Malta Implements the EU Public Country-by-Country Reporting

By means of Act No. XVIII of 2024, Malta has transposed Directive (EU) 2021/2101 providing for Public Country-by-Country Reporting (“Public CbC Reporting”) of income tax information, effective for accounting periods commencing on or after 22 June 2024.

The requirement to disclose income tax information under the Public CbC Reporting Directive applies to MNE groups having consolidated revenues exceeding €750 million for each of the last two consecutive financial years, and standalone undertakings whose revenues exceed the mentioned threshold of €750 million. Groups and standalone undertakings which are established, or have their fixed places of business or permanent business activity, within the territory of a single EU or EEA State and no other tax jurisdiction are excluded from the scope.

More specifically, subject to meeting the €750 million threshold, the Maltese entities which are required to publish a Public CbC Report with income tax information are:

a) Maltese ultimate parent entities of in-scope MNE groups,

b) Maltese in-scope standalone undertakings (i.e. not part of a group),

c) Maltese medium-sized and large undertakings (i.e. exceeding at least two of the following three thresholds: (i) balances sheet total of EUR 4 million, (ii) net turnover of EUR 8 million, (iii) average number of employees of 50), forming part of a group whose ultimate parent entity is not governed by an EU or EEA State, and

d) Branches opened in Malta whose net turnover for each of the last two consecutive financial years exceed €8 million, of an undertaking that is an in-scope standalone entity or that forms part of a MNE group where the standalone entity or the ultimate parent entity is not governed by the law of an EU or EEA state, unless certain exceptions apply.

The requirement on Maltese subsidiaries and branches referred to in (c) and (d) above shall not apply if the Public CbC Report is drawn up by the ultimate parent entity of the MNE group or by a standalone undertaking that is not governed by the laws of an EU or EEA State, subject to the satisfaction of public accessibility criteria, provided that the report identifies another EU or EEA subsidiary or branch which has published the report in accordance with Article 48d(1) of the Public CbC Reporting Directive.

Credit institutions, investment firms and their affiliated undertakings required to disclose a report in accordance with Article 89 of the Capital Requirements Directive IV (Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms) that encompass information on all of their activities may be excluded from the scope of Public CbC Reporting.

The Public CbC Report shall include information relating to all the activities of the standalone undertaking or the ultimate parent entity and all of its affiliated undertakings consolidated in the financial statements in respect of the relevant financial year, and shall consist of:

• The name of the ultimate parent entity and a list of all relevant subsidiaries, or the name of the standalone undertaking, the financial year concerned, the currency used for the presentation of the report;

• A brief description of the nature of their activities;

• Number of employees on a full-time equivalent basis;

• Revenues including transactions with related parties;

• Profit or loss before income tax;

• Current tax expense excluding deferred taxes and provisions for uncertain tax liabilities;

• Income tax paid during the relevant financial year; and

• The amount of accumulated earnings at the end of the relevant financial year.

The information shall be included in the Public CbC Report in the following manner: 

• Separately for each jurisdiction being an EU Member State or an EEA state;

• Separately for each jurisdiction included in the EU list of non-cooperative jurisdictions for tax purposes (both under the so called ‘black list’ and ‘grey list’);

• Aggregated for the other tax jurisdictions.

Specific rules apply for the publication of commercially sensitive information.

The audit of financial statements, when such statements are statutorily required of undertakings governed by an EU or EEA State, must state whether the undertaking is required to publish a Public CbC Report and if applicable, whether the report was so published in accordance with the Public CbC Directive or the mirroring local provisions.

The Public CbC Reporting requirements apply to accounting periods commencing on or after 22 June 2024.

Public CbC Reports shall be published within 12 months from the financial year end for which the report is drawn up and shall be made accessible to the public in at least one of the official languages of the EU and free of charge on the website of the undertaking required to publish such report.

The Public CbC Report shall remain accessible on the relevant group website for a minimum of five consecutive years.

Furthermore, where the reporting is required to be made by a Maltese undertaking, the report shall be delivered to the Malta Business Registrar for registration and public electronic access within 14 days from publication on the undertaking’s website.

Directors of in-scope undertakings or branches shall notify the Malta Business Registrar of the status of the undertaking / branch for Public CbC reporting purposes i.e. as an ultimate parent entity or a standalone / subsidiary / affiliated undertaking or a branch, within the said 14-day window. 

Directors of ultimate parent entities, standalone undertakings, subsidiaries, and persons designated to carry out disclosure formalities for branches that are required to draw up, publish, and make accessible the Public CbC Report, have collective responsibility for ensuring that the Public CbC report is drawn up, published, and made accessible in accordance with all relevant requirements as regards content, publication, and accessibility; and to file the notification to the Registrar within the 14-day window. Such officials shall be liable to administrative penalties in case of non-compliance with the Public CbC Reporting requirements.

Should you require any further information in this respect, please do not hesitate to contact the undersigned or your KPMG contact.