Background

In 2021, the EU public Country-by-Country Reporting (pCbCR) Directive came into force. This requires large multinational companies that have a substantial presence in Europe to publicly share key financial information on their operations in each EU Member State and a designated list of tax havens.¹ In the main, the Directive will lead to major new corporate tax disclosures in 2026, based on 2025’s financial data. However, Romania opted to implement the EU Directive much earlier than other Member States, with data relating to 2023 starting to emerge at end 2024. So, we are now seeing the first EU pCbCR disclosures begin to come to light.

An oddity in the way Romania has implemented the Directive means that only multinationals with significant operations in Romania, but that are headquartered outside of the EU, are impacted – i.e., businesses with an ultimate parent entity in the US, Switzerland, Japan, the UK, etc.

Research and analysis

The Fair Tax Foundation has conducted an online search to find these first EU pCbCR public reports and analysed them. We identified 75 in total. Research was not as simple as might be hoped as the Romanian business register is not yet operational as a public repository of such information. Furthermore, there are no penalties in Romania for neglecting to implement the legislation as required. Which means, we suspect, that there are a large number of businesses who have simply opted to ‘ignore’ the legislation and act as though it doesn’t exist. This needs to be borne in mind in the analysis that follows. At the very least, all of the 75 companies identified as producing information on their website in connection with Romania’s early implementation of the pCbCR Directive have acknowledged its existence in some way.²

Standard of implementation: the good news

Almost two-thirds (63%) of the returns that are newly available are good, solid attempts to implement the EU pCbCR legislation.

This is to be welcomed, with the businesses undertaking this deserving of applause. They have followed the letter of the law. Some have even gone further and embraced the spirit of the law and provided country-by-country data on a wider range of countries than is stipulated by regulations. Examples include LG Electronics (South Korea), Adecco Group (Switzerland), Nippon Sheet Glass (Japan) and Sun Pharmaceutical (India).

The frequency of good application of the EU pCbCR requirements was above average among Japanese-headquartered business (80%), with UK-headquartered business in line with the average (63%). It was lower than average among Swiss (45%) and US businesses (55%).

It was surprising to see that even businesses that robustly released hard data, did not provide accompanying narrative in their returns. Little or no meaningful context was provided in ‘section 5’ of the returns of nearly every business examined.

Rating of Implementation of EU pCbCR Directive (good to bad)

The not so good news

Less positively, in ten percent of instances, business have opted to disclose activities in tax havens only. Examples, include Bristol Myers Squibb (US) and Ringier (Switzerland).

Worse still, in a further twenty percent of cases, Romanian subsidiaries have been ‘told’ by their parent company that they will not be provided (as a point of principle) with the information needed to disclose activity outside of Romania – i.e, they parent company is refusing to implement the legislation. Examples below. This tactic is especially common among Swiss business.

“The information for the corporate income tax report was requested from the ultimate parent company, Novartis AG, by Novartis Romania. The data and information disclosed is limited to Novartis operations in Romania as Novartis AG has not made the country by country information for other countries available to Novartis Romania.”

“Hitachi, Ltd., has not made available to Hitachi Energy Romania S.R.L. and GlobalLogic Romania S.R.L. CbC data regarding the Hitachi Group’s worldwide operations.”

It was noteworthy that the pharmaceuticals sector had a below average rate of application: with just three of eight companies (37.5%) showing solid implementation of the directive. Information Technology was another laggard sector, with only seven of fourteen companies (50%) demonstrating robust compliance.

Location of ultimate parent entity

As might be expected, companies head-quartered in the United States top the list of businesses captured by the legislation in Romania (41%), followed by Switzerland (15%), Japan (13%), the UK (11%) and China (4%).

EU pCbCR Directive disclosures, by Ultimate Parent Entity location

The near future

We can expect a few more late returns connected to Romania to emerge in the coming months, and perhaps the local business register will become operational and many more will emerge. Beyond that, we should look to Croatia next, where an earlier than average filing date also applies. More substantially, early reporting can also be anticipated for businesses filing in Spain, where the requirement is for pCbCR to be published within six months of the closing of the balance sheet, not the standard twelve months.

Businesses wishing to get ahead of the curve are invited to visit our pCbCR Resource Hub, which includes a list of Fair Tax Mark certified exemplars of tax transparency.

We will continue to monitor application of the pCbCR Directive – if you would like to engage with us on this work please reach out to [email protected]

Footnotes and references

• • 1. Multinationals with an annual consolidated turnover of at least €750m. See our pCbCR Global Tracker for a list of EU and EEA States and the designated ‘tax havens’.
  • 2. Note: none of the long-time, voluntary pioneers of pCbCR have been captured by this research as they are either: a) head-quartered in other EU Member States; b) based in the UK, but don’t have substantial operations in Romania.