Country-by-Country Reporting (CbCR): what multinationals are declaring and why it won't affect you in 2026
Every year, the world's largest multinational corporations—Apple, Total, LVMH, Nestlé—submit an explosive document to their tax authorities: the Country-by-Country Report (CbCR). This report lists, country by country, their revenues, profits, taxes paid, number of employees, and tangible assets. The objective: to allow tax authorities worldwide to see exactly where profits are generated, where they are declared, and if there is a suspicious discrepancy between the two. The CbCR is the tax x-ray of multinationals—and the most powerful tool ever created for detecting artificial profit shifting.
For an expatriate in Paraguay with a US LLC, the CbCR does NOT apply directly. But understanding the CbCR is essential for two reasons: it explains how the global tax landscape is evolving (towards ever greater transparency), and it allows one to anticipate rules that might one day filter down to smaller entities. This guide explains the CbCR from A to Z: its origin, its content, who is concerned, how tax authorities use it, and what it means for the future of your structure in Paraguay.
The Origin of the CbCR: BEPS Action 13
The Problem the CbCR Solves
Before the CbCR, tax authorities operated blindly when dealing with multinationals:
- The French tax authority saw Google's French subsidiary and the taxes paid in France—but it did NOT know how much Google earned in Ireland, Bermuda, or Singapore. It was impossible to know if the profits declared in France corresponded to economic reality.
- Each country saw its own piece of the puzzle—without ever seeing the complete picture. Multinationals exploited this information asymmetry to shift profits to low-tax countries without anyone having an overall view.
- Transfer pricing audits were long (2-5 years), costly (millions in consultants), and often ineffective (the multinational had more data than the tax authority—massive information asymmetry).
The CbCR reverses the asymmetry: for the first time, tax authorities have a country-by-country view of each large multinational's activities. The complete puzzle is visible—and missing pieces stand out.
The Genesis of the CbCR
- 2013: The OECD's BEPS project is launched. Action 13 ("Transfer Pricing Documentation and Country-by-Country Reporting") is one of the 15 Actions.
- 2015: The final report on Action 13 is published. It establishes a three-tiered framework for transfer pricing documentation: Master File, Local File, and Country-by-Country Report.
- 2016-2018: Countries adopt the CbCR into their national legislation. The EU adopts a directive (DAC4) for the automatic exchange of CbCRs between Member States. The first CbCRs are filed for fiscal years starting in 2016.
- 2026: More than 100 countries have adopted the CbCR. It has become a global standard—as universal as CRS for bank accounts.
The Content of the CbCR: What Multinationals Must Declare
The Three Levels of BEPS Action 13 Documentation
| Level | Document | Content | Who Prepares It | Threshold |
|---|---|---|---|---|
| 1 | Master File | Overview of the group: organizational structure, description of activities, transfer pricing policy, list of entities, cost-sharing agreements, consolidated financial statements. | The group's ultimate parent company | Consolidated revenue > €400M (French threshold) — varies by country |
| 2 | Local File | Detailed analysis of the local entity's intra-group transactions: description of transactions, amounts, transfer pricing method used, comparables, functional analysis. Demonstrates that prices charged are arm's length. | Each local entity of the group (e.g., the French subsidiary) | Revenue > €400M OR assets > €400M OR headcount > 2,000 people (French threshold) |
| 3 | Country-by-Country Report (CbCR) | Country-by-country table with: revenues (intra-group + third parties), profit before tax, tax paid (accrued + cash), stated capital, accumulated earnings, number of employees, tangible assets. Plus the list of all group entities in each country. | The ultimate parent entity of the group | Consolidated revenue > €750M |
The CbCR in Detail: Country-by-Country Data
The CbCR contains three tables:
Table 1: Allocation of Revenue, Taxes, and Activities by Tax Jurisdiction
For each country where the group has an entity:
- Revenues from unrelated parties (third-party customers)
- Revenues from related parties (intra-group transactions)
- Total revenues
- Profit (or loss) before tax
- Income tax paid (cash payments)
- Income tax accrued (accounting tax expense)
- Stated capital
- Accumulated earnings (retained earnings)
- Number of employees (FTE — full-time equivalent)
- Tangible assets (excluding cash)
Table 2: List of All Group Entities by Jurisdiction
For each country: name of each entity, jurisdiction of incorporation (if different from tax jurisdiction), and nature of main business activity (R&D, IP holding, manufacturing, sales/marketing, administrative services, holding, etc.).
