Dr. Daniel Zöller, RSM Ebner Stolz: "Mandatory Disclosure of Corporate Income Tax Information through Public CbCR"

With the introduction of Public CbCR, large multi­national corporate groups must disclose key tax and corporate data within the framework of an income tax information report. The new rules apply to financial years beginning after June 21st 2024. The disclosure must be made within one year after the end of the financial year for which the income tax report is to be prepared.

The key distinction compared to the tax-re­lated CbCR, which is mandatory since 2016, lies in the intended audience: while tax CbCR is only submitted to the compe­tent tax authorities, Public CbCR is intend­ed for the general public.

The obligation to prepare a Public CbCR is linked to the threshold of €750 million in group revenue. Specifically, to fall within the scope of Public CbCR, the sales revenue or consolidated group sales revenue must exceed €750 million in each of two consec­utive financial years (revenue threshold).

In principle, the obligation applies to

• domestic standalone companies with a branch, permanent establishment or ongoing business activity in at least one other country, if the standalone company exceeds the revenue threshold,

• German ultimate parent companies of corporate groups with a subsidiary, branch, permanent establishment or ongoing business activity in at least one other country, if the group exceeds the revenue threshold,

• domestic subsidiaries that are classified as medium-sized or large under the size categories of the German Commercial Code, whose ultimate parent companies are based outside the EU/EEA, and the group exceeds the revenue threshold, or

• domestic branches of a non-EU/EEA standalone company or a group with an ultimate parent company based outside the EU/EEA, if the revenues of the branch exceed €12 million in each of two consecutive financial years and if the standalone company or group exceeds the revenue threshold.

Detailed disclosure requirement

If affected companies fail to comply with the obligation or do so late, this can be sanctioned with fines of up to €250,000.

Companies must disclose detailed information about the included entities, a description of the business activity and various key figures, such as the number of employees, revenue and the corporate income tax payable for the reporting period. The information must be given separately for each EU/EEA state and for each tax jurisdiction classified as non-cooperative according to the EU list; for all other tax jurisdictions, the information can be aggregated.

The information to be disclosed essentially corresponds to the data already required in the non-public tax CbCR when exercising the relevant options. However, potential deviations must still be examined in detail.

Certain disclosures may be omitted from the corporate income tax report if their publication would cause significant harm to the company concerned, provided this is duly justified. However, this informa­tion must be included in the income tax information report prepared for the fourth financial year after the reporting period at the latest.

The income tax information report must generally be prepared using a template specified by the EU Commission in a ma­chine-readable format and must be submit­ted, in German, to the German Company Register.

Additionally, the income tax information report must be made accessible on the re­porting company’s website for at least five years. Alternatively, it is sufficient to pro­vide a note on the website stating that the report is available free of charge via the Company Register and that, in this case, the publication on the website itself is not required.

Both the submission to the Company Reg­ister and the publication on the website must occur within one year after the end of the respective financial year to which the income tax information report relates.

ABOUT THE AUTHOR

Dr. Daniel Zöller is a certified tax advisor and partner at RSM Ebner Stolz in Stuttgart. He is also a member of the working group on income tax information reporting of the Institute of Public Auditors. His areas of expertise include: International tax law, reorganizations, tax audits and exit taxation. He routinely represents high-profile clients in the IT, automotive and manufacturing sectors.