15/02/2017

Adoption issues over country-by-country reporting

Published in April 2016, the European Commission proposal for public country-by-country reporting of results by large companies continues to face legal disagreements between the European Parliament and the Council of the EU, which represents the interests of the 28 member states.

MEPs and member states disagree on the legal basis upon which the text should be adopted. MEPs, supported by the European Commission argue that the proposal is within the scope of European Competition policy as harmonising the conditions of the single market. This would mean an ordinary adoption procedure where the legislation is adopted jointly by Parliament and the Council.

On the opposite side, for certain member states at the Council the proposal contains tax measures that belong to the sole competence of member states. Such proposal would have to be adopted by the unanimity of the member states, with only a consultative role from the Parliament.

During an exchange of views on 12 January 2017 at the Legal Affairs Committee at the European Parliament, the Maltese Presidency promised to do its best to come to a solution before the end of June. The Council will start its work based on the draft report from the European Parliament released on 9 February.

This report contains stricter amendments to strengthen the initial proposal from the Commission, including a lower threshold in turnover for companies to start disclosing tax and profits information on a country-by-country basis and a larger geographical scope of jurisdictions impacted.