Table 3: Additional Information
Explanatory notes on the data, methodology, and accounting sources used.
What the CbCR Reveals
The CbCR allows tax authorities to detect inconsistencies between economic substance and declared profits at a glance. Examples of red flags:
- High profits + few employees: A Bermuda subsidiary declares €5 billion in profits with 3 employees and no tangible assets → massive red flag. Profits do not correspond to real activity—they are likely transferred from other countries via artificial transfer pricing.
- Very low effective tax rate: The Irish subsidiary's profit is €2 billion and tax paid is €50 million (effective rate 2.5%) while the Irish nominal rate is 15% → the group likely uses special regimes (patent box, tax credits, exemptions).
- Dominant intra-group revenues: 90% of a subsidiary's revenues come from intra-group transactions (no third-party customers) → the subsidiary is likely a "re-invoicing center" used to shift profits, not a value-creating center.
- Chronic losses in high-tax countries: Subsidiaries in France, Germany, and Italy declare losses year after year, while the Luxembourg subsidiary shows record profits → transfer pricing shifts profits to Luxembourg.
How Tax Authorities Use the CbCR
Automated Risk Analysis
Tax authorities do not read CbCRs line by line—they use risk analysis algorithms that automatically cross-reference CbCR data with other sources:
- Profit/employee ratio: €100 million profit with 5 employees in a low-tax country = high-risk score.
- Profit/tangible assets ratio: €500 million profit with zero tangible assets (all is intangible IP) = high-risk score.
- Comparison of effective rate with nominal rate: An effective rate significantly lower than the country's nominal rate = special regimes or optimization structures → in-depth analysis.
- Annual variation: A sudden change in profit allocation (suddenly, 80% of profits are in Luxembourg instead of France) = suspicious restructuring → audit.
The CbCR as a Tool for Audit Selection
The CbCR is NOT a reassessment tool—it is a tool for selecting audit targets. The tax authority uses the CbCR to identify groups that warrant closer examination, then conducts a standard transfer pricing audit (request for Local File, transaction analysis, comparables) to establish a potential reassessment.
The OECD emphasizes: the CbCR should NOT be used as a direct basis for reassessment (it is not detailed enough for that). It serves to identify risks—reassessment is based on the Local File and detailed transaction analysis.
Automatic Exchange of CbCRs
CbCRs are automatically exchanged between the tax authorities of participating countries:
- The parent company files the CbCR with the tax authority of its country of residence (example: Total files the CbCR with the DGFiP in France).
- The DGFiP automatically transmits the CbCR to the tax authorities of ALL countries where the group has entities (via exchange agreements—Multilateral Convention or bilateral agreements).
- Result: Each country has access to the complete CbCR—not just data from its own jurisdiction. The Brazilian tax authority can see profits declared in Ireland by a Total subsidiary, even if Total has not filed a CbCR in Brazil.
In 2026, the CbCR exchange network covers over 100 countries. Paraguay, as a member of the BEPS Inclusive Framework, participates in this network—it receives CbCRs from groups with subsidiaries in Paraguay and transmits CbCRs from Paraguayan groups (if any of that size existed) to other countries.
Who is Concerned by the CbCR
The €750 Million Threshold
The CbCR applies to multinational groups whose consolidated revenue exceeds €750 million (or the equivalent in local currency). This threshold was set by the OECD in 2015 and adopted by almost all participating countries.
