Parliament, led by the S&D Group, closes political deal with EU governments on pioneering financial transparency rules.
This evening, the European Parliament and EU governments reached an agreement on public country-by-country reporting (pCBCR), which will oblige big multinationals to publicly disclose where they make their profits and where they pay their taxes. This political deal also includes the obligation for companies to publish how many full-time employees they have, their turnover and taxes paid, as well as all profits and losses they have in each country they operate in, inside the European Union and in tax havens. The Portuguese Presidency managed to break the five-year deadlock in the Council, thereby opening the way for an agreement. As part of our tax justice campaign, the Socialists and Democrats have led the drive for public country-by-country-reporting for the past five years. S&D MEPs and Parliament negotiators Evelyn Regner and Ibán García del Blanco could finally close a successful deal on meaningful financial transparency, the first of its kind globally that will make currently undisclosed information publicly available.
Evelyn Regner, S&D MEP and Parliament negotiator on pCBCR, said:
“Tonight’s agreement between the European Parliament and EU governments lays the foundation for more tax justice, and this will finally oblige large multinational companies to publicly disclose where they make their profits and where they pay their taxes. This decision will not only boost investors’ appetites - which is of particular importance given that we need investment more than ever to relaunch our struggling economies - but also empower public scrutiny of known tax-dodgers such as Apple and Amazon. Thanks to the new rules, we will know which companies are free-riding and which are contributing their fair share to society.
“The agreement on public country-by-country reporting will boost our fight against tax havens. Especially as we managed to include publication requirements for third countries listed on the EU’s grey or black lists of tax havens.
“I am proud that we have managed to close a loophole through which non-European companies could have escaped the new rules by simply filing an explanation. On EU soil, the same rules must apply to EU and non-EU companies.
“Now, that governments are helping companies to get through the pandemic with public money, it has become even more important to ensure big businesses contribute their fair tax share to the recovery.”
Ibán García del Blanco, S&D MEP and Parliament negotiator, said:
“For five years, the Parliament led by the S&D Group, has been fighting for meaningful public country-by-country reporting, while some EU governments put on the brakes. While we strongly regret that the Council refused our persistent demands for a worldwide country-by country-report on a disaggregated basis, the deal reached today is a major step towards more corporate transparency and contains a number of improvements.
“During the negotiations we managed to include the requirement that companies will have to report all their full-time employees and list all subsidiaries. This will make it much harder for companies to blow smoke and conceal their real economic activities in each country.
“We included a strong review clause to continue the battle on global disaggregation of the information and limit the effects of the safeguard clause, which will allow companies to avoid reporting to protect their commercial interests. We will surely make it even more ambitious in the future.
“To truly empower public scrutiny, the data must be fully available and easily accessible. We fought for and obtained that the data will be free of charge, in an open format and in a common template.”
Note for the editor:
In April 2016, the European Commission proposed legislation on corporate tax transparency, commonly referred to as public country-by-country reporting (pCBCR) for multinationals, which would require large multinational companies with an annual turnover of more than €750 million to publish an annual public report disclosing where they do business, make profits and how much they pay in taxes and other payments, for each country where they operate. This measure would complement the existing legislation on automatic exchange of tax information and introduces accountability of the multinational to the public and all other taxpayers.
In July 2017, the European Parliament adopted its mandate for the inter-institutional negotiations, so-called trilogues. Ever since, the Council was blocked by a number of countries opposing the proposal and has thus not yet reached a negotiation position. On 24 October 2019, the European Parliament passed a strong resolution urgently calling on the member states to break the deadlock within the Council, conclude their first reading on public CBCR and enter inter-institutional negotiations with Parliament. The Portuguese Council Presidency finally managed to break the deadlock, which led to today’s political deal on public country-by-country reporting. The agreement still needs to be confirmed by the full plenary of the European Parliament.