REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Assessment on the Adequacy of the Information to be disclosed under Article 89(1) of Directive 2013/36/EU
Date: 2023-06-26
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: EU Member State, credit institution, disclosure of information, exchange of information, financial supervision, investment company, trade information

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 26.6.2023  COM(2023) 344 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Assessment on the Adequacy of the Information to be disclosed under Article 89(1) of Directive 2013/36/EU      
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
TO THE COUNCIL 

Assessment on the Adequacy of the Information to be disclosed under Article 89(1) of 
Directive 2013/36/EU 

INTRODUCTION 

1. 
Directive 2013/36/EU of the European Parliament and of the Council1, commonly referred to 
as Capital Requirements Directive IV (hereinafter: CRD IV), established an EU framework to 
coordinate  national  provisions  concerning  access  to  the  activity  of  credit  institutions  and 
investment firms, the modalities for their governance, and their supervision. It was adopted in 
2013 as a part of a legislative package including Regulation (EU) No 575/20132, commonly 
referred to as Capital Requirements Regulation (hereinafter: CRR), laying down uniform rules 
on general prudential requirements.  

This  package  was  adopted  in  a  context  of  mounting  public  pressure  on  the  financial  sector 
since the financial and debt crisis started in 2007, and included specific provisions aimed to 
address this pressure with a view to regaining the trust of European citizens and taxpayers in 
the overall financial sector.  

For  the  sake  of  “increased  transparency”3,  Article  89  (“country-by-country  reporting”, 
hereinafter:  CBCR)  of  CRD  IV  hence  required  that  Member  States  ensure  that  credit 
institutions  and  investment  firms  (hereinafter:  “institutions”)  subject  to  this  legislative 
framework disclose specific information – both financial and non-financial – regarding their 
activities. 

The  present  report  is  prepared  under  Article  89(6)  of  CRD  V4,  which  requires  the 
Commission  to  review  whether  the  CBCR  information  is  still  adequate  and  whether  further 
relevant  information  should  be  added.  Moreover,  it  provides  the  obligation  to  present  the 
outcome  of  this  assessment  to  the  European  Parliament  and  to  the  Council  in  view  of  a 
possible legislative proposal. 

1 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity 
of  credit  institutions  and  the  prudential  supervision  of  credit  institutions  and  investment  firms,  amending 
Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC. 
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013L0036&from=EN  
2 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential 
requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. 
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013R0575&from=EN  
3 See Recital (52) of CRD IV  
4 Directive (EU) 2019/878 of the European Parliament and of the Council  of 20 May 2019 amending Directive 
2013/36/EU  as  regards  exempted  entities,  financial  holding  companies,  mixed  financial  holding  companies, 
remuneration, supervisory measures and powers and capital conservation measures. 
EUR-Lex - 32019L0878 - EN - EUR-Lex (europa.eu) 

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The assessment acknowledges the findings of the supporting study5 carried out by an external 
contractor  and  is  based  on  the  internal  review  conducted  at  the  Commission.  EBA,  EIOPA 
and ESMA were consulted.  

The  methodology  used  by  the  contractor  for  collecting  and  assessing  data  relies  on  a 
combination  of  desk  research,  legal  mapping,  interviews,  surveys,  and  sample  analysis:  the 
relatively  low  response  rate  from  institutions  and  stakeholders  invited  to  take  part  in  this 
exercise is a limitation to be considered throughout the present assessment. 

2. 

CONTEXT BEHIND THE INTRODUCTION OF CBCR REQUIREMENTS 

In the aftermath of the global financial crisis (2007-2009) and of the debt crisis affecting the 
Eurozone (2010-2012), public confidence in the financial system dropped to a very low level. 
Institutions  had  been  at  the  origin  of  the  crisis,  and  the  general  feeling  of  distrust  was 
exacerbated  by  the  widespread  perception  of  financial  institutions  as  enablers  of  tax 
avoidance. 

In  this  context,  the  European  Parliament  proposed  to  amend  the  Commission’s  CRD  IV 
proposal by putting forward transparency requirements6. This initiative resulted in Article 89, 
the objective of which was to regain trust by increasing “transparency regarding the activities 
of institutions, and in particular regarding profits made, taxes paid and subsidies received”7. 
The CBCR requirements are listed in paragraphs (a) to (f) of Article 89(1), as follows:  

(a) name(s), nature of activities and geographical location; 

(b) turnover; 

(c) number of employees on a full time equivalent basis; 

(d) profit or loss before tax; 

(e) tax on profit or loss; 

(f) public subsidies received. 

Particularly, each Member State shall require institutions to disclose the information above: 

-  on  a  country-by-country  basis:  with  regards  to  each  jurisdiction  the  reporting  entity 

operates in, and 
annually: on a consolidated basis for the financial year. 

- 

As provided by Article 89(4), the information above shall be published, where possible, as an 
annex  to  the  annual  financial  statements  or,  where  applicable,  to  the  consolidated  financial 
statements of the institution concerned. 

