The European Parliament has adopted a resolution calling on EU Member States and the Finnish presidency of the Council of the European Union to move forward on public Country-by-Country reporting. The resolution, adopted by 572 votes in favour, 42 against and 21 abstentions.
On 12 April 2016, the European Commission proposed to amend the Accounting Directive (Directive 2013/34/EU) which would require large multinational companies operating in the EU to draw up and publically (on the website of the undertaking) disclose income tax information, including a breakdown of profits, revenues, taxes and employees. The proposal builds on the OECD BEPS work, in particular Action 13 on CbC reporting. However, it went a step ahead by requiring large MNEs to make certain items of the CbC report publicly available. As such, to the extent public CbC reporting is adopted, it could lead to implications for both EU-headquartered and non-EU-headquartered undertakings with a consolidated turnover of or exceeding €750 million.
By making Country by Country publicly available, it is expected that the proposal should make taxes more transparent by providing the public with a picture of the taxes paid by multinationals, and where those taxes are paid. Currently, multinationals are only required to indicate an aggregate of the taxes they have paid, without detailing what was paid to which tax jurisdiction. The agreed resolution aims to eradicate the corporate tax avoidance, which is estimated to cost EU countries EUR 50-70 billion a year in lost tax revenues.
During the recent meeting, France, Spain, Belgium, Denmark, the Netherlands, Italy, Romania, Bulgaria, Greece, and Slovakia pleaded to move forward on the issue, making the CbCR publicly availble. However, countries like Cyprus, Austria, Malta, Hungary, Estonia, Luxembourg, Latvia, Ireland, Poland, Sweden, the Czech Republic, Slovenia, Portugal, Lithuania, and Croatia are reported against such measures. In this regard, the European Parliament has adopted the resolution by 572 votes in favour, 42 against and 21 abstentions.
As noted earlier, the proposal was first presented in April 2016. However, no progress has been made after 19 council working party and attaché meetings have been held.