Country-by-country reporting requirements apply to multinational enterprise groups whose consolidated revenue reached €750 million in the prior fiscal year, or $850 million for groups parented in the United States. The Ultimate Parent Entity files a single annual report breaking down revenue, profit, taxes paid and accrued, employees, capital, and tangible assets for every jurisdiction where the group operates. U.S. groups file on IRS Form 8975 with their income tax return; over 120 jurisdictions have adopted equivalent rules, and the reports are exchanged automatically between tax authorities.
Which Groups Must File
The obligation turns on one number. If a multinational enterprise group prepares consolidated financial statements covering entities in at least two countries, and total consolidated group revenue in the fiscal year immediately before the reporting year reached €750 million, it must file a country-by-country report.1OECD. Country-by-Country Reporting for Tax Purposes The IRS set the equivalent U.S. threshold at $850 million.2Internal Revenue Service. About Form 8975, Country by Country Report
Revenue for the threshold test means all sales, service income, and other revenue in the consolidated financials after eliminating intercompany transactions. It is a bright-line test. A dollar above $850 million and every data point across every jurisdiction gets reported.
The filer is the Ultimate Parent Entity (UPE), the top-level company that controls the group and prepares the consolidated financials. The UPE files in its home jurisdiction. Every other company, branch, or permanent establishment in the consolidated group is a Constituent Entity, and each one appears in the report regardless of size or profitability.
A U.S. subsidiary of a foreign-parented group can still have its own filing obligation. That happens when the foreign parent’s jurisdiction lacks a proper exchange arrangement with the United States, a situation addressed below.
What Goes in the Report
The report has three standardized tables. Every tax authority receives the same format.
Table 1: Financial and Tax Data by Jurisdiction
Table 1 aggregates figures for all group entities in each tax jurisdiction. Revenue splits into two lines: transactions with unrelated parties and transactions with related group companies. That split is the most immediately useful signal to tax authorities, because heavy related-party revenue in a low-tax jurisdiction raises transfer pricing questions.
The table also requires profit or loss before income tax, income tax actually paid in cash during the year, and income tax accrued as a current-year expense. Reporting both cash and accrued tax lets authorities see timing differences and understand the real tax burden.
The remaining fields measure economic substance: stated capital, accumulated earnings, total employees (headcount or full-time equivalent), and the value of tangible assets other than cash. A jurisdiction with large reported profits and almost no people or assets is exactly what these fields are designed to expose.
Table 2: Entity List and Business Activities
Table 2 lists every Constituent Entity, its jurisdiction of tax residence, and, for branches, the jurisdiction of the entity that owns the branch. Each entity is tagged with one or more standard business activity categories: research and development; holding or managing intellectual property; purchasing and procurement; manufacturing; sales and marketing; distribution; administrative and management services; internal group finance; and others. The classification must be applied consistently across the report.
Table 3: Explanatory Notes
Table 3 is the narrative section. Groups use it to identify the source of the figures (consolidated financial statements, statutory accounts, or internal management accounts), note accounting standard differences such as U.S. GAAP versus IFRS, and explain unusual items that might otherwise read as red flags.
Currency for U.S. Filers
All amounts on Form 8975 and Schedule A are stated in U.S. dollars. The default is the exchange rate methodology consistent with U.S. GAAP. If a different rate or method is used for any amount, the group must disclose that in Part III of the relevant Schedule A.3Internal Revenue Service. Instructions for Form 8975 and Schedule A (Form 8975)
How and When U.S. Groups File
U.S.-parented groups file Form 8975 and a Schedule A for each jurisdiction as an attachment to the UPE’s income tax return, due by the return’s due date including extensions.4eCFR. 26 CFR 1.6038-4 – Information Returns Required of Certain United States Persons The IRS instructions are explicit that Form 8975 must not be filed separately from the return.3Internal Revenue Service. Instructions for Form 8975 and Schedule A (Form 8975) A calendar-year corporation on extension generally has until October 15 of the following year.
The reporting period covered is generally the 12 months of the UPE’s applicable financial statement that ends with or within its tax year. If the UPE does not prepare an annual financial statement, the reporting period defaults to the 12 months ending on the last day of its tax year.4eCFR. 26 CFR 1.6038-4 – Information Returns Required of Certain United States Persons
Surrogate Parent Entity Filing
A group can designate a Constituent Entity other than the UPE to file the report, making it the Surrogate Parent Entity. This is typically used when the UPE’s home jurisdiction either does not require country-by-country reporting or has systemic problems with its exchange mechanism. The Surrogate Parent Entity carries the same filing responsibilities and deadlines the UPE would in its own jurisdiction.