5  Study  on  the  Adequacy  of  the  Information  to  be  Disclosed  under  Article  89(1)  of  the  Capital  Requirements 
Directive IV  Company law and corporate governance | European Commission (europa.eu) 
6  Report  on  the  proposal  for  a  directive  of  the  European  Parliament  and  of  the  Council  on  the  access  to  the 
activity  of  credit  institutions  and  the  prudential  supervision  of  credit  institutions  and  investment  firms  and 
amending  Directive  2002/87/EC  of  the  European  Parliament  and  of  the  Council  on  the  supplementary 
supervision  of  credit  institutions,  insurance  undertakings  and  investment  firms  in  a  financial  conglomerate 
(COM(2011)0453 – C7‑0210/2011 – 2011/0203(COD)). See Recital 12(b) and Article 86a. 
https://www.europarl.europa.eu/doceo/document/A-7-2012-0170_EN.html  
7 See Recital 52 of CRD IV 

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In compliance with Article 89(3), in 2014 the Commission conducted a general assessment of 
the  potential  negative  economic  consequences  of  the  public  disclosure  of  such  information, 
including the impact on competitiveness, investment and credit availability and the stability of 
the financial system8. The resulting  report  concluded that the disclosure requirements  under 
Article 89(1) of CRD IV were unlikely to have a significant negative economic impact: on the 
contrary, the assessment highlighted positive consequences of CBCR on the transparency and 
accountability of, and on the public confidence in, the financial services sector in the EU. 

3. 

ASSESSMENT OF THE ADEQUACY OF CBCR REQUIREMENTS 

Following the adoption of the CRD  IV in  2013, the Member States had  to  require financial 
institutions to disclose the CBCR information by 1  January 2015.  To date, all EU Member 
States completed the transposition of Article 89(1) CRD IV into their national laws.9  CBCR 
requirements  are  thus  mandatory  and  have  fully  applied  as  implemented  in  national 
legislations since 1 January 2015. 

In accordance with the provisions of Article 89(6) of the CRD V, the present report covers the 
assessment  of  the  adequacy  of  the  CBCR  requirements,  notably  by  checking  whether  they 
serve  the  overall  purpose  of  enabling  public  scrutiny  while  ensuring  resilience  in  the  sector 
and  whether  they  should  be  revised  or  supplemented  with  further  relevant  information  to 
continue fostering transparency of institutions. 

In this chapter, the legal and practical implementation of Article 89(1) will be assessed. First, 
a  general  overview  of  the  principles  and  means  of  disclosure  will  be  given  (section  3.1). 
Subsequently,  each  CBCR  requirement  will  be  reviewed  individually  (section  3.2).  Where 
specific issues are identified, possible adaptations to the legislative text, following proposals 
by the contractor, are also being considered. In line with the Better Regulation Guidelines10 
and toolbox, the CBCR information will then be assessed against five standard criteria used to 
check the performance of EU interventions (section 3.3), namely: 

  effectiveness in achieving the CRD objectives; 
  efficiency of the use of resources as regards potential administrative costs; 
  continued relevance of mandatory requirements and CRD objectives; 
 
  added value at Union level. 

internal and external coherence; 

8  Report  from  the  Commission  to  the  European  Parliament  and  the  Council,  General  assessment  of  economic 
consequences of country-by-country disclosure requirements set out in Article 89 of Directive 2013/36/EU of the 
European Parliament and of the Council of 26 June 2013 
https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52014DC0676&qid=1639170286777&from=EN 
9 The transposition deadline was 31 December 2013. 
10 SWD(2021) 305 final Commission Staff Working Document Better Regulation Guidelines 
https://ec.europa.eu/info/sites/default/files/swd2021_305_en.pdf  

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3.1 

Implementation of Article 89(1) of CRD IV: horizontal aspects 

Breakdown of information: establishment and country-by-country disclosure  

The driving principle of the country-by-country approach is that information is required to be 
disclosed  at  a  level  of  granularity  corresponding  to  the  national  jurisdiction  where  the 
institution concerned has an establishment. As clarified by the  European  Banking Authority 
(EBA)11, the term ‘establishment’ should be interpreted broadly, as referring to subsidiaries, 
branches and other relevant entities through which an institution has a physical presence in a 
particular  country,  whether  Member  States  or  third  countries.  However,  despite  the  EBA’s 
clarifications,  it  seems  that  Member  States  are  still  generally  uncertain  as  to  whether 
European  branches  of  non-EEA  institutions  should  comply  with  CBCR,  and  there  is  no 
consistent interpretation of this term across the Member States. 

As for EU institutions active in multiple countries, most comply with CBCR requirements and 
include the relevant information concerning their entities in the country-by-country report. At 
the same time, it has to be noted that approximately 90% of the institutions in the EU-27 are 
only  domestically  active,  not  having  foreign  branches  or  subsidiaries,  or  are  themselves  the 
subsidiary  of  an  internationally  operating  bank.  This  means  that  out  of  the  approximately 
4.60012  credit  institutions  (July  2021  data13)  within  the  scope  of  Article  8914,  de  facto  only 
around 600 of them have significant relevance in the context of CBCR. 

To address the fact that most EU institutions are only active in their own Member State, and 
to  clarify  the  situation  of  European  branches  of  non-EEA  institutions,  it  could  be  useful  to 
consider  refocusing  the  CBCR  requirement  on  institutions  which  are  active  in  several 
Member States or in both a Member State and third-country jurisdiction.  

It  might  also  be  beneficial  to  clarify  that  the  term  “establishment”  should  cover  both 
subsidiaries  and  branches.  This  would  ensure  that  branches  are  recognised  as  a  part  of  the 
activities in the respective Member State or tax jurisdiction (outside the EU) where they are 
active. 

