Overview
Country-by-country reporting differs from regular financial reporting in that companies have to publish information for every country they operate in rather than providing a single set of information at global level.
Specific rules in the Accounting Directive and the Transparency Directive require mining and forestry companies to use this system to report on the taxes, royalties and bonuses that they pay worldwide.
The Commission has also proposed a new directive that will require large multinational companies to publish country-by-country information on where they make their profits and where they pay tax.
Requirements for extractive and logging industries
Under EU rules, listed and large non-listed companies that are active in the oil, gas, mining or logging sectors have specific reporting obligations.
They must report all payments to governments broken down by country. They must also report by project if these payments have been attributed to a specific project.
Companies must report the following types of payments:
- production entitlements
- taxes on income, production or profits
- royalties
- dividends
- signature, discovery and production bonuses
- licence fees, rental fees, entry fees and other considerations for licences and/or concessions
- payments for infrastructure improvements
These rules aim to improve the transparency of payments made to governments all over the world by the extractive and logging industries.
This helps populations of resource-rich countries hold their governments accountable for the exploitation of natural resources, in line with the Extractive Industries Transparency Initiative (EITI). The EITI is a voluntary initiative promoting public awareness of how countries manage their oil, gas and mineral resources.
Transparency of multinationals on corporate income tax per country
The EU aims to enhance the transparency on corporate income tax paid by large companies, with a view to foster greater corporate accountability, enable better informed public debate and contribute to maintain trust in the fairness of national tax systems.
With the country-by-country Directive, multinational enterprise groups with global revenues exceeding EUR 750 million will publish, starting in year 2026, how much corporate tax they pay in each Member State as well as in non-cooperative jurisdictions for tax purposes. The reports will include contextual information per country in addition to the amount of corporate income tax, such as the nature of activities, the list of subsidiaries, turnover, number of employees, retained earnings, and profit before tax. Enterprises will also have to disclose similar information, globally, on the basis of the business they conduct outside the EU.
These reports will be made available to citizens on the enterprise’s web site and from the national Business Registers.
These additional transparency requirements will apply to any multinational company - whether European or not – that is currently significantly active in the EU.