The European Council announced that an agreement was reached between the member states and the representatives of the European Parliament (EP) in the regulation called “Public reporting on a country basis”, which was prepared to increase transparency in taxation.
Accordingly, all multinational companies and their subsidiaries with consolidated revenues of more than 750 million euros in the last 2 financial years will be required to publicly disclose the tax information they have paid in EU countries. Whether or not the companies in question are headquartered in EU countries will not change this situation.
Companies will also have to disclose the taxes they pay in countries on the blacklist, which includes third countries that do not cooperate with the EU in the tax field, or in the gray list, which includes countries that have committed to harmonizing their tax regulations with EU rules.
Taxes will be reported in electronic format, on a common EU template. Reporting will be made within 12 months after the balance sheet date of the financial year in question.
In addition to the tax amount, the report will also include information such as the profit or loss status and the number of people employed in each country.
The official approval of the European Council and the European Parliament is required for the agreed regulation to become law. After approval, member states will transfer the regulation to their national legislation within 18 months.
In 2016, the EU Commission announced its proposal for regulation for multinational companies operating in member countries with revenues of more than 750 million euros to disclose their country’s income and profits.
According to EU studies, various tax avoidance methods by companies are estimated to cost Europe 50 billion euros per year.