Lastly, it could be made clear that  activities in offshore financial centres and tax havens are 
reported with reference to those tax jurisdictions rather than the sovereign states of which they 
form a part. 

Annual reporting: scope of consolidation  

Article 89(1) CRD IV generally refers to “a consolidated basis” without further specifying the 
approach  to  follow.  Consequently,  there  is  room  for  interpretation  on  whether  the  scope  of 
consolidation  should  be  on  a  prudential  or  an  accounting  basis.  The  EBA  clarified  that  it 

11 EBA Q&A 2014_1248 https://eba.europa.eu/single-rule-book-qa/-/qna/view/publicId/2014_1248 
12 ECB “List of Monetary Financial Institutions (daily data)”, available at: 
https://www.ecb.europa.eu/stats/financial_corporations/list_of_financial_institutions/html/elegass.en.html  
13 As reported in the Study on the Adequacy of the Information to be disclosed under Article 89(1) of the Capital 
Requirements  Directive  IV.  Page  63  Company  law  and  corporate  governance  |  European  Commission 
(europa.eu) 
14 The credit institutions not subject to CRD as defined under Article 2(5) CRD IV have been excluded from the 
list.  

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refers to the prudential scope of consolidation while allowing Member States to “prescribe a 
more extensive scope of consolidation”. In addition, the EBA invited the institutions to make 
clear  the  scope  of  consolidation  used15.  In  practice,  most  institutions  report  in  line  with  the 
accounting  basis.  In  addition,  the  derogation  offered  to  very  large  institutions  in  Directive 
2021/210116  to  avoid  double  reporting  is  conditioned  by  the  fact  that  the  scope  of  the 
institution’s reporting is based on accounting principles. 

In addition, it appears that Member States interpret Article 89 as meaning that not only parent 
institutions  have  the  duty  to  report,  but  also  their  European  subsidiaries.  A  possible 
clarification could relate to a requirement to report at ultimate parent company level only, in 
order to prevent double reporting. 

Means of disclosure: data reporting format 

Article 89(4) of CRD IV provides that CBCR information shall be published, where possible, 
as  an  annex  to  the  annual  financial  statements  or,  where  applicable,  to  the  consolidated 
financial statements of the institution concerned. The EU legislation does not provide further 
instructions  on  the  reporting  format  to  be  used  for  disclosing  the  information,  and  no 
harmonised  template  is  developed  at  Union  level.  In  the  absence  of  specific  guidance 
providing a standardised EU approach, the reporting institutions are free to develop their own 
format or template, which might affect the consistency of the reported information. 

The  majority  of  the  institutions  comply  with  this  provision  through  disclosing  the  CBCR 
information  as  a  note  or  annex  to  the  annual  financial  statement,  while  some  institutions 
prepare  a  separate  country-by-country  report.  Furthermore,  during  the  study  it  has  been  the 
case  that  annual  reports  were  not  always  available  on  the  corporate  websites  of  the  credit 
institutions concerned. 

In  order  to  further  improve  the  accessibility  and  comparability  of  information,  the 
introduction  of  standard  templates  and  the  harmonisation  of  reporting  procedures  could  be 
considered. Particularly, institutions could systematically publish their CBCR report on their 
corporate  website  and  where  the  institution  is  a  listed  company  the  CBCR  report  could  in 
addition be systematically annexed to their annual report rather than in a separate report.  

3.2 Information to be disclosed 

Name(s), nature of activities and geographical location 

The  first  set  of  information,  laid  down  in  Article  89(1)(a),  is  purely  descriptive.  Its 
interpretation is of utmost importance as it sets the disclosure boundaries for CBCR and thus 
determines  the  scope  of  the  other  measurable  information  listed  in  Article  89(1).  From  a 
formal  perspective,  it  was  literally  transposed  by  all  Member  States,  and  most  institutions 
comply with the disclosure requirement. 

15 See footnote 11 
16 Directive (EU) 2021/2101 of the European Parliament and of the Council of 24 November 2021 amending 
Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches – 
Article 48b(3) 

5 

 
 
 
                                                           
Some  interpretation  issues  concern:  the  nature  of  activities,  with  institutions  being  allowed 
discretion in their own selection of categories, which might include categories such as retail, 
corporate,  wholesale,  leasing,  property  development,  etc.;  or  the  geographical  location, 
especially in relation to territories associated with tax havens and offshore financial centres17, 
with a minority of institutions disclosing information by sovereignty instead of by country.  

Turnover 

Article 89(1)(b) of CRD IV requires the institutions to annually disclose their “turnover” by 
Member  State  and  by  third  country.  When  transposing  this  requirement,  only  few  Member 
States provided a more detailed definition. 

In line with the clarifications made by the EBA18, the term “turnover” in the banking sector 
should be understood as ‘net banking income’. The large majority of the banks adhere to the 
EBA  indications  and  report  net  revenues  (considering  e.g.  net  interest  income,  net 
commission income). 

Therefore, to ensure further legal certainty and a harmonised and comparable implementation 
of  Article  89(1)(b),  the  term  “turnover”  could  be  replaced  with  “net  operating  revenues” 
(including net interest income, net commissions and fees income, net investment income and 
other operating income).  

