Higher attention to Country-by-Country Reporting going forward - Tax and Legal blog


Recent developments, such as the acceleration of the public Country-by-Country Reporting (“CbCR”) obligations by Romania, as well the newly published guidance regarding Pillar II safe harbour rules, have put increasing pressure and scrutiny on Multinational Enterprises’ (“MNEs”) CbCR obligations and will directly affect companies’ tax compliance obligations.

Romania implements obligatory public CbCR as of 1 January 2023


On 21 December 2021, the EU adopted a Directive on “Public Country-by-Country Reporting (“Directive (EU) 2021/2101”), requiring MNEs to disclose certain tax and no-tax information on a jurisdictional basis.

Said Directive is applicable to both EU-headquartered MNEs and non-EU-headquartered MNEs doing business in the European Union through a subsidiary or branch in Romania, with a total consolidated revenue of more than EUR 750 million in each of the last two consecutive financial years.

Implementation by Romania

Romania is the first EU Member State to implement the public CbCR into national law. As a consequence, for financial years starting on 1 January 2023, MNEs that are domiciled in Romania or have a taxable presence there through a subsidiary or branch, are required to publish details about their tax position on their website (alternatively on the website of the relevant chamber of commerce when free of charge).

The information to be disclosed is largely in line with the EU Directive and covers the following:

  1. Brief description of the nature of their activities;
  2. Number of employees on a full-time basis.
  3. Net revenues;
  4. Gross profit or loss;
  5. Income tax paid on a cash basis and income tax accrued;
  6. The amount of gains accrued

The above should be disclosed for each EU Member State separately, as well for each jurisdiction that is either mentioned in Annex I (the so-called “blacklist”) or Annex II (the so-called “grey list”) of the EU list of non-cooperative jurisdictions. For all other jurisdictions, the information should be reported jointly on an aggregated basis.

Furthermore, the information should be filed within 12 months of the financial year end-date, i.e. at the latest on 31st December 2024 for companies with a financial year starting 1 January 2023, and should remain accessible for at least 5 consecutive years.

Transitional CbCR Safe Harbour rule under the GloBE rules

On 20 December 2021, the OECD published its initial Safe Harbour framework on Pillar II.

In this respect, a Transitional CbCR Safe Harbour rule has been introduced, providing relief to MNEs in respect of their GloBE compliance obligations for the years covered by the transition period (i.e. Fiscal Years beginning on or before 31/12/2026 but not including a Fiscal Year that ends after 30/6/2028).

More specifically, if a MNE can demonstrate, based on its qualifying CbCR and financial accounting data, that a jurisdiction has

  1. revenue and income below the de minimis threshold (the de minimis test), or
  2. an ETR that equals or exceeds a rate of 15%, 16% or 17% in 2024, 2025 and 2026 respectively (the ETR test), or
  3. profits before income tax that does not exceed the substance-based income exclusion amount as calculated under GloBE rules (the routine profits test), that MNE is relieved from the obligation to perform detailed GloBE calculations in respect of that jurisdiction.

The Transitional CbCR Safe Harbour applies only where the MNE Group prepares its CbC Report using Qualified Financial Statements, meaning based on

  1. the accounts used to prepare the Consolidated Financial Statements of the Ultimate Parent entity; or
  2. separate financial statements that are prepared in line with an Acceptable or Authorised Financial Accounting Standard; or
  3. when an entity is not included in the consolidated financial statements due to size or materiality grounds, the financial accounts for an entity that are used for the preparation of the CbCR

The measure of taxes the Inclusive Framework has chosen for the purposes of the Safe Harbour is income tax expense as recorded in a Constituent Entity’s financial accounts, provided that such Constituent Entity’s income is included in the CbC Report but does not include taxes that are not Covered Taxes as described in Article 4.2.2. Income tax expense includes all below-the-line tax expenses (e.g., the zakat).

Using income tax expense for the Simplified ETR calculation means including deferred taxes in the ETR numerator. The GloBE Rules require making certain adjustments to deferred tax expense (i.e., the net movement of deferred tax liabilities and deferred tax assets), which can give rise to additional complexity in the determination of the GloBE ETR. However, for the transitional period, it is recognised that such adjustments can be disregarded except for uncertain tax positions, which in any case have to be excluded.

Once a jurisdiction falls outside the scope of the CbCR Safe Harbour rule, the MNE cannot apply, with respect to that jurisdiction, for a transition safe harbour in a subsequent year.


Based on the above developments, it is beyond any doubt that going forward, Groups’ CbCR will be subject to a higher level of scrutiny, requiring MNEs to perform a more comprehensive analysis of their CbCR, as well review their broader tax reporting strategy.

If you would like to discuss more on this topic, please do reach out to our key contacts below.

Key contacts

Blog_Daniel stutzmann110x110

Daniel Stutzmann - Partner, Global Minimum Tax  

Daniel is a Tax Partner with 17 years of experience as an international corporate tax specialist. Daniel has extensive experience in the area of cross-border structuring (like establishing tax efficient IP- and financing structures) as well as business reorganizations including large supply chain transformation projects. He also has broad knowledge in tax accounting and tax reporting both from an advisory and audit side. Daniel is a specialist in the OECD Pillar 2 legislation and its impact and leads the Deloitte Switzerland Pillar 2 team.

As a Swiss tax expert he has managed the Swiss tax compliance of hundreds of companies in Switzerland from various industries. He is well acquainted with the Swiss tax authorities and has successfully led various tax audit and tax ruling negotiations with the Swiss tax authorities.


Martin Krivinskas_picture new_110x110

Martin Krivinskas -  Partner, Transfer Pricing 

Martin is an international tax partner with 20 years experience working on international tax matters. He has worked extensively with global multinationals, with a particular focus on helping international group’s mitigate tax risk and manage their effective tax rates. Martin has significant experience of supporting clients with a wide range of transfer pricing and international tax matters and is part of Deloitte` s Global Value Chain Alignment leadership team. Martin`s clients are predominantly in the life sciences, industrial products and consumer products industries.

Martin is a Chartered Accountant and a member of the Chartered Institute of Taxation


MC pic

Miroslav Cerovic - Director – Transfer Pricing and Value Chain Alignment

Transfer Pricing Director with extensive experience of the whole life cycle of transfer pricing projects, from feasibility, through detailed design and implementation, maintenance and defence under audit. Specialised in helping businesses going through operating model changes, working with key tax/finance and operational stakeholders to integrate transfer pricing and broader corporate tax considerations in the development of operationally effective and tax aligned business models.


Freya slika

Freya Younes - Senior Manager –Transfer Pricing

Freya is a Senior Manager in the Swiss tax practice where she advises multinationals in a variety of industry sectors in the field of International Taxation and Transfer Pricing. She specifically focuses on large group restructurings and business model / value chain transformations, as well as planning opportunities following new international regulations.



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