- Who is above the threshold: Approximately 10,000-12,000 multinational groups worldwide (out of millions of companies). The largest companies in each country (CAC 40 in France, Fortune 500 in the USA, FTSE 100 in the UK, etc.).
- Who is below the threshold: 99.9% of companies worldwide. All SMEs, all startups, all freelancers, all individual US LLCs, all Paraguayan SRLs.
What €750M Means in Practice
To put things in perspective:
| Structure | Approximate Revenue | Concerned by CbCR? |
|---|---|---|
| Your US consulting LLC | €100,000-€500,000 | No (× 1,500-7,500 below threshold) |
| Your PY real estate SRL | €10,000-€100,000 | No (× 7,500-75,000 below) |
| An international law firm (50 lawyers) | €20-€50M | No (× 15-37 below) |
| A French industrial SME | €50-€200M | No (× 3-15 below) |
| A French mid-cap company | €200-€750M | Potentially (if revenue > €750M) |
| Danone | ~€27 billion | Yes |
| Apple | ~$380 billion USD | Yes |
You are between 1,500 and 75,000 times below the threshold. The CbCR does not concern you and will not concern you—unless the threshold were divided by 1,000 (which is neither under discussion nor conceivable).
Public CbCR: Transparency for All
The EU Directive on Public CbCR
In 2021, the EU adopted the directive on public CbCR (public Country-by-Country Reporting). This directive requires large multinational corporations operating in the EU to publicly disclose certain data from their CbCR—not just submit it to tax authorities. The directive came into effect for fiscal years beginning on or after June 22, 2024:
- Who is concerned: Multinational groups with consolidated revenue > €750M and subsidiaries or branches in the EU.
- What is published: Revenue, profit before tax, tax paid, tax accrued, number of employees, accumulated earnings, tangible assets—broken down by EU country + aggregated for non-EU countries (except countries on the EU blacklist or grey list, which are detailed individually).
- Where it is published: On the company's website and in a public register accessible to all.
- The impact: For the first time, journalists, NGOs, researchers, and the public can see how much tax large multinationals pay in each EU country. Companies that declare massive profits in low-tax countries (while having few employees and assets) are publicly exposed.
Public CbCR as a Tool for Social Pressure
Public CbCR does not create a new tax—but it creates reputational pressure. A multinational that pays 2% effective tax thanks to structures in Luxembourg exposes itself to:
- Negative press articles ("X barely pays any taxes in France")
- NGO campaigns (Oxfam, Tax Justice Network)
- Consumer boycotts
- Questions in the European Parliament
- A tax audit triggered by publicity
Public CbCR is a tool of fiscal soft power—it does not force companies to pay more taxes but it makes "not paying" socially costly.
CbCR and Evolution Trends: Towards a Lowering of the Threshold?
The Debate on the €750M Threshold
The €750M threshold was set in 2015 as a political compromise: low enough to cover the largest multinationals, high enough to spare SMEs and mid-caps. But since 2015, pressure to lower the threshold has been mounting:
- Argument of proponents of lowering: Mid-caps and large international SMEs also shift profits. A group with €200M in revenue with subsidiaries in Ireland and Luxembourg can transfer millions in profits—without being covered by the CbCR. Lowering the threshold would expand transparency.
- Argument of opponents: The cost of preparing the CbCR is significant (€50,000-€200,000 for an average group). Imposing this burden on mid-caps with €200M in revenue is disproportionate—the cost exceeds the tax benefit (the amounts of profit shifting by mid-caps are much lower than those of multinationals).
- Compromise under discussion: Some propose a gradual lowering—€500M in 2028, €250M in 2030. Others propose a "simplified" CbCR for groups between €250M and €750M (less data, simpler format).
