by Julie Martin
After several quiet months, it seems that consideration of an EU proposal for public country-by-country reporting is now moving forward as the EU Council’s working party on company law is slated to take up the matter this afternoon.
The hotly contested proposal, offered December 2017 by the EU Commission, calls for an amending directive mandating public disclosure of tax information on multinationals that have worldwide turnover of €750 million, including information on how much tax they pay and where they pay it, even including taxes paid outside the EU. The European Parliament in 2017 approved a version of the legislation. The OECD disapproves of public release of the data.
One thing sure to be debated today is the legal basis of the directive, Rasmus Corlin Christensen, a Ph.D. Fellow at Copenhagen Business School, told MNE Tax.
Christensen said that although it would be difficult for the directive to pass under the rule of unanimity voting by EU Member States, required for EU taxation directives, the Commission appears to have found a way to get around that roadblock.
“The Commission has essentially got one over the Member States and the Council. By classifying the directive as ‘financial reporting’ under Article 50 [of the Treaty on the Functioning of the European Union], the unanimity requirement associated with tax-related decisions under Article 115 is bypassed,” Christensen said.
Chirstensen added that although one might think that the Member States and the Council could just overrule the Commission, that cannot be done.
“Nope. They need unanimity to overturn the Commission’s classification of the legal basis for this directive.”
Chirstensen said that the move is a good example of “innovative activism” on the part of the Commission, which has been quite successful in recent years pushing tax agendas in the EU. This is a significant change from a decade ago, he said
“It will be an interesting debate to watch,” Chirstensen said.
And, Chirstensen posted this on Twitter, which we reproduce with his permission because it just seems to sum it all up so perfectly:
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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Very interesting…politicians hate taxpayers circumventing tax rules, yet they themselves do that all the time, and now on a national scale by classifying tax reporting as financial reporting, in the name of making tax “fairer”. I wonder if what it is against the EU Treaties…
And thanks MNE for the news and update!
You are welcome, Edwin Bin. Yes, it will be interesting to follow this, for sure.