EU Parliament Approves Proposal On Tax Transparency

The EU parliament approved the proposal to amend Directive 2013/34/EU on disclosing the financial information of multinationals for tax purpose, including branches outside the EU.

Threshold for Country-by-Country report

The proposal introduces a threshold that the global turnover equals to the amount of €750 million. Multinationals above the threshold have to publicly release their tax information, explaining the amount of tax due and the place to pay, irrespective of whether the tax is paid within the EU or not.

The information would include:

  • the name of the firm and, the list of all its subsidiaries, a brief description of the nature of their activities and their respective geographical location;
  • the number of employees on a full-time equivalent basis;
  • the amount of the net turnover;
  • stated capital;
  • the amount of profit or loss before income tax;
  • the amount of income tax paid during the relevant financial year by the firm and its branches resident for tax purposes in the relevant tax jurisdiction;
  • the amount of accumulated earnings;
  • whether undertakings, subsidiaries or branches benefit from a preferential tax treatment;

All these information is to be released online and offered free of charge to improve the tax transparency.

Exemption of disclosure on confidential and sensitive information

As regards confidential information, Member States have the discretion to exempt one or more items. However, such exemption is subject to strict limits and has to be renewed every year. Once the exemption is ceased, the company concerned must make the omitted data publicly available immediately, by which time the firm must publish its tax details retroactively “in the form of an arithmetic average” to cover that period when they did enjoy immunity from providing details. 

Sources: EU Parliament, EU Commission
 

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