Number of employees on a full-time equivalent basis 

The  reporting  requirement  under  Article  89(1)(c)  of  CRD  IV  covers  the  “number  of 
employees on a full-time equivalent basis” (FTE). It was literally transposed by all Member 
States and its interpretation is non-controversial as it clearly defines the approach to follow, 
namely FTE (the number of hours considered full time) instead of headcount (the number of 
individual employees), which is the alternative definition traditionally applied. 

The  general  application  of  the  FTE  definition  in  country-by-country  reports  facilitates  the 
comparison  of  figures.  However,  considering  that  the  financial  statements  of  most  banks 
report the number of employees as headcount, this may affect the comparability. Besides, the 
financial statements usually provide information as an annual average, while the country-by-
country reports may indicate the number of employees at the end of the year.  

Based on these observations, this requirement could be revised to ensure consistency with the 
accounting  requirements  or  be  specific  to  the  country-by-country  obligation,  including  as 
adopted via Directive 2021/2101.  

Profit or loss before tax 

Article 89(1)(d) of CRD IV requires the institutions to include the “profit or loss before tax” 
in  their  country-by-country  report.  All  Member  States  completed  the  transposition  of  this 
requirement and also its interpretation is straightforward in terms of definition and coverage: 
all reporting institutions include it in their country-by-country report and, in most cases, the 
information is consistent with the figures provided in the financial statements. 

17 As an example, the activities in the Cayman Islands are considered part of the UK activities. 
18 EBA in Q&A 2014_1249 https://eba.europa.eu/single-rule-book-qa/-/qna/view/publicId/2014_1249  

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However, the term “profit or loss before tax” could also be changed to “profit or loss before 
business  income  tax”  to  avoid  that  taxes  other  than  corporate  income  taxes  are  being 
considered and to correctly calculate the effective corporate tax rate. 

Tax on profit or loss 

Directly  related  to  the  preceding  information,  Article  89(1)(e)  of  CRD  IV  concerns  the 
disclosure of “tax on profit or loss”. Its transposition in national legislation is complete and all 
reporting  institutions  provide  information  of  taxation  in  their  country-by-country  reports,  in 
consistency with the figures of their financial statements. 

The interpretation of this requirement depends on whether the calculation of taxes on profit is 
based on an accrual  (taxes accounted  for) or on  a cash accounting  (taxes paid) basis.  In the 
interest  of  transparency  and  comparability,  the  EBA  recommended  providing  separate 
information  using  both  cash  and  accrual  principles,  for  example  those  used  under  IAS  12 
Income Taxes19. Nevertheless, most institutions autonomously choose to apply either cash or 
accrual method, therefore hampering the comparability of the information across country-by-
country  reports.  To  facilitate  the  assessment  of  the  effective  tax  rate  and  enhance  the 
comparability  of  the  figures  across  countries  and  institutions,  the  requirement  on  “tax  on 
profit  or  loss”  could  be  further  specified  by  requiring  institutions  to  disclose  two  tax 
indicators, namely “income tax accrued (current year)” and “income tax paid (current year)”.  

Public subsidies received 

The CBCR list ends with the requirement to report “public subsidies received”, as provided in 
Article 89(1)(f). All national legislations transposed this information.  

The term “public subsidy” generally refers to a financial contribution made by a government 
or a public body to the benefit of the recipient. At Member States level there is no common 
understanding as to whether this definition should include all forms of “grants”, or “State aid” 
(such  as  loans,  tax  credits,  gifts  or  exemptions),  and  its  interpretation  in  the  context  of  the 
country-by-country  report  was  not  addressed  by  the  EBA  either.  Its  implementation  is  also 
uncertain,  with most institutions not  specifying the definitions used for public subsidies and 
not disclosing the amounts of subsidies received by country.  In this sense, in order to avoid 
uncertainty about its meaning, the term “public subsidies received” could be defined to ensure 
that the subsidies include grants and State aid. 

To  conclude  on  this  section,  it  could  be  considered  to  improve  the  consistency  of  CBCR 
requirements  by  aligning  the  general  wording  of  Article  89(1),  where  appropriate,  to  the 
accounting  requirements  and  to  the  clearer  formulation  provided  in  other  relevant  pieces  of 
legislation. This would allow addressing some interpretation issues and ensure a harmonised 
implementation of the requirements by the institutions across the EU. 

3.2 Assessment of CBCR  

Effectiveness: overall improvement of public trust 

19 IAS 12 Income Taxes: https://www.ifrs.org/issued-standards/list-of-standards/ias-12-income-taxes/  

7 

 
 
 
                                                           
The objective of CBCR is to regain the trust of citizens in the financial sector. This objective 
is achieved by: 

 

increasing  transparency  regarding  the  activities  of  institutions,  including  profits  made, 
taxes paid, and subsidies received; and 

  contributing to foster corporate responsibility towards stakeholders and society20. 

To  this  end,  the  information  provided  in  CBCR  plays  an  important  role  in  improving  the 
reputation of the financial system by enabling all citizens to access a set of key information 
directly and publicly shared by the institutions themselves. 

The overall implementation by institutions of the requirements laid down in Article 89(1) has 
contributed  to  making  publicly  available  basic  data  on  the  geographical  location  of  the 
activity  of  financial  institutions  and  their  taxation  practices.  The  introduction  of  CBCR 
represents for citizens, taxpayers, and NGOs a useful instrument to increase public awareness 
in this area and to promote responsible conduct of institutions towards society21. 

