Public country-by-country reporting: Prepare for it now

The Danish proposal to implement the EU public Country-by-Country reporting Directive  has been presented (L118). The Danish proposal generally follows a minimum implementation approach, i.e. the information included in the reporting is limited to the minimum requirement from the EU Directive.

The proposal is expected to be adopted by the end of June 2023 with effect for financial reportings starting after 22 June 2024, i.e. for Groups reporting for calendar years 2025 will be the first year in scope.

The new legislation will include the obligation to report the following data for Multinational Groups, including Danish Funds and Cooperatives, with consolidated net turnover of EUR 750m [DKK 5.6m] in the last 2 years:

• Total Revenue, 
• Profit / loss before tax, 
• Tax paid (on cash basis), 
• Tax accrued (current year), 
• Number of employees, 
• Total accumulated earnings. 

The Group also needs to disclose a list of names of the constituting legal entities, and include a brief description of the nature of their activities. 

The information must be reported at a Country level for all entities in the group with EU nexus, on geographical level for each EU Member State, Black list, and Grey list countries. Entities outside the EU can be reported at aggregated level. The report must be publicly available (website, annual report, public register, etc.). 

Data should be made available 12 months following the end of the financial year, via submission to the Danish Business Authorities. Disclosure can be omitted if it is prejudicial to the commercial position of the Group, for a maximum of 5 years.

The challenge:

Groups should carefully consider how their CbCR data may be interpreted by tax professionals and other interested parties. With advances in data analytics, interested stakeholders, including investors and NGOs, can analyse the data and compare it with other publicly available data. In order to best communicate regarding their tax position, groups should start to develop their tax transparency strategy now.

Complying with the additional public CbCR requirements should also be considered in the broader context of a group’s overall tax strategy and tax governance. Given that the overall tax strategy and ESG objectives are important to boards, tax directors should prepare to raise the proposed changes with their boards at an early stage, and certainly well in advance of the group’s required deadline to publicly disclose information. 

How we can help:

Using Alteryx flows, a Tableau dashboard and PwC’s Workbench collaboration hub, a new digital solution from PwC makes it easy for companies to analyse and understand their CbCR data in advance of making it available to the public. A web-based solution developed by PwC’s tax team picks up multiple years of CbCR data, analyses it and provides key insights through interactive dashboards. 

The only data we need from you to have this analysis automatically generated is a company's standardised format CbCR data for as many years as possible. 

The key benefits of using the CbCR data analysis tool:

• Key ratio analysis and risk assessment allowing for early detection of potential communication areas
• Increased transparency for the tax department and other stakeholders 
• Meeting mandatory compliance in a timely manner
• Data visualisation going beyond standard tax reporting to enable analysis of financial and tax data
• 24/7 access to your CbCR data in a user-friendly format

The takeaway:

PwC’s CbCR data tool provides valuable insights into the multi-year data that companies have to disclose to the tax authorities and will have to make public in the near future. The tool helps to increase transparency within the organization and allows following key metrics of the company in an innovative, digital and easily accessible way.