The directive will apply to multinational companies with an annual turnover of more than €750 million.

They will be required to declare their profits, how many people they employ and how much tax they pay in each EU country where they operate – as well as in countries on the EU’s tax haven blacklist.

The deal was agreed by negotiators but still has to be formally approved by MEPs at a full sitting of the EU parliament, and by the European Council.

But Portugal, which currently holds the six-monthly rotating chair of the European Council, hailed the obligation for public country-by-country reporting as a major step forward for tax justice.

Several political groups within the European Parliament including the Social Democrats and the Greens also welcomed the development.

Some campaigners for tax justice however said the measures did not go far enough.

The new agreement comes as US President Joe Biden is pushing the need for a 15% minimum tax for multinationals to back up the international agenda.

Biden’s proposal is due to be discussed by finance ministers from the Group of Seven wealthy nations at a meeting in London on Friday.

The EU measures were first proposed in the wake of a series of international financial scandals revealed in major investigations such as LuxLeaks and the Panama Papers.

“At a time when our fellow citizens are trying to overcome the effects of the pandemic, it is more crucial than ever to demand real financial transparency,” said Portugal’s Economy Minister Pedro Siza Vieira.

He estimated the European Union’s losses from tax evasion to be €50 billion a year.

But Transparency International EU said the proposed measure would not work.

“EU legislation on country by country reporting set to be finalised is not fit for purpose,” the campaign group tweeted.

“It won’t apply to most company operations and tax avoidance will continue.”