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EU: EU public country-by-country reporting

28 February 2017

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Bob van der Made

The EU Parliament's members of the Economic and Monetary Affairs (ECON) Committee and the Legal Affairs Committee (JURI) published their joint draft legislative recommendations on the European Commission's public country-by-country reporting (public CbCR) proposal on February 9 2017.

The main recommendations made by these MEPs to the Commission's text state:

  • Large groups, as defined in Article 3(7) and all large undertakings as defined in Article 3(4), should be subject to the new disclosure requirements (i.e. no threshold of €750 million ($797 million));
  • The scope of the measure should not be limited to information related to the EU and tax havens/non-cooperative jurisdictions (as identified by the EU), but be worldwide. "Public disclosure of such information is not a sanction for non-cooperative jurisdictions but rather a prerequisite for those operating in a well-functioning single market"; and
  • The standardisation of the format of the reporting documents for all companies within the scope of this directive needs to allow for the comparison of data.

The ECON/JURI draft report stresses that "more transparency of multinational undertakings' activities is key for putting an end to profit shifting, operated via several mechanisms, such as letterbox companies, patent boxes and transfer pricing, and also to unhealthy tax competition practices between legal systems, which too often have been used to the detriment of citizens, in particular taxpayers, employees, and SMEs".

On January 12 2017, a legal opinion by the EU Parliament's Legal Service was endorsed by the JURI Committee, which backs the position of the Commission's Legal Service that the Commission's choice to propose public CbCR in the form of an amending act to the EU's Accounting Directive was legally sound and legitimate. The Council's Legal Service and a number of EU member states are of the opinion, however, that this is essentially a tax file and therefore a unanimous vote is required in the ECOFIN Council.

Next steps

The joint ECON/JURI Committee vote on the draft report is scheduled for May 30 2017. Other MEPs can propose amendments until then.

In December 2016, the Slovak EU Council Presidency published a draft compromise text that was rejected by the member states' technical level representatives at their first meeting in January 2017, however. The Council's Working Party on Company Law (Attachés CbCR) will reconvene on March 29 2017 to get an update on the status of CbCR in the EU Parliament from the Maltese EU Council Presidency. It is also set to discuss the state of play on the public CbCR proposal in the Council and "further examine technical compromises on the text".

A representative of the Maltese EU Council Presidency apparently informed JURI Committee MEPs at their meeting in January that the Council and the Maltese Presidency will deal with this dossier "with the utmost pace" and will continue work at Council Working Party level "to get the positions of member states", but also that they will wait for the ECON/JURI Committee vote on May 30 2017 before "moving forward" on this file.

The Council's Working Party on Tax Questions (Direct Tax) is also set to look at this dossier from a tax perspective after their colleagues in the Working Party on Company Law (Attachés CbCR) have finalised their technical level work.

The Commission's proposal for public CbCR did not appear as an item on the indicative Maltese Presidency's six-monthly Council agenda, which ends on June 30 2017. Estonia will succeed Malta as EU Council Presidency for the second half of 2017 on July 1 2017.

Bob van der Made (
PwC EU Public Affairs-Brussels
Tel: +31 6 130 96 296

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