Strasbourg, 12/05/2016 (Agence Europe) - The debate held at the plenary session of the European Parliament on Wednesday 12 May on the automatic exchange of information between tax administrations regarding 'country-by-country reporting' suggests that the coming negotiations on the public nature of this reporting, proposed in April, will be tough.
The debate on whether this information should be published, as proposed in amendments to the directive on accounting standards “will be complicated”, predicts Ludek Niedermayer (EPP, Czech Republic). The French MEP Alain Lamassoure, a member of the same group, also acknowledged that the EPP would have to discuss the matter internally, as it has not always voted consistently in the past. For instance, the president of the special committee TAXE2 explained, the group voted against public reporting in the framework of the revision of the directive on shareholders' rights, but in favour in the recommendations of TAXE2.
Opinions also differ within the ECR group. Poland's Zdzislaw Krasnodebski feels that the system will not work until there is full disclosure of information, whilst his fellow countrymen and member of the same group, Stanislaw Ozog, argues that the principle of confidentiality should be respected. Ashley Fox of the UK has similarly also stated in the past that he was against publishing the information, whilst the British government has taken position in favour, although it would like the scope to be broader (see EUROPE 11539).
Other MEPs, such as Cora Van Nieuwenhuizen (ALDE, Netherlands), Belgium's Sander Loones (ECR), Brian Hayes of Ireland and Sweden's Gunnar Hökmark (EPP), have said, on a more general note, that the EU should not make progress unilaterally and that it should comply with the standards of the OECD.
The question of the threshold is also up for discussion. In the OECD's recommendations, only groups with a consolidated turnover of €750 million and above must submit country-by-country reports to the tax administrations. The Commission adopted this in its two proposals on reporting (to the administrations and publicly). Some of the groups, such as the S&D, Greens/EFA and GUE/NGL, wish to borrow a principle from the accounting directive, which imposes a reporting requirement on mining companies above a threshold of €40 million (and a certain number of employees).
“I assure you that the decision to limit the application to multinationals with a turnover of €750 million is not the result of cowardice or weakness, but of an in-depth reflection and common sense and is also based on the conclusions of the OECD”, said the Commissioner for Taxation, Pierre Moscovici, at the end of the debate, adding that it made no sense to create a new standard in parallel to that of the OECD. He went on to say that it would cover 90% of the revenue of multinationals in Europe. Why not reduce the threshold? But “then we would have to reduce it OECD level”, he said.
As Emmanuel Maurel of France, shadow rapporteur for the S&D, explained, an amendment was tabled in plenary to reduce the threshold; it was rejected by 360 votes against, 285 in favour and three abstentions (amendment 35). It had already been amended by the committee on economic and monetary affairs, the rapporteur, Dariusz Rosati (EPP, Poland), pointed out. Maurel criticised the Conservatives and Liberals for voting against.
In the other amendments made to the Commission's text, the EP (which is only consulted on taxation matters) included the Commission in the scope of the exchange of information. “There is a state aid dimension”, Rosati explained, and was echoed on this point by Bernd Lucke (ECR, Germany).
Commissioner Moscovici explained that the Commission was not able to either receive or have access to the content of the information sent to the tax administrations to assess the transfer price risk. Nor would this “comply with the confidentiality clause of the OECD agreement”, he added.
In subsequent initiatives, he pledged to turn his attention to promoters of aggressive tax planning schemes. The text was adopted by 560 votes in favour, 30 against and 53 abstentions. (Original version in French by Elodie Lamer)