Country-By-Country Reporting relevant?

Country-by-country reporting (CbCR) is relevant for multinational enterprises (MNEs) that operate in multiple countries and have annual sales of at least €750 million. These companies are required to prepare and file CbCR reports that provide detailed information about their global business activities in multiple countries.

In addition, CbCR is also relevant for tax authorities and governments seeking to combat tax avoidance and evasion by MNEs. By having access to comprehensive and detailed information on MNEs’ business activities in different countries, tax authorities can detect potential tax evasion and avoidance and ensure that MNEs comply with their tax obligations.

CbCR can also be of interest to the public, as it can help increase the transparency of MNEs and ensure that they are taxed fairly and appropriately in all countries in which they operate. Some countries have made CbCR reports publicly available to increase transparency and strengthen public scrutiny of MNEs’ tax practices.

What does such a reporting look like?

A country-by-country reporting (CbCR) report is a comprehensive report prepared by multinational enterprises (MNEs) to provide information to tax authorities about their global business activities in different countries. The report is usually divided into three parts:

General Information: This part contains basic information about the company, including its name, registered office, business structure and main business activities.
Country-specific information: Detailed information is provided here for each jurisdiction in which the company operates, including sales, profit, taxes paid, number of employees, assets and other key figures. This information provides an overview of the company’s business activities in each country and can help tax authorities detect potential tax avoidance and evasion.
Other Information: This section may contain additional information relevant to the tax authorities, such as a description of the company’s business strategy or intercompany transactions between the company’s different entities.

The CbCR report must meet certain standards and must usually be submitted electronically to the relevant tax authorities. The exact requirements for the CbCR report may vary by country, as each country has its own laws and regulations regarding CbCR.