Large companies in the EU will in future have to publish their net sales, profit before tax and the income taxes actually paid. This should make tax saving models recognizable.
Large corporations in the European Union will soon have to make public how much taxes they pay in each state. EU governments approved a controversial law aimed at disclosing corporate tax-saving models.
EU institutions agreed on the new rules for so-called “country-by-country reporting” in June after a five-year dispute. The Council of Ministers has now approved this compromise and paves the way for a final decision by Parliament, which is considered a formality. The law then has to be implemented by the member states within 18 months – probably by mid-2023.
Insight for the public
According to the regulation, multinational companies with a worldwide turnover of more than 750 million euros must not only give the tax offices but also the public an insight into their books. This applies to both European and international companies based in the EU. In a country-specific report, they should publish, among other things, the net sales, profit before taxes and the income taxes actually paid. The number of employees and subsidiaries should also be made transparent. The data should be broken down for all EU countries, as well as for the countries on the EU list of tax havens.
This should give an insight into how tax saving models work. Some companies push their profits to countries with the lowest possible tax rates, even though they were not achieved there, in order to save taxes. This happens within the EU, but also worldwide.
MEP Sven Giegold (Greens) welcomed the decision. «The instrument is a sharp sword against tax dumping. Country-specific tax transparency will reveal how great the damage caused by tax dumping is for the general public, “said Giegold.
Sweden and Cyprus voted against the scheme, and Member States such as Luxembourg and Ireland, known for their low taxes, abstained from voting. Giegold therefore fears that some countries could take legal action against the law before the European Court of Justice.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
