Country-by-Country Reporting (CbCR) Explained

What Is Country-by-Country Reporting (CbCR)?

Country-by-Country Reporting definition

Country-by-Country Reporting (CbCR) is a tax reporting format in which large multinational groups disclose to tax authorities how much profit they earn and how much tax they pay in each country of operation. 

The aim is simple — to show whether there is a gap between where a company actually does business and where it declares its profits.

Why CbCR was introduced

CbCR emerged as a response to the problem of base erosion and profit shifting (BEPS): previously, tax authorities only saw their part of the picture and could not assess whether a group was shifting profits to low-tax jurisdictions. The OECD initiative gave them a tool to quickly assess such risks without having to conduct a full audit of each company in the group.

Who Must File CbCR?

Country-by-Country Reporting requirements

The reporting obligation is imposed on the parent company of a group whose consolidated revenue exceeds a certain threshold — usually €750 million in the previous fiscal year. If the parent jurisdiction does not require CbCR or does not have a data exchange agreement with the country of the subsidiary, the reporting obligation may be shifted to another company in the group to avoid a strategic choice of jurisdiction.

Which multinational groups are affected

The requirement only applies to large groups — the revenue threshold, not the number of countries or industries, is the determining factor. The specific thresholds and details vary depending on national legislation, so a group should check the rules not only in the parent company’s jurisdiction, but also in each country where its subsidiaries are present.

How Country-by-Country Reporting Works

Information included in a CbCR report

The report shows the main financial indicators of the group for each country separately: revenue, profit, taxes paid, number of employees and assets, as well as a list of legal entities with a description of their activities. This way, tax authorities can see whether the declared activity of the company is consistent with the financial results it reports in that jurisdiction.

Filing process and reporting jurisdictions

The parent company files the report with its tax authority, which automatically transmits the data to the tax administrations of other countries where the group operates, within the framework of international information exchange agreements. The report must usually be filed within 12 months of the end of the financial year, and before filling, the group must separately notify the authorities which company within the group is responsible for the filing.

Country-by-Country Reporting Form & Template

Standard Country-by-Country Reporting form

The standard CbCR format developed by the OECD as part of BEPS Action 13 consists of three tables. Table 1 contains aggregated financial figures by jurisdiction, Table 2 lists the legal entities of the group with a description of their activities, and Table 3 provides additional explanations and comments that the company considers necessary for a better understanding of the data.

Country-by-Country Reporting template explained

The template is filled in based on the group's consolidated reporting by country, and the data must be consistent with the financial statements of each company. Otherwise, the tax authorities may doubt the reliability of the report. Therefore, many groups develop an internal policy for preparing CbCR so that the methodology does not change from year to year.

CbCR Compliance Requirements

OECD BEPS Action 13 framework

CbCR is one of three levels of transfer pricing documentation required by BEPS Action 13, alongside the master file and the local file. While the master file describes the global business structure of a group and the local file details the operations of a particular subsidiary, CbCR provides a consolidated quantitative picture of the distribution of profits and taxes across all jurisdictions simultaneously.

Deadlines, notifications, and documentation

In addition to the report itself, the company must submit an annual notification of who is responsible for reporting and in which jurisdiction. Skipping this step can lead to fines even if the report is ready. It is also worth keeping working documentation with data sources, as tax authorities may request explanations as part of their transfer pricing risk assessment.

Common CbCR Challenges

Data collection across jurisdictions

The most practical challenge is to reconcile data from dozens of subsidiaries, often operating under different accounting systems, reporting frameworks, and even different financial years. Companies are increasingly implementing centralized IT solutions or engaging consultants to automate this process and avoid discrepancies.

Reporting consistency and transfer pricing risks

CbCR enforcement serves as a pre-screening tool, so any illogical detail, for example, profitability in a jurisdiction with minimal staff, can be a reason for scrutiny. Therefore, CbCR data should be aligned with the overall transfer pricing group policy, rather than being

prepared separately from it.

Best Practices for Country-by-Country Reporting

Preparing accurate CbCR reports

Accuracy starts with a clear definition of the consolidation perimeter and a single data processing methodology for information collection, as well as internal review of the report before submission. It is useful to prepare explanations for atypical figures, to reduce the risk of unnecessary inquiries from tax authorities.

Working with international tax advisors

Due to the complexity of CbCR reporting requirements across jurisdictions, many multinational groups engage international tax advisors to coordinate the reporting process, especially when the group operates in dozens of countries with different local rules. Advisors help coordinate filing deadlines across jurisdictions, track changes in legislation, and align CbCR data with the group’s overall tax strategy. This is particularly valuable during restructuring or when entering new markets, when the group’s structure is changing rapidly.

Frequently Asked Questions

Is CbCR mandatory?

Yes, for multinational groups with consolidated revenues above a certain threshold (usually €750 million) in all jurisdictions that have implemented BEPS Action 13. Smaller companies and groups without an international structure are exempt from this requirement.

What companies are exempt from Country-by-Country Reporting?

Groups with revenues below the threshold and companies without foreign subsidiaries abroad are exempt. In some jurisdictions, temporary exemptions may also apply to groups that are only approaching the threshold.

How is CbCR related to transfer pricing?

CbCR is part of the three-tier system of transfer pricing documentation under BEPS Action 13 and serves as a preliminary risk assessment tool: based on this data, tax authorities decide which groups require more detailed examination.

Final Guide to Country-by-Country Reporting

CbCR has become one of the primary tools of tax transparency, showing the real distribution of profits and taxes of multinational groups by country. Compliance is not a formality, but a systematic work: a clear methodology for data collection, consistency with other tax documentation, and timely interaction with consultants in each jurisdiction where the group operates.