As  regards  the  achievement  of  the  CBCR  objective,  almost  a  decade  since  the  end  of  the 
financial  and  debt  crises,  the  confidence  in  the  financial  system  has  generally22  increased: 
according to the Edelman trust barometer23, global trust in the financial sector in 2021 raised 
by 8% compared to 2012, reaching 52%. Also according to the Ipsos Global Trustworthiness 
Monitor24,  an  increase  in  trustworthiness  for  banks  (20%  in  2018  vs  28%  in  2021)  is 
registered.  

Moreover,  the  consultation  exercise  carried  out  by  the  external  contractor  consisting  in 
targeted  interviews  and  other  surveys  confirms  the  general  consensus  around  the  improved 
perception  of  institutions  compared  to  the  pre-CBCR  times25.  Banks  are  confident  that  the 
increased  transparency  resulting  from  all  the  disclosure  requirements  has  improved  the 
confidence of citizens in the banking sector. A positive effect is also seen by tax authorities, 
banking supervisors and NGOs.  

However, the exact contribution of the CBCR disclosure requirements to the improved trust in 
the  banking  sector  remains  challenging  to  determine.  After  the  financial  crisis,  the  EU 
legislator  took  initiatives  to  make  the  financial  and  banking  sector  more  resilient.  In 
particular,  it  strengthened  the  banking  regulatory  framework  by  creating  the  Single 

20 See footnote 7 
21 Study on the  Adequacy of the Information to be  Disclosed under  Article 89(1) of the Capital Requirements 
Directive IV, pp. 67-68  Company law and corporate governance | European Commission (europa.eu) 
22 Subject perhaps to the impact of specific (crisis) events such as the recent collapse of the Silicon Valley Bank 
in California (US) or the forced rescue of Credit Suisse.  
23 Edelman trust barometer (2021). Trust in Financial services. 
https://www.edelman.com/sites/g/files/aatuss191/files/2021-
04/2021%20Edelman%20Trust%20Barometer%20Trust%20in%20Financial%20Services%20Global%20Report
_website%20version.pdf.  
24 
2021.pdf. 
25 Study on the  Adequacy of the Information to be  Disclosed under  Article 89(1) of the Capital Requirements 
Directive IV, p. 67 Company law and corporate governance | European Commission (europa.eu) 

https://www.ipsos.com/sites/default/files/ct/news/documents/2022-01/Global-Trustworthiness-Monitor-

8 

 
 
                                                           
 
 
Supervisory  Mechanism  for  banks  of  the  Eurozone,  revising  the  rules  for  calculating  the 
capital requirements and setting out a new framework to orderly resolve banks.  

Overall,  the  information  referred  to  in  Article  89(1)(a)  to  (f)  is  considered  adequate  for  the 
purposes  pursued  and  there  is  no  need  to  add  new  indicators26.  However,  this  report  also 
identifies possible adjustments to clarify further the concepts used. 

Efficiency: benefits outweighing costs  

With  the  introduction  of  CBCR,  the  reporting  institutions  had  to  dedicate  some  efforts  and 
resources  to  conform  to  mandatory  requirements.  Particularly,  in  the  kick-off  phase, 
institutions  had  to  do  one-off  investments  to  develop  the  new  system  by  e.g.:  defining  the 
reporting format,  adapting the accounting software to  the required information,  and training 
staff to deal with data reporting tasks. The costs associated with CBCR increase in line with a 
number  of  factors,  such  as  the  size  of  the  reporting  institution,  the  complexity  of  its 
organisational structure or the number of different countries covered. The administrative costs 
also  depend  on  the  means  of  disclosure,  with  increased  efficiency  when  the  country-by-
country  report  is  included  in  the  annual  report  instead  of  being  prepared  as  a  separate 
document.  

Based  on  the  estimations  made  in  the  context  of  the  external  supporting  study27,  the  costs 
incurred  by  the  institutions  subject  to  the  CBCR  requirements  under  Article  89(1)  are 
negligible:  expressed  in  terms  of  turnover,  they  are  significantly  below  the  one  percentage 
point. Furthermore, their amount decreases after  the first  year, once the reporting method is 
put  in  place28.  It  has  also  to  be  noted  that,  in  the  absence  of  the  CBCR  requirement,  many 
institutions  would  have  incurred  most  of  the  administrative  costs  already  e.g.  for  their 
business  reporting,  or  reporting  to  tax  authorities  pursuant  to  national  laws  implementing 
OECD action BEPS 13.  

Overall,  the  proven  positive  impact  on  both  institutions  and  society  related  to  reporting 
obligations highly outweighs the limited costs necessary to implement CBCR. In light of the 
very  limited  administrative  costs  for  credit  institutions  in  relative  terms,  there  is  no 
justification to reduce the list of information to be disclosed under Article 89(1). 