Notification
Every Constituent Entity in a jurisdiction that has adopted these rules must notify its local tax authority of the identity and tax residence of the entity actually filing the report. Notification deadlines are often earlier than the report deadline and may match the local return due date. In the United States, notification is handled through the filing of Form 8975 itself and a statement attached to the income tax return identifying the reporting entity.3Internal Revenue Service. Instructions for Form 8975 and Schedule A (Form 8975)
When a U.S. Entity Must File Locally
The standard model is one filing by the UPE and automatic exchange to every other jurisdiction where the group operates. Local filing is the fallback. A Constituent Entity files directly with its local tax authority when the UPE’s jurisdiction has not adopted country-by-country reporting, when the two jurisdictions lack a qualifying Competent Authority Arrangement, or when the UPE’s jurisdiction has agreements in place but is failing to actually deliver reports on time.
For a U.S. subsidiary of a foreign-parented group, local filing on Form 8975 is required when the foreign UPE sits in a jurisdiction that does not have a qualifying Competent Authority Arrangement with the U.S. Treasury. The IRS publishes a jurisdiction status table listing every country that has signed or is negotiating an exchange agreement with the United States.5Internal Revenue Service. Country-by-Country Reporting Jurisdiction Status Table Checking that table before each filing cycle is the cleanest way to confirm whether local filing is on the table.
Penalties for Failing to File
Missing, late, or incomplete Form 8975 filings trigger penalties under Section 6038 of the Internal Revenue Code. The initial penalty is $10,000 for each annual reporting period with missing information. If the failure continues more than 90 days after the IRS mails a notice, an additional $10,000 accrues for each 30-day period (or partial period) the failure persists, capped at $50,000 in additional penalties.6Office of the Law Revision Counsel. 26 USC 6038 – Information Reporting With Respect to Certain Foreign Corporations and Partnerships Total exposure for a single reporting period can reach $60,000 before considering any collateral consequences.
A reasonable cause defense is available. The IRS looks at whether the filer acted responsibly before and after the failure, requested extensions when it could, corrected errors promptly, and had legitimate mitigating circumstances such as first-time filer status or issues outside its control.7Internal Revenue Service. Penalty Relief for Reasonable Cause A group that discovers a late or incomplete filing and moves quickly to correct it stands in a far stronger position than one that ignores IRS correspondence.
How the Data Moves Between Countries
Automatic exchange operates through the Multilateral Competent Authority Agreement, which provides the standardized legal basis for sharing between signatory jurisdictions. Once the UPE files at home, that country’s tax authority distributes the report to every other jurisdiction where the group has Constituent Entities. The exchange deadline is generally 15 months after the end of the reporting fiscal year, with 18 months for the first reporting period.
More than 120 jurisdictions have implemented domestic country-by-country filing rules, and the exchange network continues to expand.8OECD. Country-by-Country Reporting – Compilation of 2025 Peer Review Reports Before any jurisdiction can receive the data, it must demonstrate adequate confidentiality safeguards and commit to using the information solely for tax administration.
Tax authorities are supposed to use the data for high-level transfer pricing risk assessment, not as a direct basis for adjustments. In the United States, data received through exchange is protected under Section 6103 of the Internal Revenue Code, which restricts disclosure of tax return information and prevents sharing with non-tax agencies or the public.9Office of the Law Revision Counsel. 26 U.S. Code 6103 – Confidentiality and Disclosure of Returns and Return Information
The EU Public Disclosure Regime Is a Separate Obligation
A different reporting requirement runs in parallel and should not be confused with the confidential filing above. Under EU Directive 2021/2101, qualifying multinational groups must publicly disclose country-by-country income tax information for fiscal years beginning on or after June 22, 2024.10EUR-Lex. Directive (EU) 2021/2101 The report goes on a website and stays accessible for at least five years.
The revenue threshold matches the OECD standard: consolidated group revenue above €750 million for each of the two most recent consecutive fiscal years. The directive reaches non-EU-parented groups, including U.S. multinationals, when the group has at least one medium-sized or large subsidiary or a qualifying branch in an EU member state.10EUR-Lex. Directive (EU) 2021/2101 The responsible EU subsidiary or branch publishes the report within 12 months of the fiscal year-end in an official EU register and on a company website, in a machine-readable format. Member states had to transpose the directive into national law by June 22, 2023, and first public reports are due in 2025 and 2026 depending on fiscal year timing.