Brussels, 30/10/2014 (Agence Europe) - The European Commission feels that country-by-country reporting (CBCR) from 2015 onwards of information about bank and investment company activity would not damage their competitiveness.
The publication of information on a country-by-country basis about tax paid on profits and public subsidies received is “not expected to have a significant negative economic impact, including on competitiveness, investment, credit availability or the stability of the financial system,” says the Commission in a report published on Thursday 30 October. The Commission says that the results of an econometric analysis suggest that improved disclosure quality - which is a key objective of CBCR - would lead to a number of positive outcomes as long as various details relating to implementation and interpretation of EU legislation are amended. The Commission wants the transparency rules to apply from 1 January 2015 onwards.
Under EU Directive 2013/36/EU (CRD IV), European banks are required to provide information once a year, on a consolidated basis for the financial year in question, breaking down the information by member state and non-EU country where they are registered: - from 1 July 2014, they must provide information about their company name(s), the nature of their business and their geographical location, turnover and number of staff on a full-time equivalent basis; - from 1 January 2015, they must also provide their pre-tax profit, the amount of tax paid on profits and public subsidies received.
The Commission gives a positive assessment of CBCR in the report and the measures examined in the report will come into force on 1 January 2015 without requiring any legal decisions to be taken in the future in this connection. A negative assessment would have required the Commission to unveil draft legislation to postpone application of the new rules.
“Country-by-country reporting would allow stakeholders to gain a better understanding of the structures of financial groups, their activities and geographical presence and help to understand whether taxes are being paid where the actual business activity takes place. Mandatory country-by-country reporting is an important element of the corporate responsibility of institutions towards stakeholders and society and will help to restore trust in the banking sector,” explained the current Internal Market Commissioner, Michel Barnier.
The report, which draws on the results of a public consultation, a round table (and an external study, explains that stakeholders expect CBCR to have some positive impact on the transparency and accountability of, and on public confidence in, the European financial sector, and risk management by financial bodies would improve, as would the quality of the information that is published. (MB)