Implementation of the Country by Country Report

June 7, 2024

The implementation of Country-by-Country Reporting (CbC) under Action 13 of the OECD’s Base Erosion and Profit Shifting (BEPS) Project has significantly transformed the international tax compliance landscape. This mechanism seeks to ensure that multinational enterprises (MNEs) report revenues, profits and other key economic indicators in each country where they operate, promoting tax transparency and global tax fairness.  

Importance of Country-by-Country Reporting

CbC is essential for tax administrations to identify Transfer Pricing and other risks related to tax base erosion and profit shifting. This tool enables governments to detect aggressive tax planning practices and ensure that MNEs pay their fair share of taxes.  

Reporting Requirements

The agreed reporting threshold is €750 million in consolidated group revenue. Companies exceeding this threshold must file a CbC report detailing relevant financial information broken down by country, which includes:  

  • Revenue from related and unrelated parties.  
  •  Income (loss) before taxes.  
  •  Taxes paid and accrued.  
  •  Number of employees.  
  •  Tangible assets other than cash and cash equivalents.  

Challenges and Solutions

One of the initial challenges was the interpretation of total consolidated revenues, especially in cases of currency fluctuations and the application of different accounting standards. The OECD guidance clarifies that income should be reflected in accordance with the accounting standards applicable in the country of the ultimate parent entity (UPE). In addition, financial institutions may use specific terms according to their accounting practices, such as “net banking income” or “net income”.  

Impact on Mergers and Acquisitions

Mergers and acquisitions present complex cases for CbC. The reporting obligation is based on consolidated revenues for the immediately preceding fiscal year. For example, if an entity merges with or acquires another entity, it must determine whether consolidated group revenue exceeds the €750 million threshold to define the reporting requirement .  


The implementation of Country-by-Country Notification under BEPS Action 13 is a crucial step towards tax transparency and tax fairness. It ensures that MNEs provide detailed and consistent information on their global operations, making it easier for tax authorities to assess risks and enforce fair taxation.