EU Member States continue to block public tax transparency of large companies. At today’s meeting of the relevant Council Working Party on Company Law, the representatives of the national governments were again unable to agree on a common position on the Commission proposal for so-called country-by-country reporting.
Cyprus, Malta, Austria, Hungary, Estonia, Luxembourg, Latvia, Ireland, Poland, Sweden, the Czech Republic, Slovenia, Portugal and Croatia all question the legal basis of the Commission proposal and would prefer to negotiate the file in the Council Working Party on Taxation, where unanimity between Member States is required instead of qualified majority voting. This would certainly jeopardize any progress in tax transparency for large companies. Germany continues to be decisive by maintaining its scrutiny reservation together with Lithuania. In the German government, Minister of Finance Christine Lambrecht (SPD) has the leading role. Finance Minister Olaf Scholz (SPD) and Economy Minister Peter Altmaier (CDU) are involved in the interministerial coordination.
France, Spain, Belgium, Denmark, the Netherlands, Italy, Romania, Bulgaria, Greece and Slovakia consider public tax transparency a measure of corporate reporting and advocate keeping the dossier in the Council Working Group on Company Law. The Finnish Presidency itself has no clear position, as there is disagreement within the Finnish government between the ministries involved.
Only yesterday, MEPs adopted a cross-party resolution calling on EU governments to abandon their blockade of public tax transparency.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“By blocking tax transparency of large companies, European governments are gambling with citizens’ trust in the European Union. Combating tax dumping by multinational companies would be possible through joint action by European member states. Country-by-country tax transparency would effectively put a stop to the transfer of profits to tax havens. The EU governments obviously prefer to insist on their self-imagined sovereignty in tax matters instead of establishing tax justice for citizens and small and medium-sized enterprises. It is a tragedy for European politics that the German government once again opposes the clearly pro-European French position.
Within the federal government, the SPD ministers bear a special responsibility for the stalemate at the European level. Hiding behind a scrutiny reservation to examine the legal basis is nothing more than cowardice to take a clear stand. Lambrecht and Scholz must seek conflict with the German Conservatives on tax transparency just as they did just this on minimum pensions. Only then will Olaf Scholz’s U-turn in tax transparency become credible. In the coalition agreement, the CDU/CSU also clearly commits itself to the fight against tax fraud and aggressive tax avoidance. The Social Democrats must remind CDU Minister of economic affairs Altmaier of this commitment. Even more, the CDU/CSU parties should stand up for fair competition between SMEs and large companies. Their opposition to tax transparency of large companies undermines the social market economy as much as tax justice.
Stating legal concerns is a poor excuse. For the big banks, the EU has already introduced country-by-country tax transparency under a majority-voting procedure. This has been functioning for years and has not led to any legal problems. Fears of sanctions from third countries are also a bad excuse. The existing transparency rules for large banks in the EU have been accepted internationally. In recent years, it were the USA who adopted far-reaching tax reforms with repercussions for third countries. These unilateral measures however have not led to negative reactions from other jurisdictions. Europe should exercise its sovereignty by defending fair competition and tax justice. European politics should not be driven by cowardice.”
Cross-party resolution of the European Parliament calling on the EU Member States to finally end their blockade in negotiations:
Coalition agreement between CDU, CSU and SPD for the 19th legislative period (in German):