In January, the European Commission published a Directive on introducing country-by-country reports, which would oblige companies to share important information with the tax authorities of fellow Member States. The new Commission proposal not only goes an important step further to promote more transparency, it would also be an opportunity to rebuild the trust of the public, which yet again has been destroyed in the wake of publishing the Panama Papers. However, criti-cal voices remain, as companies in so-called tax havens are mostly not affected by the publication of these reports.

Public country-by-country report

This proposal is a revision of the current Directive 2013/34/EU on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings and only requires a qualified majority by the Council of the European Union instead of a unanimous resolution. All multinationals within the European Union, which generate a global turnover in excess of 750 million euros, will be obliged to make the following information available to the public:

• Type of activities
• Number of employees
• Total net turnover
• Pre-tax profit
• Income tax, which based on profits in a country has to be paid
• Amount of actually paid tax
• Accumulated earnings

This information has to be disclosed for each EU Member State. However, this itemisation does not apply to third countries. In this case, companies are only obliged to state aggregate figures - the overall amount of tax they pay outside the EU. Exemptions only concern those countries, which are on a joint list of non-cooperating states (so-called tax havens) to be agreed. However, individual Member States have applied different criteria. It remains open when this list will be agreed. Hence, important data from individual states, which are outside the European Union, are hidden from the public. Another important point is, that the Directive Proposal from January provides tax authorities access to twelve parts of information, whereas the public can only access seven.

Further information:

Press release

Commission Proposal

The fight against tax fraud is entering the next phase!