Evolution Scenarios
| Scenario | Threshold | Probability | Impact for an Expat in PY |
|---|---|---|---|
| Status Quo | €750M (unchanged) | 40 % | No impact |
| Moderate Lowering | €250-€500M | 40 % | No impact (your LLC at €200,000 is still ×1,000 below) |
| Significant Lowering | €50-€100M | 15 % | No impact (your LLC is still ×250-500 below) |
| Extension to SMEs | €10-€50M | 5 % | No impact (your LLC is still ×50-250 below) |
| Extension to Micro-businesses | < €10M | < 1 % | Theoretically concerned but the compliance cost would be so disproportionate that this scenario is almost impossible |
Even in the most extreme scenario (threshold at €10M), your US LLC with €200,000 in revenue would be 50 times below the threshold. The CbCR will not reach freelancers—the administrative cost would be absurd for structures that have only one entity in one country.
The CbCR and Paraguay
Paraguay within the CbCR Framework
Paraguay, as a member of the BEPS Inclusive Framework, has adhered to the standards of Action 13:
- Receipt of CbCRs: The Paraguayan DNIT receives CbCRs from multinational groups with subsidiaries in Paraguay (via exchange agreements). In practice, few multinationals with €750+ million in turnover have subsidiaries in Paraguay—such cases are rare.
- Sending CbCRs: If a Paraguayan group exceeded the €750 million turnover threshold, the DNIT would transmit its CbCR to the tax authorities of the countries where the group has entities. In practice, no Paraguayan group exceeds this threshold.
- National Legislation: Paraguay has incorporated transfer pricing documentation obligations into its tax law (Law 6380/2019 and DNIT resolutions), including provisions compatible with the OECD CbCR framework. However, its application is mainly theoretical due to a lack of taxpayers covered by the threshold.
Impact for Your Structure in Paraguay
No direct impact. The CbCR is a tool for multinational groups with €750+ million in turnover. Your US LLC + PY residence + PY SRL is not a "multinational group" in the sense of the CbCR. You have no obligation to file a CbCR, a Master File, or a Local File—neither in Paraguay, nor in the USA, nor in France.
The impact is only indirect and structural: the CbCR is part of a global movement towards greater tax transparency. This movement also includes CRS (bank accounts), CARF (crypto), DAC6 (tax arrangements), and DAC9 (AI and data cross-referencing). Each tool targets a different segment—but together, they create an environment where hiding income or profits becomes practically impossible. For an honest expatriate in a territorial country, this is good news: transparency confirms your legitimate position (see our CRS guide).
Transfer Pricing Documentation for Structures Not Covered by CbCR
What Small Structures Must Document in France
Even without CbCR, French companies (or French entities of foreign groups) have transfer pricing documentation obligations:
| Obligation | Threshold | Content | Does your US LLC apply? |
|---|---|---|---|
| CbCR | Consolidated turnover > €750 million | Full country-by-country report | No |
| Master File + Local File | Turnover > €400 million OR assets > €400 million OR workforce > 2,000 | Full transfer pricing documentation | No |
| Simplified documentation (Art. L.13 AA LPF) | Turnover > €50 million OR assets > €50 million OR held 50%+ by an entity exceeding these thresholds | Transfer pricing policy, functional analysis, significant transactions | No |
| Declaration 2257 (simplified form) | Turnover > €50 million OR assets > €50 million OR held by/holding an entity > €50 million | Declarative form on intercompany transactions (nature, amount, method) | No |
| No formal obligation | Below all thresholds | No mandatory documentation. But the tax authorities can always request justification of prices in case of audit (Art. 57 CGI). | Yes (if France reclassifies you as a resident) |
Your US LLC is below ALL thresholds. There is no formal transfer pricing documentation obligation. But as explained in our transfer pricing guide, having an informal benchmark and basic documentation is a prudent protection—not an obligation.
Recommended Documentation (Even Without Obligation)
A minimalist documentation file for your US LLC:
- Activity Description: 1 page describing what the LLC does (consulting, development, design, etc.), what clients it serves, and how it operates.