Continuous relevance in the light of current and emerging needs 

Eight  years after the introduction of mandatory CBCR through the CRD IV, the trust in the 
financial system has increased. Still, the efforts to restore confidence in the financial system 
have been slowed down by more recent tax and money laundering scandals such as Offshore 

26  The  supporting  study  carried  out  by  an  external  contractor  concluded  that  “there  is  a  need  to  refine  the 
definitions, rather than adding new indicators to the existing CBCR” (p.98). At the same the study notes that a 
significant minority of the banks in the sample reported on additional indicators, including additional tax, income 
statement,  balance  sheet,  and  geographical  indicators,  some  of  which  overlap  with  the  indicators  requested  by 
stakeholders (pp. 50-51)  Company law and corporate governance | European Commission (europa.eu)  
27 Ibid., p. 63 and Annex IV. Descriptive statistics for Administrative Costs and In-cremental Costs, pp. 126-156 
Company law and corporate governance | European Commission (europa.eu) 
28 Ibid., Annex IV. Descriptive statistics for Administrative Costs and Incremental Costs, pp. 126-156 Company 
law and corporate governance | European Commission (europa.eu) 

9 

 
 
                                                           
 
Leaks  (2013),  Luxembourg  Leaks  (2014),  Swiss  Leaks  (2015),  Panama  Papers  (2016), 
Paradise Papers (2017) and Pandora Papers (2021). 

Besides, the above-mentioned Edelman trust barometer indicates that, in 2021, the global trust 
index has dropped by 4% compared to 2020. Some of the biggest drops in trust happened in 
European  countries  like  Spain  (-9%),  Ireland  (-7%)  and  France  (-7%),  while  a  slight 
improvement is registered in Italy and Germany (+1%)29.  

In  this  respect,  it  should  be  noted  that  the  positive  role  played  by  CBCR  in  improving  the 
reputation of institutions by increasing awareness of their activities takes place within a wider 
political and legal context aimed at promoting tax transparency30. The CRD IV itself provides 
further transparency measures which can contribute to the restoration of the trust of citizens, 
such as the disclosure on the governance and remuneration of board members. 

While  the  objectives  of  the  CBCR  remain  valid,  recent  challenges  have  emerged  and  new 
priorities  have  arisen  on  the  EU  agenda:  in  an  increasingly  globalised,  mobile  and  digital 
economy, more complex business models and corporate structures facilitate profit shifting. In 
response, the OECD launched in  October 2015 its  BEPS  (Base Erosion and Profit Shifting) 
action  plan  which  proposes  new  standards  aimed  at  reforming  the  system  to  ensure  that 
income taxes are paid where the economic activity takes place. In addition, the Commission 
has  implemented  several  initiatives,  such  as  the  Anti-tax  Avoidance  Package31,  which 
includes the Anti-Tax Avoidance Directive (ATAD 1 and 2)32, to reduce tax avoidance in the 
EU.  In  May  2021,  the  Commission  published  an  EU  Tax  Policy  Agenda  with  a  number  of 
proposals  for  business  taxation  including  a  new  proposal  for  the  annual  publication  of  the 
effective corporate tax rate of certain large companies with operations in the EU. In order to 
undermine  tax  avoidance,  the  European  Parliament  and  the  Council  adopted  in  November 
2021  the  Public  Country-by-Country  Reporting  (Public  CBCR)  Directive,  introducing 
reporting  rules  for  very  large  multinational  enterprises  and  their  subsidiaries  (with  annual 
revenues above EUR 750 million), that will have to publicly disclose the amount of tax they 
pay in each EU Member State. 

In this changing context, the continuous relevance of a CBCR approach is confirmed33 by the 
wider public, namely consumers and citizens, as well as by specific  groups of stakeholders, 
such as:  

29 https://www.edelman.com/sites/g/files/aatuss191/files/2021-03/2021%20Edelman%20Trust%20Barometer.pdf 
pp. 46-47 
30  Among  the  major  EU  initiatives  pursuing  this  overarching  goal:  the  introduction  of  more  stringent  capital 
requirements  (Capital  Requirements  Directive  V  and  Capital  Requirements  Regulation  II),  the  crisis 
management  framework  (Bank  recovery  and  resolution  framework,  Deposit  guarantee  schemes),  the  Banking 
Union  (Single  Supervisory  Mechanism,  Single  Resolution  Mechanism)  and  the  Communication  from  the 
Commission to the European parliament and the Council “Business Taxation for the 21st Century” for ensuring 
fair 
(https://ec.europa.eu/taxation_customs/system/files/2021-
05/communication_on_business_taxation_for_the_21st_century.pdf) 
31 https://ec.europa.eu/taxation_customs/anti-tax-avoidance-package_en 
32  ATAD  1:  Council  Directive  (EU)  2016/1164  of  12  July  2016  laying  down  rules  against  tax  avoidance 
practices that directly affect the functioning of the internal market. ATAD 2 Council Directive (EU) 2017/952 of 
29 May 2017 amending Directive (EU) 2016/1164 (ATAD) 
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016L1164&from=EN  
33 Study on the  Adequacy of the Information to be  Disclosed under  Article 89(1) of the Capital Requirements 
Directive IV, p. 69-70 Company law and corporate governance | European Commission (europa.eu) 

effective 

taxation 

and 

10 

 
 
                                                           
 
 

trade  unions,  which  emphasise  the  importance  for  workers  they  represent  of 
having information on the tax behaviour of companies they work for;  

  small and medium-sized enterprises, which consider public disclosure essential to 
ensure  a  level  playing  field  and  prevent  large  firms  from  gaining  an  unfair 
competitive advantage;  
investors,  whose  decisions  might  be  influenced  by  information  on  corporate 
responsibility;  

 

  developing economies, for which CBCR is a tool to enhance fiscal accountability 

and avoid abuses by non-democratic countries;  

  public  authorities  at  both  national  and  EU  level,  for  which  public  disclosure  is  a 

key instrument to drive policy and decision-making. 

