Country-by-Country Reporting

CbCR, the OECD standard

Find out what is included in a complete country-by-country report and how to prepare one.

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Country-by-Country Reporting (CbCR): what you need to know

Why CbCR?

Countries are implementing country-by-country reporting (CbCR) to compel multinational companies to disclose detailed information about their business activities and profits in different countries, thereby combating tax avoidance and profit shifting.

When and how often is CbCR required?

Multinational companies must prepare a CbCR report annually and submit it to the relevant tax authority by the deadline – usually within twelve months of the end of the financial year. The exact deadlines and requirements may vary from country to country.

Who is required to prepare country-by-country reports?

Country-by-Country Reporting (CbCR) generally applies to multinational groups with global consolidated annual turnover exceeding certain thresholds, which vary from country to country, and is required by the relevant national tax authorities.

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Understanding Country-by-Country Reporting

What is country-by-country reporting (CbCR)?

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

CbCR requires MNEs to report information on turnover, profit, taxes paid, number of employees, assets and other key figures for each jurisdiction in which they operate. This information is then used by the tax authorities of the countries concerned to ensure that MNEs fulfil their tax obligations and to detect potential tax evasion and avoidance.

CbCR was first introduced by the Organisation for Economic Co-operation and Development (OECD) as part of its BEPS (Base Erosion and Profit Shifting) project to combat tax avoidance and evasion by MNEs. Many countries have since incorporated CbCR into their tax legislation or require MNEs to prepare and submit CbCR reports.

Who is country-by-country reporting relevant to?

Country-by-Country Reporting (CbCR) applies to multinational enterprises (MNEs) that operate in several countries and have an annual turnover of at least 750 million euros. These companies are required to prepare and submit CbCR reports containing detailed information about their global business activities in various countries.

Furthermore, CbCR is also relevant to tax authorities and governments seeking to combat tax avoidance and evasion by MNEs. By having access to comprehensive and detailed information about the business activities of MNEs in different countries, tax authorities can uncover potential tax evasion and avoidance and ensure that MNEs fulfil their tax obligations.

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

What does this sort of reporting look like?

A Country-by-Country Report (CbCR) is a comprehensive report prepared by multinational enterprises (MNEs) to provide tax authorities with information on their global business activities in various countries. The report is usually divided into three parts:

  1. General information: This section contains basic information about the company, including its name, registered office, corporate structure and main business activities.
  2. Country-specific information: This section provides detailed information for each jurisdiction in which the company operates, including turnover, 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 to detect potential tax avoidance and evasion.
  3. Other information: This section may contain additional information relevant to the tax authorities, such as a description of the company’s business strategy or of inter-company transactions between the company’s various entities.

The CbCR report must comply with certain standards and is usually submitted electronically to the relevant tax authorities. The specific requirements for the CbCR report may vary from country to country, as each country has its own laws and regulations regarding the CbCR.

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Free of charge and with no obligation

Book a consultation now

Create robust, comprehensive country-by-country reports in a systematic manner, guided by experts. In addition, you can use Opti.Tax Optionally, you can also deal with the Pillar 2 issue.

  • in person

  • free of charge

  • in detail

Book your no-obligation consultation now and find out more about Opti.Tax:

Packshot of the Opti.Tax software documentation

Can't find a suitable date, or is the calendar not working?

FAQ – Frequently Asked Questions

Frequently asked questions about Country-by-Country Reporting (CbCR) and the Opti.Tax software

Opti.Tax provides you with software for country-by-country reporting that can be used internationally. We have answered the questions we have received from interested professionals on your behalf.

The term ‘country-by-country reporting’ (CbCR) refers to a reporting standard agreed upon in 2015 by the member states of the OECD (Organisation for Economic Co-operation and Development). CbCR requires multinational enterprises to report their tax information on a country-by-country basis to the tax authorities. It serves as a tool to combat tax avoidance by obliging companies to be more transparent. Country-by-Country Reporting applies to companies that meet certain criteria.

