On Thursday, EU countries again failed to reach an agreement on a directive that would require multinationals to disclose their revenues and tax payments.
For four years, there have been futile talks about such a legal obligation for multinationals to report annually. So far, multinationals have been able to play EU countries against each other. However, there is increasing pressure on EU countries to put an end to tax havens. More and more EU countries are advocating for no longer undercutting each other.
The proposal aims to promote transparency regarding tax payments and to combat tax evasion. Negotiations on the Commission’s proposal from 2016 were stalled for months due to a blocking minority of member states.
The proposal was supported by major countries like France, Italy, Spain, and the Netherlands, while Germany abstained from voting. Among others, Luxembourg, Ireland, Croatia, and Malta are blocking the law.
The mandatory reporting applies only to large multinationals with a net turnover of more than 750 million euros. The parent company must publish a report annually, per EU country, detailing the number of employees, profit or loss before taxes, and the corporate taxes paid. This would, for example, give the EU insight into how much revenue internet companies generate in each EU country without paying taxes there.
The major disagreement so far concerns whether the mandatory annual report covers 'finance and administration' or 'taxation.' In the latter case, unanimity among all EU countries is required, and it is also seen as a way to preserve profitable national tax deals with multinationals.