Internal and external coherence of CBCR and growing application of the country-
by-country principle 

In  the  specific  context  of  the  CRR/CRD  package,  Article  89  on  CBCR  is  not  the  only 
provision that deals with the mandatory reporting of information to be publicly disclosed by 
institutions.  Other  provisions  dealing  with  public  disclosure  are  Article  90  of  CRD  IV, 
covering the publication of return on assets in the annual report, and Part Eight of  the CRR, 
specifying a number of information  items  to  be  published in  the annual  financial statement. 
Nevertheless, neither Article 90 nor Part Eight require country-by-country reporting. 

In  terms  of  internal  consistency,  Article  89  can  therefore  be  considered  as  a  stand-alone 
provision, with minimal links with other components of the same legislative framework. 

The assessment of the external coherence - through looking at the way the CBCR under CRD 
IV interacts with other pieces of legislation having the same policy objectives - reveals some 
potential synergies and overlaps. 

Following  the  entry  into  force  of  the  Investment  Firms  Regulation34  and  Investment  Firms 
Directive35  (IFD),  only  Class  136  and  Class  1  minus37  investment  firms  are  required,  where 
appropriate, to comply with CRR and CRD. Class 2 investment firms must comply with the 
requirements laid down in Article 27 of the IFD itself. The list of information to be disclosed 
according  to  this  article  mirrors  the  list  under  Article  89(1),  with  the  only  exception  of  the 
first requirement (where “geographical location” is replaced with “location of any subsidiaries 
and branches”).  

Close similarities are identified between the CBCR of CRD IV and the newly adopted Public 
CBCR  Directive,  in  terms  of  both  objectives  (increasing  corporate  transparency  and 
enhancing  public  scrutiny)  and  the  principle  of  disclosure  (types  of  information  to  be 

34  Regulation  (EU)  2019/2033  of  the  European  Parliament  and  of  the  Council  of  27  November  2019  on  the 
prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, 
(EU) No 600/2014 and (EU) No 806/2014, OJ L 314, 5.12.2019 
35  Directive  (EU)  2019/2034  of  the  European  Parliament  and  of  the  Council  of  27  November  2019  on  the 
prudential  supervision  of  investment  firms  and  amending  Directives  2002/87/EC,  2009/65/EC,  2011/61/EU, 
2013/36/EU, 2014/59/EU, and 2014/65/EU, OJ L 314, 5.12.2019 
36 Article 62 of IFR, amending Article 4(1) Regulation (EU) 575/2013 
37 Articles 1(2) and (5) of IFR.  

11 

 
 
                                                                                                                                                                                     
 
reported,  country-by-country  basis).  The  Directive  was  adopted  as  an  answer  to  the  various 
tax scandals revealed around 2015 and applies to large multinational enterprises (with at least 
EUR 750 million consolidated revenues). This recent piece of legislation, amending Directive 
2013/34,  specifies  in  the  new  Article  48c(2)  in  Chapter  10a  a  list  of  requirements  largely 
matching  the  information  under  Article  89(1)  of  CRD  IV.  Still,  the  information  to  be 
disclosed  under  Chapter  10a  is  worded  in  a  more  detailed  manner  than  the  terms  used  in 
Article 89 CRD IV, therefore overcoming the interpretational difficulties posed by Article 89. 
As for the scope, the new Directive focuses on very large undertakings38, while Article 89 of 
CRD IV covers  credit  institutions, and systemic  and large investment  firms. For institutions 
that could fall within the scope of application of both regimes, the new Directive includes a 
specific  provision,  namely  Article  48b(3),  that  seeks  to  avoid  a  possible  double  CBCR 
disclosure.  To  enhance  accessibility  and  comparability  of  the  information,  the  amended 
Accounting  Directive  requires  that  the  country-by-country  report  shall  be  presented  using  a 
common template and electronic reporting formats which are machine-readable.  

A country-by-country reporting obligation at  international  level is  also  laid down by OECD 
BEPS  Action  1339  (implemented  in  the  EU  by  Council  Directive  (EU)  2016/881  as  regards 
mandatory automatic exchange of information  in the field  of taxation (DAC4)) between tax 
authorities.  However,  the  information  provided  under  BEPS  Action  13  and  DAC4  is  not 
required  to  be  made  publicly  available.  DAC4  applies  to  multinational  enterprises  (MNEs) 
located  in  the  EU  or  to  resident  MNE  group  entities  in  the  EU,  with  total  consolidated 
revenues  exceeding  EUR  750  million  in  the  previous  accounting  period.  The  country-by-
country  report  includes  information  for  MNE  group  entities  in  every  tax  jurisdiction, 
including  indicators  like  related  party  revenue,  employees,  and  assets  to  assess  substance 
activity  requirements,  and  covers  wider  range  of  indicators  than  those  laid  down  in  Article 
89(1).  

