On Monday 9 April, the European Commissioner for Taxation, Pierre Moscovici, said that the exchange of information introduced in the EU on 'country-by-country reports' was not sufficient and that this reporting should be made public (see EUROPE 11960).
The Council has yet to reach a position on this proposal, which was presented by the Commission through amendments to the directive on accounting standards. No meetings have been scheduled on the dossier so far by the Bulgarian Presidency of the Council of the EU.
The Commissioner was speaking at a conference arranged by the S&D group at the European Parliament, the Foundation of the European Progressive Studies (FEPS) in partnership with, amongst others, the Maison Syndicale Internationale, concerning fair, modern and effective corporate taxation in Europe.
This issue was raised in the framework of the panel discussing the matter of letterbox companies. Séverine Picard of the European Trade Union Confederation pointed out that the freedom of establishment was a pillar of the European Treaties and that a number of judgements of the Court of Justice of the EU had shown that nothing should restrict a company in its desire to set up wherever it wishes. This was the case with the Polbud judgment, concerning a Polish business that wished to transfer its headquarters to Luxembourg, “mainly for tax reasons”, Picard explained, adding that the Court had found in the company's favour. This judgment will have an impact on the 'company law' package anticipated at the end of the month, she went on to stress.
According to our information, France called for the proposal on company law to contain safeguards to prevent abusive delocalisations. In its public consultation, the European Commission asked whether there were grounds to authorise transfers of company headquarters only if the company could prove that it had a genuine economic link with the country it wished to move to.
On behalf of the NGO Oxfam, Johan Langerock explained that the European criteria of the European blacklist of non-cooperative jurisdictions in taxation matters touched upon the question of economic substance, a question that the EU has “still not definitively answered”, he stressed.
He also referred to the rules on controlled foreign companies (CFC) devised by the Netherlands in the context of their implementation of the anti-tax avoidance directive. This provides for economic substance to be demonstrated by salary costs of at least €100,000 and evidence of the payment of rent for 24 months. These rules are set to enter into force in 2019, but Langerock does not consider that they are sufficiently proportionate.
Prem Sikka of the University of Essex and the Tax Justice Network called for public reporting, so that all citizens may become responsible auditors.
Moscovici himself confirmed that the public reporting dossier was not on the agenda of the Council. “Maybe the Council thinks there is not enough pressure” to push forward, he suggested. (Original version in French by Élodie Lamer)