Directive (EU) 2021/2101 of the European Parliament and of the Council of 24 November 2021 amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches (Text with EEA relevance)

Published date01 December 2021
Date of Signature24 November 2021
Subject MatterFreedom of establishment
Official Gazette PublicationOfficial Journal of the European Union, L 429, 1 December 2021
1.12.2021 EN Official Journal of the European Union L 429/1


of 24 November 2021

amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches

(Text with EEA relevance)


Having regard to the Treaty on the Functioning of the European Union, and in particular Article 50(1) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee (1),

Acting in accordance with the ordinary legislative procedure (2),


(1) Transparency is essential for the smooth functioning of the internal market. The Commission, in its communications of 27 October 2015 entitled ‘Commission Work Programme 2016 – No time for business as usual’ and of 16 December 2014 entitled ‘Commission Work Programme 2015 – A New Start’, identified as a priority the need to respond to the call of citizens of the Union for fairness and transparency and the need for the Union to act as a global reference model. It is essential that the efforts to achieve greater transparency take into account reciprocity between competitors.
(2) In its resolution of 26 March 2019 (3), the European Parliament stressed the need for ambitious public country-by-country reporting as a tool for increasing corporate transparency and enhancing public scrutiny. In parallel with the work undertaken by the Council to fight corporate income tax avoidance, it is necessary to enhance public scrutiny of corporate income taxes borne by multinational undertakings carrying out activities in the Union, in order to further foster corporate transparency and responsibility, thereby contributing to the welfare of our societies. Providing for such scrutiny is also necessary to promote a better-informed public debate regarding, in particular, the level of tax compliance of certain multinational undertakings active in the Union and the impact of tax compliance on the real economy. The setting of common rules on corporate income tax transparency would also serve the general economic interest by providing for equivalent safeguards throughout the Union for the protection of investors, creditors and other third parties generally, and thus contribute to regaining the trust of citizens of the Union in the fairness of national tax systems. Such public scrutiny can be achieved by means of a report on income tax information, irrespective of where the ultimate parent undertaking of the multinational group is established.
(3) Public country-by-country reporting is an efficient and appropriate tool for increasing transparency in relation to the activities of multinational undertakings and for enabling the public to assess the impact of those activities on the real economy. It also improves shareholders’ ability to evaluate properly the risks taken by undertakings, leads to investment strategies being based on accurate information and enhances the ability of decision-makers to assess the efficiency and the impact of national legislation. Public scrutiny should be conducted without harming the investment climate in the Union or the competitiveness of Union undertakings, including small and medium-sized undertakings as provided for in Directive 2013/34/EU of the European Parliament and of the Council (4).
(4) Public country-by-country reporting is also likely to have a positive impact on employees’ rights to information and consultation as provided for in Directive 2002/14/EC of the European Parliament and of the Council (5) and, by increasing knowledge of undertakings’ activities, on the quality of the dialogue that takes place within undertakings.
(5) Following the European Council conclusions of 22 May 2013, a review clause was introduced in Directive 2013/34/EU. That review clause required the Commission to consider the possibility of introducing an obligation on large undertakings in additional industry sectors to produce a country-by-country report on an annual basis, taking into account the developments in the Organisation for Economic Cooperation and Development (OECD) and the results of related European initiatives.
(6) The Union has already introduced public country-by-country reporting for the banking sector with Directive 2013/36/EU of the European Parliament and of the Council (6), as well as for the extractive and logging industry with Directive 2013/34/EU.
(7) By introducing public country-by-country reporting with this Directive, the Union becomes a global leader in the promotion of financial and corporate transparency.
(8) More transparency in financial disclosure will be advantageous for all, since civil society will become more involved, employees will be better informed and investors less risk-averse. In addition, undertakings will benefit from better relations with stakeholders, which will lead to greater stability, along with easier access to finance due to a clearer risk profile and an enhanced reputation.
(9) In its communication of 25 October 2011 entitled ‘A renewed EU strategy 2011-14 for Corporate Social Responsibility’, the Commission defined corporate social responsibility as the responsibility of enterprises for their impact on society. Corporate social responsibility should be company-led. Public authorities can play a supporting role through a smart mix of voluntary policy measures and, where necessary, complementary regulation. Undertakings can go beyond compliance with the law and become socially responsible by integrating further social, environmental, ethical, consumer or human rights concerns into their business strategy and operations.
(10) The public should be able to scrutinise all the activities of a group of undertakings if the group has certain types of entities established within the Union. For groups which carry out activities within the Union only through subsidiary undertakings or branches, those subsidiary undertakings and branches should publish and make accessible the report of the ultimate parent undertaking. If that information or report is not available or the ultimate parent undertaking does not provide the subsidiary undertakings or branches with all the required information, the subsidiary undertakings and branches should draw up, publish and make accessible a report on income tax information containing all information in their possession, obtained or acquired, and a statement indicating that their ultimate parent undertaking did not make the necessary information available. However, for reasons of proportionality and effectiveness, the obligation to publish and make accessible the report on income tax information should be limited to medium-sized and large subsidiary undertakings established in the Union and to branches of a comparable size opened in the Union. The scope of Directive 2013/34/EU should therefore be extended accordingly to branches opened in a Member State by an undertaking which is established outside the Union and which has a legal form which is comparable with the types of undertakings listed in Annex I to Directive 2013/34/EU. Branches that have been closed as referred to in Article 37, point (k), of Directive (EU) 2017/1132 of the European Parliament and of the Council (7) should no longer be subject to the reporting obligations set out in this Directive.
(11) Multinational groups, and where relevant, certain standalone undertakings, should provide the public with a report on income tax information where they exceed a certain size, in terms of the amount of revenue, over a period of two consecutive financial years, depending on the consolidated revenue of the group or the revenue of the standalone undertaking. By way of symmetry, such obligation should cease to apply where those revenues cease to exceed the relevant amount over a period of two consecutive financial years. In such cases, the multinational group or the standalone undertaking should remain subject to the obligation to report on the first financial year subsequent to the last financial year when its revenues exceeded the relevant amount. Such multinational group or standalone undertaking should become subject to the reporting obligation again when its revenues again exceed the relevant amount over a period of two consecutive financial years. Given the wide array of financial reporting frameworks with which financial statements may comply, for the purposes of determining the scope of application, for undertakings governed by the law of a Member State, ‘revenue’ should have the same meaning as ‘net turnover’, and should be understood in line with the national financial reporting framework of that Member State. Article 43(2), point (c), of Council Directive 86/635/EEC (8) and Article 66(2) of Council Directive 91/674/EEC (9) provide definitions for the determination of the net turnover of a credit institution or of an insurance undertaking, respectively. For other undertakings, revenue should be assessed in accordance with the financial reporting framework on the basis of which their financial statements are prepared. However, for the purposes of the content of the report on income tax information, a different definition of revenue should apply.
(12) In order to avoid double reporting for the banking sector, ultimate parent undertakings and standalone undertakings which are subject to Directive 2013/36/EU and which include in their report prepared in accordance with Article 89 of that Directive all of their activities and, where appropriate, all the activities of their affiliated

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