Good Intentions, Flawed Design: Balancing Transparency, Fundamental Rights and EU Principles in the EU Public CbC Reporting Directive

This article explores the real-world impact of Directive (EU) 2021/2101 on Public Country-by-Country (CbC) Reporting, with particular attention to how external stakeholders engage with and interpret the published data. It argues that multinational enterprises (MNEs) must not only comply with the disclosure obligations but also actively manage the narrative and reputational implications that arise in an environment of heightened tax transparency. The analysis identifies three principal risks for MNEs resulting from the Directive’s application and demonstrates that these risks stem from its legislative design. In light of this, the article stresses the importance of precise regulatory drafting to ensure legal certainty and a balance between transparency and MNEs’ fundamental rights – such as the freedom to conduct a business and property rights. Five structural shortcomings in the Directive are examined in detail, and recommendations are put forward to address them. These suggestions rely on a combination of hard law reforms and soft law guidance at EU level to mitigate the identified risks and enhance the Directive’s effectiveness.