International groups and reporting

The EU plans significant simplification of tax reporting

In June, the European Commission presented a comprehensive package of proposals aimed at simplifying European direct tax rules and reducing the administrative burden on businesses.
One of the main changes is to be a revision of the DAC system, i.e. the European rules on administrative cooperation and the exchange of tax information. The existing provisions are to be consolidated into a single, clearer piece of legislation, whilst certain duplicative reporting obligations are to be reduced.
Significant simplification is proposed, for example, for groups subject to Pillar 2 rules, which would no longer be required to report certain cross-border arrangements under DAC6 at the same time. Reporting obligations are also set to be simplified in the area of traditional country-by-country reporting and centralised reporting under Pillar 2.
This is currently a European legislative proposal, the final form of which may change.

Pillar no. 2: the central reporting is waiting for the Czech legislation

The DAC9 enables multinational groups to simplify compliance with reporting obligations relating to the global minimum tax. Provided certain conditions are met, it will be possible to submit a consolidated report on behalf of the group centrally in a single country, and the individual tax authorities will then automatically exchange the necessary data.
However, the Czech legislation required for this mechanism to function fully has not yet been finalised. The draft amendment to the Act on International Cooperation in Tax Administration is still in the Chamber of Deputies.
We therefore recommend that the multinational groups concerned monitor further legislative developments, particularly with regard to reporting obligations relating to previous periods.

Public CbRD: the first publication expected in 2026

Large multinational groups and certain individual companies with cross-border operations will be subject to a new obligation to publicly disclose information about their tax burden.
Public country-by-country reporting (Public CbCR) applies in particular to groups with consolidated revenues, provided that two conditions are met in two consecutive financial years: for a multinational group, consolidated revenues must reach EUR 750 million; and for an independent enterprise with a cross-border element, net turnover must exceed CZK 19 billion.
The obligation applies to financial years beginning after 22 June 2024. For entities with a financial year beginning after 22 June 2024, the first reporting period may end as early as 2025. The report must be published within 12 months of the balance sheet date. For example, for a financial year ending on 30 June 2025, the report should be prepared and published by 30 June 2026.
For companies where the financial year is the calendar year, provided the relevant conditions are met, the first period for which the report is to be prepared and published will be the year 2025. They will therefore have to prepare the report by the end of 2026. The report will include, for example, revenue, profit before tax, tax paid and payable, the number of employees and other data broken down by individual tax jurisdictions.
Unlike the traditional CbCR intended for tax authorities, this is a publicly available report. Companies subject to this obligation should therefore not only focus on the preparation of the data itself, but also on its presentation and the potential reputational impact of the information disclosed.