- Pricing Policy: 1 page explaining how you determine your rates (commercial negotiation with clients, market benchmarks, hourly or flat rates).
- Informal Benchmark: 1-2 pages with market data on comparable rates (Glassdoor, Upwork, Toptal screenshots, industry reports). Shows that your rates are within market range.
- Summary of Transactions with Related Entities: If you have a PY SRL in addition to the US LLC, 1 page listing transactions between the two entities (loans, service provision) with amounts and prices. If you only have the US LLC (no PY SRL), this section is "N/A—no intercompany transactions."
- Mercury Bank Statements: Archive annual statements showing LLC flows (client revenue, owner distributions, operational expenses).
Preparation cost: €0 (you do it yourself in 2-3 hours) to €500 (your accountant formalizes it). This is NOT an obligation—it's an assurance. The day an inspector asks a question about your LLC's prices, you have a file ready.
The Link Between CbCR, CRS, and DAC: The Transparency Ecosystem
The Global Transparency Puzzle
The CbCR is not an isolated tool—it is part of an integrated ecosystem of tax transparency that is mutually reinforcing:
| Tool | Target | Data exchanged | Are you concerned? |
|---|---|---|---|
| CRS | Bank accounts of non-resident individuals and legal entities | Identity, balances, financial income | Yes (your Mercury, IB, Wise accounts are declared) |
| FATCA | Accounts of "US persons" worldwide + US accounts of non-residents | Identity, balances, income | Indirectly (Mercury Bank reports to the IRS) |
| CbCR | Profits and taxes of large multinationals (turnover > €750 million) | Revenue, profits, taxes, employees, assets—by country | No (below threshold) |
| DAC6 | Cross-border tax arrangements (reported by intermediaries) | Description of the arrangement, participants, tax advantage | Potentially (if your lawyer reported the expatriation arrangement) |
| DAC7 | Income from digital platforms (Airbnb, Amazon, Uber) | Seller identity, income, commissions | If applicable (if you sell on EU platforms) |
| DAC8 / CARF | Crypto-asset transactions | Identity, crypto balances, transactions, income | If applicable (if you have crypto accounts on EU exchanges) |
| DAC9 | AI cross-referencing of all the above data + land registries, FICOBA, etc. | Global analysis, anomaly detection | Indirectly (AI cross-references your CRS, DAC6, DAC7, DAC8 data) |
| FICOBA | Bank accounts in France | Existence, type, holder of each account in FR | Yes (if you have a French bank account) |
Each tool targets a specific segment of transparency. Together, they create a nearly complete net: bank accounts (CRS/FATCA), multinational profits (CbCR), tax arrangements (DAC6), platforms (DAC7), crypto (DAC8), AI cross-referencing (DAC9), and national accounts (FICOBA). There are practically no more blind spots.
What This Means for an Expatriate in Paraguay
The transparency ecosystem is your ally in a territorial country:
- CRS shows your accounts → DNIT receives them → 0% tax (foreign income exempt by territoriality). Transparency confirms your legal exemption.
- DAC6 shows your expatriation arrangement → French tax authorities see you have a US LLC in Paraguay → if your PY residence is solid, the arrangement is legitimate. Transparency validates your position.
- CbCR does not concern you (below threshold) but it contributes to an environment where honesty is rewarded and concealment is punished. This is the world you want as a legitimate expatriate—a world where cheaters are caught and honest people are at peace.
Transparency is only a problem when you have something to hide. When your position is legal and documented, transparency is your best defense. See our DAC9 guide and our substance guide.
Criticisms of CbCR: Limitations and Controversies
Limitation 1: CbCR Does Not Capture Everything
CbCR only shows aggregated data by country—not individual transactions. A country with 10 subsidiaries appears as a single line in the CbCR. The tax authorities do not see which specific transactions shift profits—they only see the aggregated result. This is why CbCR is a selection tool (identifying risks) and not a reassessment tool (proving a specific transfer).
