Twelve European finance ministers took advantage of a closed-door debate on Tuesday 6 December to call on the European Commission to change the legal basis for country-by-country public reporting.
This was revealed by Taxation Commissioner Pierre Moscovici, but he didn’t say which countries or how many were involved, speaking at a hearing at the Panama Papers investigation committee on Wednesday 7 December.
Sweden launched the debate over breakfast at the ECOFIN Council on Tuesday. Its intervention seemed to be more general and based on concerns about how, in practice, many tax questions were found in legislation decided upon on a qualified majority basis. Reference was made to country-by-country reporting, a question on which the Council’s legal service says that the legal basis is wrong and needs to be changed. The European Commission selected company law, but some member states say that this is in fact a tax issue that needs unanimous discussion.
The Commission has made its own analysis in response to the that of the Council, and challenges the Council’s legal service’s interpretation. ‘The proposal doesn't serve to enforce tax law or to protect the tax bases of Member states but provides for transparency,’ argues the Commission in an informal document seen by this newsletter. It adds ‘the actual measures proposed by the Commission are strictly to disclosure obligations by undertakings and branches’ and its proposal is not aimed to apply to tax legislation or to protect member states’ tax bases, but to increase transparency.
The representatives of Germany, Finland, Slovenia, Hungary, Estonia, Cyprus, Luxembourg, Austria, the Czech Republic and Croatia backed the Council’s legal service’s analysis at the ECOFIN meeting. A Council lawyer is reported to have said that there was no doubt about this interpretation. Malta promised to deal with the issue during its presidency, which begins on 1 January 2017.
Hungary is reported to have raised the question of the directive on protecting the EU’s financial interests, which now also covers VAT fraud, and Ireland raised the fact that the legislation on the Juncker investment plan calls on the EIB to monitor European policies for combating tax optimisation.
On the question of public reporting, the Slovak Presidency of the Council of the EU is reported to feel that it is now for the permanent representatives to give their views on the legislation’s legal basis. The sherpas will meet on Thursday 15 December and reporting is a matter on the agenda for that meeting. (Original version in French by Élodie Lamer)