The Finnish presidency resurrected the long dormant file of Country-by-country reporting (CBCR) in the EU-COMPET Council last Thursday. Although we reached only ”qualified majority minus one”, and thus no General Approach on the directive, we are happy to bring the multinational corporate tax issue back on the agenda, three years since the Panama Papers scandal, and responding to the demands of the European Parliament on Oct. 24th.
Read the extensive coverage by Politico here.
The ECOFIN Council will discuss CBCR this week. Yes, discuss. There are a few countries that insist that (following the Council Legal Service opinion) the issue should be decided as a fiscal directive (following SEUT 115 art.) by unanimity in the ECOFIN.
Good luck with that.
The majority defended the Commision legal reasoning that CBCR is an amendment to an accounting directive (based on SEUT 50(1) art.). Thus, it is not a tax file – does not define tax rate, nor tax base, nor tax jurisdiction, but requires more detailed post facto reporting.
Last week, it looked like the Council might overrun its own legal opinion. In itself, it is nothing earth-shattering (legal interpretations always vary), but certainly inconvenient. That´s when the Council Legal Service came up with reconciliation ideas for possible next steps in inter-institutional negotiations.
To put it very simple, it looks like the Commission´s presentation of the directive is misleading to some extent. In the preamble, or ”recitals”, the indirect consequences of more public disclosure are presented as the objective result of the legislation; i.e. more tax paid to where it should be paid.
In other words, clarifying the objective of the legislation would help arguing that SEUT 50(1) is indeed the correct legal base.
If there is a will, there is a way to concile differing institutional opinions to a legally sound text. This is what Finland is committed to in the last remaining weeks of our Presidency.