EU lawmakers strike milestone deal for corporate tax transparency
Legislators sealed a deal obliging multinationals to publicly declare what taxes they pay in each EU country, overcoming five years of foot-dragging by some governments.
The deal struck between European Parliament and Council negotiators sets in place rules that require multinationals and their subsidiaries with annual revenues of over €750 million, and which are active in more than one country, to publish and make accessible the amount of taxes they pay in each member state. The information will also need to be made available on the internet, using a common template, and in a machine-readable format.
To facilitate the use of the information provided and increase transparency, the data provided will need to be broken down into specific items, including the nature of the company’s activities, the number of full-time employees, the amount of profit or loss before income tax, the amount of accumulated and paid income tax and accumulated earnings.
Subsidiaries or branches falling below the revenue threshold will also be required to report if they are deemed to exist only to help the company avoid the reporting requirements. Some provisions allow room for manoeuvre for multinationals to be temporarily exempt from some reporting requirements, but these are nonetheless strongly circumscribed.
The tax transparency reports should also extend to the EU list of non-cooperative jurisdictions for tax purposes outside the EU (countries on the so-called EU “black” and “grey” lists), says the agreed text. Although MEPs wanted stronger provisions to tackle profit shifting to non-EU tax havens, the new rules will still shed some light on taxes being lost to tax havens.
The text now needs to be endorsed by the Committees on Economic and Monetary Affairs and Legal Affairs and the Parliament as a whole, as well as Council. The vote in plenary is expected after the summer recess.