It is a historic day for tax transparency. After 5 years of deadlock, a clear qualified majority was reached at the meeting of EU Competitiveness Ministers on Thursday 25 February on the proposal for ‘public country-by-country reporting’ (CBCR), which would oblige companies to make public certain accounting data, such as their turnover or taxes paid (see EUROPE 12653/2).
In a press conference following the meeting, the Portuguese Minister of Economy, Pedro Siza Vieira, confirmed that he had received “very strong political guidance” from a “large majority of Member States” on the text. This should enable the Member States’ ambassadors to the EU (Coreper) to approve, on Wednesday 3 March, the EU Council’s negotiating mandate to begin negotiations with the European Parliament on the text, he said.
During the meeting, which was broadcast online, Finland—which had pushed this issue during its Presidency of the EU Council (see EUROPE 12379/13)—gave its explicit support to the text, as did Greece, Romania, Poland, Italy, Spain, France, Bulgaria, Belgium, Denmark, the Netherlands and Austria, the last of which thereby publicly confirmed its change of position (see EUROPE 12643/29).
Slovenia has also joined this camp, as the new Slovenian government has reconsidered its position and decided to support the text. “Nevertheless, in the future, we consider it necessary to ensure that the provisions of legal acts that concern tax-related information are adopted according to the appropriate legal basis”, the country said at the meeting.
Estonia, for its part, said it was “prepared to accommodate the position shared by the majority of Member States to move things forward”, while Latvia—although it believes the compromise is far from perfect—indicated that it “will not object to the current text proposal in its current version”.
It should be noted that Lithuania and Slovakia, which had traditionally spoken in favour of the text, did not take the floor during the meeting. Croatia indicated its support for the content and substance of the proposal, but at the same time criticised the choice of legal basis. For internal policy reasons, Germany indicated that it would abstain.
On the other hand, Ireland, the Czech Republic, Hungary, Sweden, Luxembourg and Malta stuck to their position, again and again invoking the question of the legal basis.
In a joint statement annexed to the minutes of the meeting, the six countries state that they continue to share the analysis of the Council Legal Service of November 2016 that the proposal should be negotiated as a tax text, unanimously and within the Ecofin Council (see EUROPE 11758/9). The Competitiveness Council is not the appropriate forum for political debate, they write.
At the meeting, Luxembourg was rather vague about its intentions. It reiterated its concerns about the legal basis, but indicated that it “will not stand in the way of the Presidency’s objectives in this matter”.
Civil society pressure paid off
The outcome of the meeting was welcomed by several civil society organisations, including Oxfam and Transparency International, which were particularly active on this issue.
“I like to believe that, yes, we made a difference. We have been campaigning for this for 5 years ," Elena Gaita, an expert on the subject at Transparency International, told EUROPE on Thursday.
“In some member states, in Germany for instance, we have not managed to have a breakthrough, but in others like Austria, I think our actions have paid off. I really think this is something the Council should take into consideration for the negotiations to come, because now there is a strong awareness of citizens on this issue. If it fails—at this stage, after so many scandals—there will be a reaction from the public”, she believed.
Transparency International welcomed this step forward, but nevertheless considers the EU Council’s compromise text to be very weak. “If the final text were this one, we think it would not have any meaningful impact”, said Ms Gaita.
The organisation hopes for several improvements, particularly in terms of geographical scope. “Both the Commission and Council texts would require companies to only report on their operations in EU Member States, which for us is unacceptable. This is our red line: if companies don’t report on all of their operations in all countries, this legislation will not make any sense at all”, she explained.
The European Parliament is ready for the ‘trilogues’
A new chapter now opens: the ‘trilogues’. And the European Parliament, which adopted its position on the text as early as 2017, is already standing at attention. Its new negotiating team, including co-rapporteurs Evelyn Regner (S&D, Austria) and Iban García del Blanco (S&D, Spain), wrote to the Council of the EU on Wednesday to apply pressure.
“We are ready to start negotiations with EU Ministers to deliver on this crucial tool in the fight against tax evasion and tax avoidance. Our goal is a public country-by-country reporting that ensures meaningful financial transparency”, Ms Regner said in a statement issued at the end of the meeting.
On Thursday morning MEP Sven Giegold (Greens/EFA, Germany) also told the press that he was optimistic about the outcome of the meeting. “I hope we will have fast trilogue negotiations, because we have no time to lose. The public coffers are empty, and we cannot afford this tax avoidance any longer”, he said.
Although Parliament’s position is certainly stricter than that of the Council of the EU, particularly with regard to the geographical scope and the safeguard clause, he nevertheless considered that the general approach of the two texts remained similar. (Original version in French by Marion Fontana)