EU springs country-by-country tax transparency on corporates

EU Springs Country-By-Country Tax Transparency on Corporates

FTI Consulting

May 28, 2013

The fight against tax evasion was high on the European council’s agenda. However, one point of the council conclusions seemed to have slipped past many participants and was introduced without debate, with potential far reaching implications for companies with large cross border operations.

The recent cases of large multinationals coming under fire both in the EU and in the US for their low taxes paid compared to the revenue generated in certain jurisdictions, has enhanced the already growing momentum to “fix” a broken international tax system. However, the latest proposal by the European Heads of State, has caught business and administrations by surprise. 

The proposal to oblige companies to report country-by-country on their turnover and taxes paid was not explicitly discussed at the European Council meetings and so the question must be asked: did this proposal just slip through almost as an oversight, or were there political considerations at play? Considering the tough negotiations on other country-by-country reporting proposals, the stealthy nature of this decision by the European Council is astounding. 

The political impetus appears not to have come from the Irish presidency, even though the Irish agreed to the conclusions. It is thought that the President of the European Council might have spearheaded the amendment, although whether it was pushed, by France or the UK, is still not clear.

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Hans Hack

Senior Managing Director, Leader of Belgium Legal Services