By voting on a part of the Anti Tax Avoidance Package, which has been presented by the European Commission, the European Parliament has taken a step further towards more tax transparency. It now rests with the Council to take the last hurdle for the Automatic Exchange of Information.

Content of the vote

After the Commission had presented its measures against aggressive tax planning in January, the competent Committee in the European Parliament already voted a few months later on the proposal concerning the country-specific Automatic Exchange of Information. The thought behind revising Directive 2011/16/EU is the exchange of tax-specific information between tax authorities in those Member States, where parent companies or subsidiaries are economically active. Apart from that, it orientates itself by Action 13 of the OECD BEPS Programme.

Role of the European Parliament

However, in this case the European Parliament only assumes an advisory role. The final decision whether the legislative text will become law has to be taken in the Council, which is expected to be in session in May. The competent rapporteur commented that the Committee would be able to agree on 10 compromise amendments. Two sections of the Directive were intensively discussed as there are different points of views.

1. How many companies are obliged to commit to more transparency?

The Directive only affects those companies, which generate a global turnover of over 750 million euro. Some MEPs regarded this threshold as too high; however, the rapporteur explained that it was in compliance with the other OECD states.

2. Transparency?

Information, which is shared within the scope of the Automatic Exchange of Information, is not accessible to the public. Here too different opinions came to the fore. The Commission, which had been criticised on several occasions because of this, presented a revision in April 2016, in which the public is granted access to a part of information (with the exception of information from third countries – this is only published in aggregated form).

The rapporteur of the S&D faction also pointed out that the Automatic Exchange of Information should not only take place between those countries where companies have set up foreign bases, but between all countries.

Vote

The draft was accepted with a majority with a few amendments and without any votes against. The revised version gives the Commission more competencies with regard to country-specific reports. It has been asked to publish this information in the reports if it does not see any danger for the competitiveness of the company. Apart from that it shall evaluate the success of the Directive after three years.

Further Information:

Amendments

Commission Proposal