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European Union: Public country-by-country reporting in the EU off the tracks, for now

24 August 2018

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During a debate at the European Parliament in mid-April 2018, a representative from the Council of the European Union confirmed to members of the European Parliament (MEPs) that there were "unresolved political issues" which prevented agreement at the council on the European Commission's April 2016 pending proposal for public country-by-country reporting (public CbCR). The two largest parties in the European Parliament, the EPP (Christian Democrats) and the S&D (Social Democrats), asked the council to unblock the negotiations on the proposal for public CbCR. This was generally understood to be the last chance to reach a deal as Austria, which holds the six-monthly rotating EU Council presidency from July 1 to December 31 2018, and could drive discussions in the council forward, is not in favour of the commission's proposal. Germany's new Federal Finance Minister Olaf Scholz said in June 2018 that the German government needed more time and he also counselled caution about the Commission's proposal and hinted at following a tax-centric approach instead.

Indeed, one of the thorniest political issues surrounding the Commission's protracted 2016 draft directive is its legal base, which has divided the EU's member states as well as the EU's institutions from the start. Both the legal services of the European Parliament and the European Commission have taken the formal view that there is no conflict in the Commission's choice of the legal basis for its proposal, since the draft public CbCR directive in their opinion is a tax transparency financial reporting tool, and not a fiscal matter as such, which would require unanimity voting in the Council (giving each of the EU-28 individual member states a right to veto the proposal). The Council's legal service however does not agree with its counterparts at the Parliament and the Commission.

Members of the European Parliament have expressed their discontent with the now prolonged impasse around public CbCR, arguing that some EU member states are using the legal basis issue as a pretext to delay any meaningful negotiations on this file.

EU Tax Commissioner Pierre Moscovici indicated in April 2018 that a deal would probably not be reached within the Juncker Commission's mandate which ends on October 31 2019.

van-der-Made-Bob
Bob
van der Made

Bob van der Made (bob.vandermade@pwc.com)
PwC | EU public affairs-Brussels (tax | tax administration consulting)
Tel: +31 6 130 96 296
Website: www.pwc.com/eudtg






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