Transparency — Tax Disclosure and Reporting

Transparency in the tax context refers to the totality of disclosure obligations that companies, financial intermediaries, and individuals have toward tax authorities and, to an increasing extent, toward the public. These obligations go beyond mere exchange of information between authorities and encompass the proactive disclosure of tax arrangements, ownership structures, and country-specific tax data before any official request.

The most important transparency instruments include Country-by-Country Reporting (CbCR) for multinational groups, beneficial ownership registers, the obligation to report cross-border tax arrangements (DAC6 in the EU, OECD BEPS Action 12), reporting obligations for digital platform operators (DAC7), reporting obligations for crypto-assets and e-money (DAC8/CARF), and public CbCR disclosure for large companies (EU Directive 2021/2101). These are complemented by tax transparency reports expected of listed companies within sustainability reporting frameworks (GRI 207, CSRD).

The regulatory trend clearly points toward public transparency: while information exchange long took place only between authorities, today governmental and corporate tax data are increasingly made accessible to the public. This heightens reputational pressure on companies and supplements purely administrative enforcement mechanisms with societal oversight.

Tax transparency obligations have their origins in general accounting and record-keeping requirements, as well as cooperation duties vis-à-vis tax authorities. Specific transparency rules for multinational groups only emerged with the OECD BEPS project: Action 13 (2015) established the standard for Country-by-Country Reports (CbCR), demanding for the first time a systematic disclosure of the profit and tax distribution of large groups.

Within the EU, DAC4 (2016) implemented the CbCR obligation between authorities for large groups; DAC6 (2018) introduced the obligation to report cross-border tax arrangements. A milestone was the EU Directive on public CbCR (2021/2101), which for the first time required public disclosure of country-specific tax data. In the area of beneficial ownership, the 4th EU Anti-Money Laundering Directive (2015) created national transparency registers; the 5th AMLD (2018) mandated public access, which had to be renegotiated following the ECJ ruling of 22 November 2022 (Joined Cases C-37/20 and C-601/20, WM and Sovim SA) on compatibility with data protection law.

Tax transparency and disclosure obligations affect:

• Multinational groups (CbCR): Groups with consolidated revenue ≥ EUR 750 million must prepare country-by-country reports on taxes, profits, and employment
• Public CbCR (EU): Large companies with EU operations must make selected CbCR data publicly available for EU and blacklisted jurisdictions
• Tax arrangements (DAC6 / OECD BEPS Action 12): Intermediaries and taxpayers must disclose reportable cross-border arrangements
• Digital platforms (DAC7): Platform operators must report income of sellers and service providers to tax authorities
• Crypto-assets (DAC8/CARF): Crypto-asset service providers must report transactions and holdings to tax authorities (from 2026)
• Beneficial ownership: Companies, trusts, and similar structures must register beneficial owners in national registers
• Sustainability reporting: Large companies must disclose tax approach and strategy under GRI 207 and CSRD/ESRS
• Tax rulings (DAC3): Cross-border advance rulings and APAs are automatically exchanged between EU authorities

Core obligations in the area of tax transparency and disclosure:

• CbCR obligation: Preparation and filing of country-by-country reports with the competent tax authority, which forwards them to relevant jurisdictions
• Public CbCR: Publication of a simplified CbCR report for large companies operating in the EU (for financial years beginning on or after 22 June 2024 (for most companies: financial year 2025))
• Reporting of tax arrangements (DAC6): Reportable arrangements must be disclosed within 30 days; historical arrangements (from 25 June 2018) were subject to retroactive reporting
• Transparency registers: Registration of beneficial owners (natural persons with ≥ 25% interest or equivalent control); data must be kept up to date
• GRI 207 reporting: Disclosure of tax governance, tax risks, tax strategy, and country-specific tax data in the sustainability report
• Master File / Local File: Documentation of intra-group transactions as part of transfer pricing documentation (BEPS Action 13)

2 corrections:
- Effective_date 25.06.2016 is DAC4-specific, not transparency in general
- Official URL points to outdated EU page
3 updates:
- ECJ ruling 2022 missing case number and exact date
- DAC7 and DAC8 missing from the presentation
- last_amended 2024-01-01 without justification or reference
1 clarification.
1 note.