The information is submitted to the tax authorities in a country-by-country report. There are various types of such reports. In Germany, since 2016, non-public country-by-country reports have had to be submitted to the Federal Central Tax Office (BZSt) in accordance with Section 138a of the German Fiscal Code (AO). To further increase the pressure on companies, the Bundestag decided in 2023 to implement a public CbCR.

Companies that meet the following criteria are required to submit a country-by-country report:

  • The company is required to prepare consolidated financial statements.
  • This includes at least one foreign company or one foreign permanent establishment.
  • The consolidated financial statements for the previous financial year show consolidated turnover of at least 750 million euros.
  • The company is not included in the consolidated financial statements of a parent company (holding company) at a higher level (foreign).

Under country-by-country reporting (CbCR), multinational enterprises are required to disclose their tax-related data. The legal implementation in Germany is known as the „country-by-country report“. Multinational enterprises (MNEs) must prepare such reports in order to provide the tax authorities with information about their global business activities in various countries. The report covers the following sections:

  1. Overview of the breakdown of income, taxes and business activities by tax jurisdiction: including, amongst other things, revenue, income tax paid, equity and number of employees
  2. A list of all the Group’s companies and business premises by tax jurisdiction, specifying their main business activities
  3. Additional information: any further details or explanations deemed necessary or which may help to improve understanding of the report

The country-by-country report must comply with certain standards and is usually submitted electronically to the relevant tax authorities. The precise requirements for country-by-country reporting vary depending on how each individual country has transposed the OECD’s guidelines into national law.

Under Section 138a of the German Fiscal Code (AO), a company subject to the CbCR requirement must prepare a country-by-country report for each financial year commencing after 31 December 2015. This must be submitted to the Federal Central Tax Office (BZSt) no later than one year after the end of the relevant financial year.

Multinational domestic parent companies with turnover of at least 750 million euros are required to submit a country-by-country report. An exception applies where a foreign parent company commissions a consolidated domestic group company to prepare and submit a country-by-country report. In this case, the commissioned company is obliged under Section 138a(3) of the German Fiscal Code (AO) to take responsibility for the CbCR. A further exception applies where the company is required by the Federal Central Tax Office (BZSt) to submit a country-by-country report.

If the company discovers that incorrect or incomplete data has been submitted, it may submit corrections at a later date.

If a company fails to submit a country-by-country report to the tax authorities, despite being obliged to do so, this constitutes an administrative offence. The fine may be up to 10,000 euros.

The country-by-country report must be prepared in an officially prescribed data set in XML format. This is based on the OECD model form. Registration via the BZStOnline portal is required for submission. Due to other reporting obligations, the companies concerned usually already have such a registration.

The data to be submitted should preferably be provided in English. The „Additional Information“ section must be submitted in English.

Country-by-Country Reporting (CbCR) has a significant impact on the transfer pricing strategy of multinational companies. Whilst companies were already required to ensure that their transfer prices met the arm’s length principle, However, CbCR makes it easier for the tax authorities to analyse transfer prices. Consequently, the companies concerned must be even better prepared for enquiries and be in a position to defend their transfer prices before the tax authorities.

Companies face the prospect of more rigorous audits and tax penalties if they are unable to provide a plausible justification for their transfer pricing. It will also become difficult to simply brush aside disproportionately low profits in high-tax countries without facing scrutiny, given the scale of their business activities. Consequently, companies that are required to submit country-by-country reports have no choice but to prepare transfer pricing documentation.

Companies and law firms use specialised software solutions and tools to prepare and submit country-by-country reports. The software used must enable the designated persons to gather all the necessary information in the required standardised format, prepare the report and submit it to the tax authorities.

As CbCR applies exclusively to large corporate groups, the software solution should integrate seamlessly with existing accounting and financial systems. For the same reason, the software should be capable of collecting and processing data from a wide variety of sources. As this involves extremely sensitive business data, the software must be able to guarantee secure data processing. Last but not least, CbCR is a complex and wide-ranging topic. A user-friendly, intuitive interface therefore saves staff a great deal of time and stress.

