Denmark: Public country-by-country reporting legislation passed
Danish parliament passed a bill implementing EU Directive 2021/2101
Danish parliament passed a bill implementing EU Directive 2021/2101
The Danish parliament on 1 June 2023 passed a bill implementing the EU Directive 2021/2101 (of 24 November 2021), effectively introducing public country-by-country (CbC) reporting for certain companies and branches operating in Denmark. The passed bill is generally aligned with the EU Directive both in terms of content and timeline of implementation.
Scope of legislation
The new Danish rules will require a parent company of a multinational group with a consolidated revenue in excess of DKK 5.6 billion (approximately €750 million) in two consecutive financial years to submit a public CbC report if they are either (1) EU parented or (2) otherwise have EU-based subsidiaries or branches of a certain size.
The parent company and its subsidiaries can be exempted from submitting the public CbC report if any of the following requirements are met:
- The parent company itself is a subsidiary of another parent company with qualifying EU presence and prepares a report on behalf of the group (as defined in Directive 2013/34/EU or Directive 2013/36/EU)
- The parent company and its subsidiaries are exclusively established in Denmark (including branches)
- The parent company is part of a medium-large sized EU-based group with a non-EU-based parent company already preparing/publishing a report.
Further, a Danish branch of a parent company with non-EU presence is required to prepare a report on behalf of the non-EU parent company or the group if the EU presence qualification is met.
KPMG observation
Non-EU-based parent companies of multinational groups with EU-based subsidiaries or branches may also be required to publicly disclose information in the CbC report. As a result, such multinationals may need to consider whether they are in scope of the new tax transparency rules and if so review if their current tax strategy is aligned to their broader ESG strategy.
Content to be included in the report
The data required in the public CbC report is aligned with the EU Directive and consequently similar to the OECD CbC report (i.e., nature of activities, turnover, profit/loss, tax paid, accumulated earnings, employees). The aggregation requirements applied are however slightly different.
Companies may choose, however, to omit certain commercially sensitive information for a maximum period of five years. In that case, the company is required to provide an explanation for the omission in the report and the information omitted should be disclosed within five years in a later report.
Disclosure of the report
As a main rule, the disclosure obligation of the report lies with the EU-based-parent company. Subsidiaries that are exempt from preparing the report (in case prepared by another group entity) will however still be required to submit the report on an annual basis, as opposed to simply submitting a CbC notification about the reporting entity. In cases when the ultimate parent is not governed by the law of an EU Member State, the reporting will have to be performed by the EU subsidiaries or branches, unless the ultimate parent publishes a report covering those subsidiaries and branches.
From a Danish perspective, the public CbC report would need to be submitted to the Danish company registry (Erhvervsstyrelsen) as well as be available on the company’s corporate website (for minimum five years).
KPMG observation
As the governance process is not the same as for private CbC reporting, multinationals may need to reassess their confidence level in the accuracy of their CbC reporting data (and what that data shows). It is thus important that heads of tax in conjunction with key internal stakeholders already now begin to consider the steps that need to be taken to be comfortable publicly publishing their CbC reporting data, both from a data integrity perspective and from a comprehensibility perspective.
Applicability dates
The passed bill will be applicable from 22 June 2023, and apply for financial years starting 22 June 2024, or later. The report needs to be published to the Danish company registry no later than 12 months after the financial year-end.
Consequently, the first year of reporting will need to happen no later than 31 December 2026, for companies with financial years starting 1 January 2025.
For more information, contact a KPMG tax professional in Denmark:
Mads Frid Nørgaard | mads.frid.norgaard@kpmg.com
Holger Haugstrup | holger.haugstrup@kpmg.com
Peder Reuther | peder.reuther@kpmg.com
Francois Marlier | francois.marlier@kpmg.com
Charlotte Marie Milman | charlotte.milman@kpmg.com
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