Public Country-by-Country Reporting

Public Country-by-Country Reporting ("Public CbCR") forms part of this broader international movement towards enhanced transparency and accountability. In Malta, Directive (EU) 2021/2101 has been transposed into the Companies Act, Chapter 386 of the Laws of Malta, through provisions principally contained in Articles 213B to 213D and Part II of the Fourth Schedule. The regime seeks to provide greater visibility into the global operations of large multinational groups by requiring certain tax and financial information to be made publicly available on a country-by-country basis.

What information is to be reported?

At its core, Public CbCR is intended to promote greater confidence in the tax systems of EU Member States by providing stakeholders with a clearer understanding of where large multinational groups generate revenue, employ people and pay income tax. This therefore represents an opportunity to demonstrate commitment to good governance, responsible tax practices and transparency.

The report must include general information concerning the reporting undertaking and the relevant financial year, including the reporting currency and, where applicable, a list of the subsidiaries consolidated in the ultimate parent undertaking’s financial statements. The country-by-country information includes revenues, profit or loss before income tax, income tax accrued for the current year, income tax paid on a cash basis, accumulated earnings and the number of employees on a full-time-equivalent basis. The report must also include a brief description of the nature of the activities carried out in each relevant jurisdiction.

One of the distinguishing features of the regime is that information relating to each EU Member State must generally be disclosed separately, together with information relating to specified jurisdictions appearing on the EU list of non-cooperative jurisdictions for tax purposes. Information concerning other tax jurisdictions is generally presented on an aggregated basis, in accordance with the applicable rules. This approach is intended to provide greater visibility over where multinational groups conduct their activities and how those activities are reflected in the group’s tax profile.

Who falls within scope of Public CbCR?

The Public CbCR rules are principally targeted at large multinational groups and are therefore not expected to apply to the majority of businesses operating in Malta. However, the scoping assessment must consider both the group’s consolidated revenue and the nature and location of its parent undertakings, subsidiaries and branches.

In general, Public CbCR applies to multinational groups with consolidated revenues exceeding €750 million in each of the previous two consecutive financial years. It may also apply to certain stand-alone entities exceeding the same threshold, however this is typically considered as a rather uncommon circumstance.

In terms of Malta’s Companies Act, Chapter 386 of the Laws of Malta, it is outlined that the following companies shall fall within scope:

• Maltese Ultimate Parent Entities of multinational Groups that exceed the €750 million revenue threshold
• Large stand-alone Maltese entities that do not form part of a multi-national structure but have revenue exceeding the €750 million threshold
• Certain Large or Medium-sized Maltese subsidiaries that form part of a multinational group, where the ultimate parent entitiy is outside of Malta and the group revenue exceeds the €750 million revenue threshold
• Certain Maltese branches of large multinational groups

Which entity is responsible for reporting?

Where the ultimate parent undertaking is governed by Maltese law, it will generally be responsible for drawing up, publishing and making accessible the report. Where the ultimate parent undertaking is outside the EU/EEA, a qualifying Maltese subsidiary or branch may instead have responsibility for publishing and making the report accessible, unless the applicable conditions for reporting through another designated EU/EEA entity are satisfied.

If a non-EU/EEA ultimate parent undertaking does not provide the necessary information, the relevant Maltese subsidiary or branch may still be required to draw up, publish and make accessible the report based on the information available to it, accompanied by a statement that the parent undertaking did not make the necessary information available.

Are any exemptions available?

The legislation provides for certain exemptions from the Public CbCR requirements. These may include cases where the ultimate parent undertaking or standalone undertaking, together with its affiliated undertakings and branches, operates in only one EU Member State or EEA jurisdiction and in no other tax jurisdiction.

An exemption may also apply where an undertaking already publishes a comprehensive report under specified EU banking and investment-firm reporting requirements, provided that the existing disclosure covers all relevant business activities and, in the case of an ultimate parent undertaking, all affiliated undertakings included in its consolidated financial statements. The availability of an exemption should be assessed by reference to the particular facts and applicable legislative conditions.

Preparing for the New Requirements

The Maltese Public CbCR requirements apply to accounting periods commencing on or after 22 June 2024. As a result, many affected undertakings are approaching their first reporting deadlines during 2026 for financial years ending during 2025.

For an in-scope group with a financial year commencing on 1 January 2025 and ending on 31 December 2025, the first Public CbCR report will generally need to be published and made accessible by 31 December 2026, being 12 months after the relevant balance-sheet date. The report must also be filed with the Registrar within 14 days of the date on which it is published online.

As a result, organisations that are likely to fall within scope may wish to begin assessing whether the relevant data is readily available, whether internal reporting processes are fit for purpose and whether responsibility for the preparation and publication of the report have been clearly identified.

Public CbCR represents another step in the continuing evolution of international tax transparency. While the regime is only expected to affect a relatively limited number of large groups, those organisations that are impacted should consider taking proactive steps now to understand their obligations and prepare for the forthcoming reporting requirements.