The Commission paves the way for greater corporate tax transparency by introducing disclosure obligations for large companies operating in the EU.
The proposal builds on the Commission’s work to combat corporate tax avoidance in Europe, which is estimated to be a loss of between EUR 50 billion and €70 billion per year for EU countries.
This would impose on multinationals with global revenues of more than €750 million per year and operating in the EU the obligation to publish key information about the EU country or countries in which they make their profits and also in the EU country or countries where they pay their taxes. These same rules would apply to non-European multinationals operating in Europe. On the other hand, companies should publish an aggregate figure for the total taxes paid outside the EU.
This proposal is a simple and proportionate way of increasing the taxation of large multinationals without affecting their competitiveness. It will apply to thousands of large companies operating in the EU, but will not affect small and medium-sized enterprises.
The proposal also sets out stricter transparency requirements for the activities of companies in countries that do not apply international standards of good governance in the field of taxation. The Commission will build on its external taxation strategy in order to establish as soon as possible the first common EU list of these tax territories.
This complements the Commission’s recent initiatives against tax avoidance and this obligation to publish information by country will allow citizens to examine the tax behaviour of multinationals. Which will encourage companies to pay taxes in the countries in which they make their profits. In addition, this disclosure of information will also contribute to a better understanding of Member States’ tax systems and to identifying existing gaps and mismatches, thus shedding more light on the causes and consequences of corporate tax avoidance.
This proposal for a Directive is now submitted to the European Parliament and the Council of the EU, and the Commission awaits its swift adoption under the codecision procedure. Once adopted, the new Directive should be transpoured into the national law of all EU Member States within one year of its entry into force.