By 2024, multinationals will have to detail how much tax they will pay in each country

Congress has consolidated the year 2024 to start implementing the country-by-country tax transparency report that will oblige multinationals to detail the total pre-tax profit or loss and the amount declared to the tax authorities.

Such reporting will be mandatory for fiscal years beginning after June 2024.

Transposition of the “Country-by-Country Directive”

The amendment serves to transpose the European directive on disclosure of information relating to corporate income tax by certain companies and branches, which must be transposed by June 2023.

The report, which will contain separate information for each Member State in which the company operates, will have to detail:

• Your income.
• The amount of profits.
• Losses before tax.
• The amount of accrued tax calculated as current tax expense, recognised in profit.
• Taxable losses.
• The amount of tax paid.
• The amount of reserves at the end of each financial year.

It must be published within six months of the end of the financial year and deposited with the Companies Register, together with the documents making up the annual accounts.

In addition, companies must make it public on their website within six months and access to it must be free of charge for at least five consecutive years.

Companies with a turnover of more than 750 million

The proposal for transposition in Spain is to extend this obligation to all dominant companies of a group or which do not form part of a group when they are subject to Spanish law, provided that they exceed 750 million euros of revenue in each of the last two financial years.

Spanish subsidiaries and branches of dominant companies that are not subject to the law of a Member State will also be obliged to report, with the report referring to the parent company or the company that has set up the branch, when they meet the aforementioned requirements.

For these cases, the transposition proposal provides that, in the event that:

• The information is not accessible.
• The subsidiary requests all required information from the parent undertaking.
• If it does not provide it, the branch publishes all available information.
• A statement that the parent has not made the required information available.

This report shall not be mandatory for companies that are not part of a group or for parent companies when they are established or have permanent business activities in only one.

Possible omissions of information

The transposition proposal leaves the door open for multinationals to temporarily omit information:

Where disclosure would be seriously prejudicial to the commercial position of the undertakings to which it relates.

In any case, such omission must be clearly indicated and accompanied by a duly substantiated justification.

In any case, any omitted information must be published in a subsequent report within a maximum period of five years, and information relating to tax territories included in the revised EU list of non-cooperative countries and territories may not be omitted.

If you have any doubts regarding this issue, please do not hesitate to contact us, by telephone to Carles Monfort Codina or by e-mail to cmc@btsasociados.com, we will be delighted to help you.