Luxembourg enacts legislation introducing public country-by-country reporting for multinational enterprises

• The Luxembourg Parliament recently approved the law implementing the European Union (EU) public country-by-country reporting (CbCR) Directive into domestic legislation.
  
  
• The new reporting obligations will apply to financial years starting on or after 22 June 2024. 
  
  
• Board members are responsible for properly implementing the new rules. 

On 19 July 2023, the Luxembourg Parliament adopted the law (Law) transposing the public CbCR Directive (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). For more information on the Law, see EY Global Tax Alert, Luxembourg submits draft legislation introducing public country-by-country reporting for multinational enterprises, 22 March 2023.

The rules set forth in the Directive require both multinational enterprises (MNEs) based in the EU, and non-EU based MNEs doing business in the EU through a branch or subsidiary with a total consolidated revenue exceeding €750 million in each of the last two financial years, to publicly disclose the income taxes paid and certain other information, such as a breakdown of profits, revenues and employees per country. 

The obligation of drawing up, publishing and making accessible the public CbCR applies to financial years starting on or after 22 June 2024. For undertakings with a calendar financial year, the reporting obligation will apply for the first time to financial year 2025. The report must be lodged in the Luxembourg Trade and Companies Register (Registre de commerce et des Sociétés), and information about this filing must be published in the Luxembourg Electronic Compendium of Companies and Associations (Recueil électronique des Sociétés et associations) and on the website of the undertaking during calendar year 2026.

The new reporting obligations will have a significant impact on in-scope MNEs. Compliance with the obligations will largely depend on the availability and quality of the information to be disclosed. As a result, a timely review and possibly adaptation of data capture processes will be required. Compliance with the new reporting rules is of particular relevance for board members, given that the members of administrative, management and supervisory bodies are held responsible for noncompliance, which can result in fines of between €500 and €25,000.