By Ninja-Antonia Reggelin
German finance minister Olaf Scholz is in the midst of a campaign tour for the social democrats (SPD) presidency.
On September 12, during one of the regional party conferences, he caused more than just surprise when he tweeted (in German): “We have agreed with the SPD ministers. We are in favor of public country-by-country reporting.”
Wir haben uns mit den #SPD-Ministern verständigt. Wir sind für öffentliches country by country reporting. #TeamGeywitzScholz #GeywitzScholz @BayernSPD #Nürnberg #unsereSPD @spdde #SPDVorsitz
— Olaf Scholz (@OlafScholz) September 12, 2019
Country-by-country reporting, based on Action 13 of the OECD/G20 base erosion profit shifting (BEPS) action plan was implemented in Germany in 2016. The reports are shared with tax authorities. Channels for exchange of this information with other national tax authorities have also been put in place.
However, it remains controversial whether the data should be made available to the public. The European Commission and the European Parliament are in favor, but the German government has so far been against it.
Although many in his own party (SPD) favor public country-by-country reporting, the Minister had refused, just as his predecessor Wolfgang Schäuble (CDU), to make this data available to the public.
The finance ministry had argued in favor of maintaining the principle of tax secrecy, opposing the German Ministry of Justice and further plans in Brussels. For tax purposes, public access is not necessary because tax authorities already receive all the reporting under current legislation, the finance ministry said.
Now Scholz sees the matter quite differently: “One strives for the highest possible transparency when publishing the data. This would be guaranteed with publication,” said a ministry spokesman, according to Handelsblatt.
The Ministry of Finance strives for a joint position within the Federal Government.
That, however, will be difficult because Federal Chancellery and Federal Ministry of Economics continue to reject publication.
The Federal Ministry of Economics pointed out to Handelsblatt that “the Federal Ministry of Finance has always rejected an obligation to publish the sensitive company data in consultation with the relevant ministries”. The Federal Ministry said that reporting would challenge the system developed by the OECD.
The main concern is that German business would face competitive disadvantages if their data were made public. Moreover, there would be no pressure on other states to disclose their data.
Nonetheless, the finance ministry policy stance may prove pivotal during negotiations in Brussels. Should the ongoing calls for public country-by-country reporting lead to new legislative proposals, it unclear how Germany would vote.
If both coalition parties do not agree, Germany could abstain from voting. It remains to be seen if and how Olaf Scholz will follow through on his party presidency campaign promises.
Ninja-Antonia Reggelin
Ninja-Antonia Reggelin is based in Berlin, where she is head of tax policy at a business association.
She previously worked at the OECD, contributing to the project that led to the publication of the BEPS Action Plan. Prior to that, she was with PwC Germany, where she focused on international tax structuring.
Ninja holds a Master’s degree (LL.M.) in International Trade Law from Bond University Australia and a Master’s degree (M.A.) in International Relations from the University of Kent Brussels School of International Studies.
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