Public Country-by-Country Reporting (pCbCR) for inbound clients in Germany
Objective: Enhancing Tax Transparency for the General Public
With the introduction of the Public Country-by-Country Report (pCbCR; Ertragsteuerinformationsbericht), the European Union has established new transparency requirements for large multinational enterprise groups. The objective of these rules is to make certain corporate income tax information publicly accessible and thereby enhance tax transparency.
Unlike the tax related Country-by-Country Report, which is submitted exclusively to tax authorities, the information contained in the Public Country-by-Country Report is made available to the general public.
Which Companies Are Affected?
The following companies are required to prepare a Public Country-by-Country Report:
- Multinational enterprises headquartered in the EU/EEA with consolidated revenues exceeding EUR 750 million in at least two consecutive financial years (Outbound Cases)
- Multinational groups headquartered in a third country whose EU subsidiaries meet certain size criteria (Inbound Cases)
In Inbound Cases, an obligation to prepare a Public Country-by-Country Report arises where the multinational group generates revenues exceeding EUR 750 million and the EU subsidiary qualifies as a medium-sized or large entity, i.e. exceeds at least two of the following three thresholds:
- Total assets of EUR 7.5 million
- Revenues of EUR 15 million
- An average of 50 employees
Accordingly, the Public Country-by-Country Report is also particularly relevant for inbound structures. A group headquartered in the United States, whose consolidated revenues exceed the equivalent of EUR 750 million in at least two consecutive financial years, may trigger reporting obligations in Germany if its German subsidiary exceeds the above thresholds.
If the Public Country-by-Country Report is not prepared by the foreign ultimate parent company, the reporting and filing obligation must be fulfilled by the German subsidiary.
Scope of the Public Country-by-Country Report
In addition to basic company information, such as the company’s name and a description of its activities, the Public Country-by-Country Report includes the following information:
- Number of employees
- Net turnover (intra-group/external)
- Profit or loss before tax
- Accrued income taxes
- Income taxes paid during the current year
- Amount of accumulated earnings
The information must be disclosed separately for each EU/EEA Member State and, for all other countries (subject to certain exceptions), on an aggregated basis.
For the determination of the required information, the data used for tax realted Country-by-Country Reporting may generally be relied upon.
First-Time Application
The obligation to prepare a Public Country-by-Country Report applies to financial years beginning after 21 June 2024. For companies with a calendar-year financial year, the provisions therefore apply for the first time to the 2025 financial year, and the Public Country-by-Country Report must be published by 31 December 2026.
Required Actions
German subsidiaries of multinational groups headquartered in third countries (inbound cases) should therefore assess at an early stage whether they fall within the scope of the new rules and which responsibilities within the group exist for fulfilling the disclosure obligations.
Particularly in inbound structures, early coordination with the parent entity is recommended to ensure that the required information is available within the group and that the disclosure obligations can be fulfilled properly.
Affected companies are required to disclose the Public Country-by-Country Report in the German Company Register (Unternehmensregister), while publication on the company’s website must also be considered.