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MEPs revive debate on public country-by-country reporting

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MEPs have again voted in favour of a Commission proposal to require multinational companies with annual revenues exceeding €750m to publish country-by-country reports disclosing revenues and tax paid in respect of their activities worldwide. This is intended to complement existing legislation requiring submission of country-by-country reports to EU tax authorities.

The EU Parliament has been waiting for the Council to give its approval since MEPs last backed the proposal in a vote at the plenary session in July 2017.

The Commission originally introduced the proposal in April 2016, which, as an amendment to the accounting directive, it believed could be adopted in the Council through qualified majority voting. However, the Council’s legal advice indicated that the proposal related to fiscal provisions, requiring unanimity.

In February 2017, the EU Parliament’s ECON committee put forward amendments in a draft report, extending the scope of the original proposal to include activities worldwide, rather than limited to the EU, and requiring a breakdown for each country in which companies operate, instead of aggregated data. These amendments failed to receive a sufficient majority in the ECON and Legal Affairs committees, meaning a full plenary debate in the EU Parliament was needed before the proposal could be taken forward to the Council.

Information to be contained in a report would include:

  • the name of the firm and all its subsidiaries, a brief description of the nature of their activities and their respective geographical location;
  • the number of employees on a full-time equivalent basis;
  • net turnover;
  • stated capital;
  • profit or loss before income tax;
  • income tax paid during the relevant financial year by the firm and its branches resident for tax purposes in the relevant tax jurisdiction;
  • accumulated earnings; and
  • whether undertakings, subsidiaries or branches benefit from a preferential tax treatment.

Exemptions would be permitted to protect commercially-sensitive information.

Speaking on behalf of the current EU Council presidency, Finnish minister for European affairs, Tytti Tuppurainen, told MEPs that while work was advancing, the Council ‘will still probably need more time to clarify our position’.

Tax Journal understands that 15 member states have expressed opposition to the Commission’s legal basis involving qualified majority voting. They are Cyprus, Austria, Malta, Hungary, Estonia, Luxembourg, Latvia, Ireland, Poland, Sweden, the Czech Republic, Slovenia, Portugal, Lithuania, and Croatia, while Germany has yet to make its position clear. France, Spain, Belgium, Denmark, the Netherlands, Italy, Romania, Bulgaria, Greece, and Slovakia support the Commission’s approach.


In the UK, Finance Act 2016 Sch 19 introduced a power for the Treasury to make regulations requiring large companies to include a country-by-country report in their published group tax strategy. In a report in December 2016, the public accounts committee encouraged HMRC to ‘drive the debate internationally about public country-by-country reporting and push for real change in the global tax system’.

Issue: 1463
Categories: News