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- The European Commission has adopted the final implementing regulation providing the common template and electronic reporting formats for presenting income tax information in the context of public CbCR.
- Reportable groups whose Ultimate Parent Entity is incorporated in a Member State should prepare their report in XHTML and Inline XBRL.
- The implementing regulation will be applicable for public CbC reports corresponding to financial years starting on or after 1 January 2025.
On 29 November 2024, the European Commission (Commission) adopted Implementing Regulation 2024/2952. Following its approval by the Commission, the implementing regulation was published in the Official Journal of the European Union on 2 December 2024 and will come into effect for financial years starting on or after 1 January 2025.
The Implementing Regulation aims to standardize the presentation of income tax information for public country-by-country reporting (CbCR), as mandated by Directive 2013/34/EU and introduces a common template and electronic formats for public CbC reports in the form of detailed Extensible Business Reporting Language (XBRL)1 specifications for financial data, requirements for report filing, and a taxonomy defining the reportable data. It emphasizes the use of Extensible Hypertext Markup Language (XHTML)2 and Inline XBRL3, which is intended to enhance the accessibility and precision of the reporting.
Detailed discussion
The EU's public CbCR rules provide that Member States shall require UPEs to prepare, publish and make accessible a report on income tax information regarding the latter of the two consecutive financial years for which the consolidated revenue on the UPE's balance sheet date exceeded a total of €750m. Directive 2013/34/EU mandated the Commission to provide a common template and electronic reporting formats, which are to be machine-readable.
The implementing regulation includes a set of four annexes that provide the structural details for the new reporting requirements. Annex I introduces a common template for the public CbC reports, which is intended to ensure uniformity in the presentation of tax information. Annex II specifies the XBRL standards for the electronic communication of financial data. Annex III sets out the requirements for marking up and filing the reports, which is intended to ensure that the data is both machine-readable and adheres to a consistent format. Lastly, Annex IV defines the taxonomy elements that determine the scope of data to be reported, which is intended to provide clarity on the information that needs to be disclosed.
To facilitate accessibility and readability, the implementing regulation mandates the use of XHTML for structuring the reports. Additionally, it requires the use of Inline XBRL to embed detailed financial data within the reports, aligning with the technical specifications in Annex II.
Recognizing the need for a transition period for adaptation to the new reporting formats, the implementing regulation is set to be applicable for public CbC reports corresponding to financial years commencing on or after 1 January 2025.
Implications
The standardization of tax reporting under the implementing regulation for public CbCR aims to enhance transparency and comparability of tax-related information.
The requirement for Member State-based reportable groups to use XHTML and Inline XBRL for reporting will necessitate changes to the way financial data is structured and disclosed.
In-scope businesses will need to prepare for the transition period leading up to the 1 January 2025 applicability date to ensure that their reporting systems are compliant with the new electronic formats.
Although under the implementing regulation, in-scope groups should utilize the prescribed format to report regarding financial years starting on or after 1 January 2025, the regulation leaves the existing local public CbCR timelines unaffected.
In Belgium, the new rules of the EU Public CBCR Directive were implemented through incorporation in the Belgian Code for Companies and Associations (BCCA) and apply to financial years starting on or after 22 June 2024. For most Belgian entities/branches, this implies the new requirements will apply for the financial year starting 1 January 2025 (see tax alert).
The Belgian legislation mirrors provisions in the EU Public CbCR Directive regarding the scope of the Public CbCR obligations for (Belgian) entities and the specific publication requirements and authorizes the King to determine the format and content of the Report through a Royal Decree. The content is however expected to be in line with the Directive and the Implementation Regulation.
Therefore, Belgian based reportable groups need to prepare themselves, ensuring that their reporting systems are compliant with the new electronic formats. The requirement to use XHTML and Inline XBRL for reporting will necessitate changes to the way financial data is structured and disclosed.
For additional information or assistance in this respect, please contact Arne Smeets.
Footnotes
1. XBRL, eXtensible Business Reporting Language, is used to exchange business information.
2. XHTML refers to eXtensible HyperText Markup Language, a stricter version of HTML
3. Inline XBRL is a structured data language, readable both by humans and machines, which makes it possible for filers to prepare a single document (e.g., financial statement) rather than multiple versions.