The new GRI Tax Standard (GRI 207), which came into effect for reporting from 2021, is the 
first and only globally applicable - voluntary - public reporting standard for tax transparency. 
It  sets  expectations  for  disclosure  of  tax  payments  on  a  CBCR  basis,  alongside  tax  strategy 
and  governance.  Some  multinational  companies  are  already  voluntarily  implementing  tax 
disclosure at  country level.  It  applies to  any organisation  (large or small,  private, or public) 
that  determines  tax  to  be  a  material  topic  to  report  on.  The  requirements  for  the  mandatory 
disclosure  of  information  (the  list  of  which  can  be  voluntarily  integrated  by  the  reporting 
entity)  partially  overlaps  with  those  laid  down  in  Article  89  of  CRD  IV.  Given  the  lack  of 
harmonisation between the two reporting systems, the institutions within the scope of CRD IV 
deciding to also disclose following the GRI 207 standard bear an additional reporting burden. 

Overall,  the  assessment  reveals  the  general  external  coherence  and  the  absence  of  conflicts 
between  the  CBCR  under  the  CRD  IV  and  the  recently  adopted  Public  CBCR.  Both 
instruments  share  the  same  objectives  of  increasing  corporate  transparency  and  enhancing 
public  scrutiny.  Some  other  tools,  such  as  DAC4,  aim  at  combating  cross-border  tax 

38 With annual revenues exceeding 750 million 

39  Country-by-Country  is  a  minimum  standard  requirement  of  the  OECD  Base  Erosion  and  Profit  Shifting 
Project.  As  of  17/10/2020  131  jurisdictions,  including  EU  Member  States,  are  subject  to  country-by-country 
reporting requirements. 

12 

 
 
                                                           
avoidance.  For  this  purpose,  DAC4  has  additional  indicators  sometimes  more  granular  than 
those set out in Article 89 of CRD IV to achieve those specific objectives. 

EU added value of CBCR as a key step towards increased global transparency 

The  rationale  behind  the  inclusion  of  CBCR  in  the  context  of  the  CRD  IV  was  the  need  to 
regain the trust of EU citizens following the global financial crisis. In this context, the EU put 
forward the introduction of mandatory reporting requirements as a tool to foster transparency 
in the financial system, putting the focus on cross-country activities of the institutions. Eight 
years after the entry into force of the CBCR requirement, this disclosure obligation has proven 
to  be  an  important  factor  for  increasing  transparency  regarding  the  activities  of  institutions 
and therefore regaining the trust of society.  

Both  national  and  EU  stakeholders  consulted  by  the  contractor40  clearly  pointed  out  that 
national interventions, in the absence of any country-by-country reporting requirement under 
Article 89 of CRD IV, would only to a limited extent be able to achieve increased citizen trust 
in the financial sector. They consider harmonisation at EU level as an advantage, and cross-
border comparability as a feature allowing citizens and civil society to analyse and scrutinise 
the financial sector.  

4. 

CONCLUSIONS 

The assessment of the CBCR provisions laid down in Article 89(1) of the CRD IV shows that 
the public disclosure of mandatory information is functioning well within its policy context: 
all  listed  requirements  have  proven  to  restore  trust  in  the  financial  sector  by  increasing 
transparency on the activities of the institutions and strengthening the resilience of the sector. 

While the general perception of the financial system by the EU citizens and stakeholders has 
significantly improved over the last  years,  trust  in the sector is  still not  at  pre-crisis  level41. 
Restoring confidence in the financial system, therefore, is still a priority. In addition, CBCR 
remains  relevant  for  the  public  scrutiny  of  tax  base  erosion  and  profit  shifting.  The  EU 
engagement to promote transparency and increase public awareness in this area also needs to 
be confirmed in the light of new challenges that have more recently arisen. These relate, for 
instance,  to  the  increasingly  complex  business  models  linked  to  the  globalised  digital 
economy.  

As concerns the administrative burden, the costs incurred by the reporting entities to comply 
with  CBCR  are  estimated  to  be  negligible,  while  the  benefits  for  the  wider  society 
significantly  outweigh  the  costs.  Moreover,  in  the  absence  of  the  CRD  IV  CBCR 
requirements, these administrative costs would have been incurred  anyway,  for example for 
their own business reporting, or for the reporting to tax authorities of DAC4.  

The provisions under Article 89(1)  are coherent  with  other parts of EU legislation  pursuing 
the  objectives  of  increasing  corporate  transparency  and  enhancing  public  scrutiny,  such  as 
Directive (EU) 2021/2101.   

40 Study on the  Adequacy of the Information to be  Disclosed under  Article 89(1) of the Capital Requirements 
Directive IV, p. 95 Company law and corporate governance | European Commission (europa.eu) 
41 Ibid., pp. 66-67  Company law and corporate governance | European Commission (europa.eu) 

13 

 
 
                                                           
While  some  room  for  improvement  is  identified  in  this  report,  neither  the  consultative 
activities carried out by the contractor in the preparation of this report nor any other sources 
reveal an appetite of relevant stakeholders to reopen the provisions at this point in time. The 
assessment  of  Article  89(1)  of  CRD  IV  reveals  that  the  implementation  of  CBCR  by 
institutions  is  overall  adequate  and  fit  for  purpose.  The  public  disclosure  of  mandatory 
requirements  remains  for citizens, tax authorities and different stakeholders across the EU a 
key  instrument  to  increase  public  awareness  in  this  area  and  contributes  to  promoting 
responsible conduct of institutions towards society. 

14