Monday 6 February 2023
Home International No EU approach to taxation for multinationals yet

No EU approach to taxation for multinationals yet

The EU countries again failed to reach an agreement on a directive on Thursday that requires multinationals to inspect their income and tax payments.

For four years now, there has been vain talk of such a legal obligation for multinationals to report annually. Until now, multinationals can continue to play the EU countries against each other. But there is increasing pressure on EU countries to end tax havens. More and more EU countries argue that they should no longer compete with each other.

The proposal aims to promote transparency about tax payments and combat tax evasion. Negotiations on the 2016 proposal from the European Commission were at a standstill for months due to a blocking minority of member states.

The proposal was supported by major countries such as France, Italy, Spain and the Netherlands, while Germany abstained. Luxembourg, Ireland, Croatia and Malta, among others, are blocking the law.

The mandatory reporting only applies to large multinationals with a net turnover of more than 750 million euros. The parent company must publish a report every year, by EU country, on the number of employees, profit or loss before tax, and the income taxes paid. This gives the EU, for example, insight into how many internet companies download in each EU country, without having to pay tax.

The big difference of opinion so far is whether such a mandatory annual report is about 'finances and administration' or about 'Taxes'. In the latter case, unanimity is required from all EU countries, but is also seen as an opportunity to maintain own lucrative national tax deals with multinationals.

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