Limitation 2: Confidentiality vs. Transparency
Companies oppose the publication of CbCR (public CbCR) arguing that the data is commercially sensitive (the distribution of profits by country reveals strategic information on margins and markets). NGOs and governments push for total transparency. The EU compromise (public CbCR but aggregated non-EU data) is an imperfect balance.
Limitation 3: Data Interpretation
High profit in a low-tax country is NOT automatically a sign of artificial transfer. It can correspond to real activity (e.g., a company with its R&D center in Ireland employs 2,000 engineers and legitimately generates high profits). CbCR detects anomalies but does not automatically distinguish legitimate from artificial anomalies—it is the in-depth audit that decides.
Limitation 4: Implementation Asymmetries
Not all countries apply CbCR in the same way. Developing countries (who most need CbCR data to protect their tax base) are often the least equipped to analyze and utilize the data received. The Paraguayan DNIT, for example, receives CbCRs but probably lacks the analytical resources to fully leverage them.
The Future of CbCR: Towards a "CbCR 2.0"?
Ongoing Discussions
- CbCR 2.0 (GloBE Information Return): Under Pillar 2 (global minimum tax), a new form—the GloBE Information Return (GIR)—will be filed by groups covered by Pillar 2 (turnover > €750 million). This GIR contains more detailed data than the classic CbCR (effective tax rate by jurisdiction, top-up tax calculation, SBIE exclusions). It is an "enhanced CbCR" for Pillar 2.
- Extension to Substance Data: Some proposals aim to add qualitative data on substance to CbCR (nature of activities, functions performed, risks assumed)—not just quantitative (revenue, employees, assets). The objective: better identify structures without substance.
- CbCR-CRS Interoperability: The idea of automatically cross-referencing CbCR data (multinational profits) with CRS data (individual bank accounts) is under discussion. The objective: detect multinational executives who personally benefit from their companies' profit transfers. For expatriates: this means AI could one day cross-reference a group's CbCR (if you are an executive) with your personal CRS data.
What the Future of CbCR Means for You
For an expatriate in Paraguay with a US LLC: CbCR and its developments do not directly impact you. But they illustrate an irreversible trend: tax transparency is only increasing. Each year, new data is collected, exchanged, and analyzed. Tax authorities see more, better, and faster.
In this context, the winning strategy remains the same: be on the right side of transparency. Live genuinely in Paraguay, declare correctly, and document your position. Transparency is the current—swim with it, not against it.
Conclusion
The Country-by-Country Report (CbCR) is the most powerful transparency tool ever created to combat artificial profit shifting by multinationals. It requires groups with over €750 million in turnover to declare, country by country, their revenues, profits, taxes, employees, and assets—allowing tax administrations worldwide to see the complete puzzle and identify anomalies.
For an expatriate in Paraguay with a US LLC: CbCR does not directly concern you. You are between 1,500 and 75,000 times below the €750 million threshold. No CbCR, Master File, or Local File obligation. Even a significant lowering of the threshold (to €50 million, or even €10 million) would not affect you.
The relevance of CbCR for you is indirect and strategic: it is part of a global transparency ecosystem (CRS, DAC6-9, FATCA, CARF) that makes concealing income and profits virtually impossible. This ecosystem is your ally: it punishes cheaters and protects honest people. When your position is legal (effective PY residence, US LLC with substance, income exempt by territoriality), transparency confirms your legitimacy.
The tax world is moving towards total transparency. This is the right direction—and it is exactly the direction that benefits legitimate expatriates in Paraguay. The more transparent the world, the more visible and unassailable the advantage of living in a cooperative territorial country.
Do you want a transparent, compliant structure with 0% tax on your foreign income? Contact our team for comprehensive support: Paraguayan residence (from €1,400), US LLC, DNIT accounting (€30/month). Transparency is total. Tax is zero. This is the winning combination.