Brussels, 17/09/2015 (Agence Europe) - Despite appeals from NGOs and repeated questioning from MEPs, the president of the European Commission, Jean-Claude Juncker, refused to commit on Thursday 17 September to public country-by-country reporting of tax payments by multinationals. He was speaking at a combined hearing of the special tax committee and the economic and monetary affairs committee at the European Parliament.
Taxation Commissioner Pierre Moscovici said that on a personal level, he was in favour of country-by-country public reporting.
The Commission is carrying out an impact assessment on the question and a public consultation ended on 9 September. French MEP Pervenche Bérès (S&D) doubted that an impact assessment was needed because similar measures have already been taken for banks and mining. Moscovici said the decision to carry out an impact assessment was not designed to delay or ditch the idea of country-by-country reporting.
This lack of a clear position does not prejudge the approach the Commission will take in the interinstitutional talks on revision of the shareholders' rights directive, for which the Parliament has added public country-by-country reporting of tax payments to its negotiating position for the talks with the Council of Ministers (see EUROPE 11354). The interinstitutional talks are due to start in the near future.
The public consultation is being piloted by Financial Services Commissioner Jonathan Hill's department, but it will be Moscovici who decides what lessons are to be learned from it, explained the latter. Speaking to a handful of reporters later on, he said he would be working with Hill on the question, which is not strictly speaking part of his own subject matter.
NGO Eurodad has taken note of Moscovici's personal backing for country-by-country reporting, commenting: “Although Commissioner Moscovici restated his personal support for public country by country reporting, it remains unclear what the position of the broader European Commission is, and Mr Juncker has avoided answering the question”. The same question was raised several times in the second salvo of MEPs' interventions, which Juncker let Moscovici answer. When leaving the room after the hearing to go to another meeting, Juncker said he always agreed with Moscovici, even when he is wrong.
On behalf of Eurodad, Tove Maria Ryding, said: “Whether the Commission and the member states agree to this proposal or not will be the real test of whether they are willing to respond to the LuxLeaks scandal and start fixing our broken tax system”.
In more general comments, Juncker said that more global rather than simply European rules were needed on tax questions, but the EU has never been able to convince its international partners about this so the EU has to go it alone. The OECD has developed a series of measures to tackle erosion of the tax basis in the BEPS plan. One of these actions is country-by-country reporting to tax offices (rather than the public domain). French finance minister Michel Sapin explained that if the United States opposes public reporting, then it would be difficult for the EU to apply it (see EUROPE 11301).
MEPs on the Parliament's special tax committee say that transparency also involves the Parliament having access to documents such as minutes of meetings of the code of conduct group on unfair tax competition at the Council of Ministers. Elisa Feirrera (S&D, Portugal) asked Moscovici, who praised the political pressure levied by the Parliament on the Council of Ministers, to give MEPs resources to apply pressure by supplying them with the above-mentioned documents. Michael Theurer (ALDE, Germany) echoed this request.
CCCTB. During the hearing, several MEPs were concerned about the Commission's desire to publish a two-step approach to the common consolidated corporate tax basis (CCCTB) by postponing the consolidation aspect in order to facilitate talks at the Council of Ministers. Moscovici said one had to be realistic and not repeat the errors of the past, adding that a stage-by-stage approach to getting the CCCTB talks going again would mean that the benefits of the proposal could be enjoyed faster. At a press conference, he promised that this did not amount to abandoning consolidation, adding that companies themselves were calling for consolidation.
Moscovici hopes that agreement will be reached on enhanced cooperation on the financial transactions tax, which will set a precedent that could be useful for seeing whether it would work for tax matters. Although the Commission is not prepared to consider this method yet for getting CCCTB going again, it might propose it if the talks remain in deadlock. An FTT adopted by 11 member states using enhanced cooperation will not be the end of the story, explained Moscovici, because the FTT may later be extended to other countries.
The countries negotiating the FTT have already admitted that it would have been easier to negotiate among all 28 member states. The Council of Ministers gave the go-ahead for enhanced cooperation in January 2013 and the talks have not yet reached agreement. Germany is reported to have threatened to drop out of the enhanced cooperation if agreement is not reached by the end of the year, but this was not a threat, explained Moscovici, as it was simply a fact that agreement now needs to be reached. Earlier on, he said that he had reminded German finance minster Wolfgang Schäuble of the start of the FTT process, when the pair had got the ball rolling together when Moscovici was French finance minister.
The tax committee hearing provided an opportunity for MEPs to ask Juncker questions for which they have been awaiting answers for nearly a year, when the Luxleaks scandal broke out. Juncker said that during his time as prime minister of Luxembourg, he had never interfered in the way his country's tax office operated. “I didn't set up any system in Luxembourg to ensure there was tax avoidance in order to discriminate against other member states. You actually in fact exaggerate my political talent”, he said, pointing out that corporate tax evasion was not just a matter for Luxembourg as a good 20 member states do the same. He said the term should be changed from “LuxLeaks” to “EULeaks”. (Elodie Lamer)