In Europe, a number of countries align tax accounts and parent-only accounts, while allowing companies to characterize consolidated profits to capital markets in a different way. Using parent-only (consolidated) accounts as a proxy for tax (book) accounts, this paper analyzes the role of reporting timeliness in inducing book-tax differences (BTD). I argue that users of financial statements require higher timeliness of book income and show that book income records economic news in a timelier manner. Higher timeliness of book income increases (decreases) book income relative to tax income during periods of good (bad) news. The effect of reporting timeliness is economically important as (i) higher BTD are associated with improved investment efficiency, and (ii) a delayed recognition of economic events in tax accounts induces a positive correlation between aggregate BTD and future income tax revenues. These findings have implications for the interpretation of book-tax differences in financial analysis and provide the new explanation for the evolution of the aggregate book-tax differences in the United States over the last years.