The European Parliament voted Thursday in favour of the European Commission’s proposal to require companies to report tax and profit information on a country-by-country basis and for national tax authorities to automatically exchange that information. The vote was 567–30, with 53 abstentions. But the Parliament is also requiring that the European Commission have access to the information to ensure that competition in the European market is not distorted by favourable tax deals for multinational companies.
Multinational companies operating in the EU would be required to report to the EU member state in which the parent entity is tax resident, information on where they make their profits and where they pay tax. The rules would apply to multinational corporations operating in the EU that have global annual revenues of €750 million ($850 million) or more.
Companies will have 12 months from the end of their fiscal year to supply the country-by-country reports. Tax authorities will then have a further three months to exchange the information.
The Parliament amended the proposal to require that the European Commission have full access to the information exchanged among member states’ tax authorities so that it can determine if countries’ tax practices comply with European rules regarding state aid.
The proposal now goes to the European Council for approval.
—Alistair Nevius (firstname.lastname@example.org) is CGMA Magazine’s editor-in-chief, tax.