EU Parliament and Council: Milestone for tax transparency

Jun 23, 2021 Benn-Ibler Rechtsanwälte

At EU level, representatives of the European Parliament and the Council were able to agree on a regulation for greater tax transparency for companies.

This agreement is aimed at multinational companies (including their subsidiaries) that operate in more than one country and have an annual turnover of over EUR 750 million. They will be required to publish and make available information on the taxes they pay in each member state. This data will be further broken down into, for example, the amount of profit or loss before tax, taxes actually paid and net sales, as well as the number of full-time employees.

Further measures are planned to counter tax avoidance strategies:

• Subsidiaries and branches that fall below the threshold of EUR 750 million are also to be affected by this reporting obligation if it can be assumed that they exist only to exempt companies from this obligation.
• The reporting obligation is also to extend to countries on the "EU list of non-cooperative countries and territories", i.e. tax havens outside the European Union. This should in particular shed light on lost taxes.

Some provisions still allow for a temporary exemption from the reporting obligation, but these exemptions are severely limited.

In the next step, the agreed text must be approved by the Legal Affairs Committee and the Committee on Economic and Monetary Affairs. The European Parliament and the Council must also approve it. A vote is expected after the summer break.

European Parliament – Press release (01 June 2021)