As with all other tax-related matters, specialised software offers many advantages when it comes to country-by-country reporting. These advantages include the following:

  • Specialised software retrieves only the required data. Thanks to its tailored design, no time is wasted on unnecessary data queries.
  • The specialised software provides all the functions required. Staff do not need to resort to makeshift solutions or additional tools.
  • When it comes to CbCR, clear legal requirements must be met. Specialist software ensures compliance with these requirements, provided it comes from a reputable supplier and is regularly updated.
  • Providers of CbCR software must, by necessity, possess the required expertise. Some of them make this expertise available to their clients; for example, hsp provides relevant videos.

The preparation of country-by-country reporting requires thorough and extensive preparation. This includes, amongst other things, the following steps:

  • Training for staff who are to be entrusted with this area of responsibility
  • Involvement of qualified tax advisers or a tax consultancy firm
  • Research into the requirements of all countries in which the company operates
  • Implementation of CbCR software and the development and testing of the necessary data management system
  • List of all subsidiaries and permanent establishments abroad
  • Collection of necessary data, e.g. turnover, profits, tax payments, number of employees
  • Alignment of the transfer pricing strategy with current international standards
  • Preparation and maintenance of accurate documentation of all CbCR measures

As country-by-country reports contain sensitive corporate and financial data, companies and, where applicable, law firms must comply with strict data protection and data security measures.

The fundamentals of data protection include the encryption of data transfers, protective measures against malicious software (malware, viruses) and compliance with data protection legislation. The next step should be to carry out regular data backups; in addition, those responsible should ensure that all CbCR processes are monitored and logged. Furthermore, all staff should receive regular data protection training, the software solutions in use should be kept up to date, and any data that is no longer required should be securely deleted. Where third-party providers are involved, the client must ensure that they comply with data protection and data security standards.

Our support team is on hand to help with technical and specialist queries. We also offer training courses, webinars and comprehensive documentation.

Country-by-Country Reporting (CbCR) is a requirement for parent companies of multinational groups or for the ultimate parent entity (UPE) within a group. Local subsidiaries are generally not permitted to delegate this obligation to the parent company.

The legislative bodies of the various countries will continually amend the legal requirements and guidelines. Consequently, all companies required to submit a CbCR must keep themselves up to date at all times. To ensure this, those responsible for the CbCR – whether an in-house department or an external tax practice or consultancy firm – must systematically monitor legislation and regulation in the countries in which the company operates. This involves monitoring official communications from the tax authorities, as well as seeking regular legal advice or consulting the legal department to have the company’s own CbCR and transfer pricing measures reviewed.

Furthermore, the software solutions and tools used should be kept up to date with regular updates. Software providers such as hsp monitor the latest developments in tax guidelines and legal requirements. Accordingly, they implement the necessary adjustments to their products quickly and efficiently. The developer, hsp, also offers the option of keeping up to date with the latest changes via its in-house social network, hsp.community. Major changes are also announced via the newsletter.

If you have any further questions, please do not hesitate to get in touch. We look forward to hearing from you.

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About hsp – Software innovation made in Germany

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Since 1991, hsp Handels-Software-Partner GmbH has been developing professional software solutions for tax consultancy and audit firms, as well as for businesses.

Our taxonomy software Opti.Tax has established itself amongst discerning professionals in the DACH region as the reliable, high-performance and long-term solution for electronic invoicing. The digital tools for legally required, GoBD-compliant documentation are particularly popular.

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Our software modules are developed in close collaboration with experienced partner firms such as Energiesozietät GmbH for internal control systems (IKS), ADKL Abels Decker Kuhfuß & Partner mbB for transfer pricing, and Schröder & Partner for the digital pension file. In this way, we ensure that the features in Opti.Tax are tailored to the real-world challenges of day-to-day professional practice.

Regular updates ensure that changes to legislation and new requirements are incorporated into the software in a timely manner. In addition, we support you with a comprehensive range of service and support offerings, e-learning courses, access to the hsp Community, our weekly live broadcast „hsp live at 11“ and much more.