COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to Article 294(6) of the Treaty on the Functioning of the European Union concerning the position of the Council on the adoption of a Directive of the European Parliament and the Council amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches
Date: 2021-10-01
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: European tax cooperation, corporation tax, exchange of information, multinational enterprise, single market, tax avoidance, tax evasion, tax inspection, tax law

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   EUROPEAN COMMISSION  Brussels, 1.10.2021  COM(2021) 617 final 2016/0107 (COD)  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT  pursuant to Article 294(6) of the Treaty on the Functioning of the European Union  concerning the position of the Council on the adoption of a Directive of the European Parliament and the Council amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches (Text with EEA relevance)  
 
 
2016/0107 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to Article 294(6) of the Treaty on the Functioning of the European Union 

concerning the 

position of the Council on the adoption of a Directive of the European Parliament and 
the Council amending Directive 2013/34/EU as regards disclosure of income tax 
information by certain undertakings and branches 

(Text with EEA relevance) 

1. 

BACKGROUND 

Date of transmission of the proposal to the European Parliament and 
to the Council (document COM(2016)0198 – 2016/0107(COD)): 

13 April 2016 

Date of the opinion of the European Economic and Social 
Committee: 

29 September 2016 

Date of the position of the European Parliament, first reading: 

27 March 2019 

Date of transmission of the amended proposal: 

N/A  

Date of adoption of the position of the Council: 

28 September 2021 

2. 

OBJECTIVE OF THE PROPOSAL FROM THE COMMISSION 

The proposal amends the Accounting Directive (Directive 2013/34/EU). It aims at enhancing 
transparency  and  public  scrutiny  on  corporate  income  tax  paid  by  multinational  enterprise 
groups  (consisting  of  their  ultimate  parent  undertaking,  subsidiaries  and  branches)  and 
standalone multinational enterprises, hereafter referred to altogether as “MNE”, carrying out 
activities  in  the  Union. This  should  foster  greater  corporate  responsibility  and  transparency, 
promote a better informed public debate and help citizens in the Union regaining trust in the 
fairness of national tax systems. 

3. 

COMMENTS ON THE POSITION OF THE COUNCIL 

The  position  of  the  Council  reflects  the  political  agreement  reached  between  the  European 
Parliament  and  the  Council  on  1 June  2021.  The  Commission  supports this  agreement.  The 
main points of this agreement include the following: 

Scope 

As  regards  the  scope  of  application,  the  political  agreement  introduces  several  changes 
compared to the initial Commission proposal: 

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It  sets  out  that  the  reporting  obligation  applies  only  when  companies  exceeded  the 
revenue threshold for two consecutive  years (while Commission proposed one  year). 
Symmetrically,  the  reporting  obligation  would  cease  to  apply  only  when  revenues 
have been below the threshold for two consecutive years; 

It  specifies  the  meaning  of  ‘revenues’  depending  on  the  applicable  accounting 
framework, for the purpose of determining whether an undertaking should report; 

It  includes  in  the scope  of application standalone undertakings  that  are  multinational 
but not part of any group; 

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It excludes from the scope of application groups that are not multinational. 

The scope of the political agreement retains the Commission proposal to impose the reporting 
on MNEs with consolidated revenues exceeding EUR 750 million. The exemption for credit 
institutions applying their specific country-by-country reporting regime is also retained. 

Safeguard clause 

In order to ensure that no disclosure of information is seriously prejudicial to the commercial 
position  of  an  undertaking,  a  safeguard  clause  is  introduced,  allowing  MNEs  to  omit  the 
disclosure of commercially sensitive information for a period of five years.  

Information to be published, geographical aggregation 

Beyond  the  information  which  the  Commission  proposed  to  include  in  the  reporting,  the 
political  agreement  requires  additional  contextual  information  such  as  the  name  of  the 
ultimate parent  undertaking or the standalone undertaking, the  financial  year  concerned, the 
currency  used,  and  the  list  of  subsidiaries  established  in  the  Union  and  in  non-cooperative 
jurisdictions for tax purposes of an ultimate parent undertaking falling within the scope, thus 
adding to the transparency. 

In  terms  of  geographical  presentation  of  that  information,  the  political  agreement  remains 
substantially  similar  to  the  Commission  proposal,  including  where  it  introduces  reliance  on 
the  list  of  jurisdictions  drawn  up  by  the  Council  in  relation  to  non-cooperative  jurisdictions 
for  tax  purposes  (relevant  annexes  of  ECOFIN  conclusions)  instead  of  a  list  drawn  up  by 
delegated act as proposed by the Commission. 

The political agreement  introduces a right for undertakings to comply in  part with reporting 
instructions laid down in Council Directive 2011/16/EU, thus reducing compliance costs for 
undertakings. 

Taking  into  account  parents’  control  over  their  subsidiaries  and  branches,  the  political 
agreement implements an obligation for any large subsidiary or branch in the EU, to request 
their ultimate parent in a third country to provide all information necessary to enable them to 
meet  their  obligations,  in  case  the  parent  does  not  already  publish  a  suitable  country-by-
country  reporting.  Where  not  all  the  required  information  is  provided  by  the  parent,  the 
subsidiary or branch in the EU would have to draw up, publish and make accessible the report 
on income tax information, containing all information in its possession, obtained or acquired, 
and a statement indicating that the ultimate parent entity or the standalone undertaking has not 
made the necessary information available. 

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Common template, electronic reporting 

With a view to facilitate the digital use of this reporting, the political agreement introduces a 
common  template  and  machine-readable  formats,  to  be  established  at  a  later  stage  by 
implementing acts. 

The  political  agreement  allows  Member  States  to  enable  access  to  the  reporting  on  the 
website(s) of their national register(s) as long as it is available free of charge to any third party 
located within the Union, thus  relieving undertakings from the duty to make it available on 
their own web site.  

Auditors’ role 

The  political  agreement  further  specifies  the  role  of  statutory  auditors,  who  should  state 
annually whether an undertaking was required to publish a report on income tax information, 
and if so, whether that report was published. 

Implementation by the Member States 

The political agreement offers a period of maximum eighteen months after the entry into force 
to  implement  the  directive  at  national  level,  which  is  slightly  longer  than  the  Commission 
proposal. 

Review clause 

Adding to the Commisssion proposal, the political agreement specifies a number of items to 
be reviewed and reported on by the Commission, on the basis of a period of four years after 
the transpostion date set out in the Directive. 

4. 

CONCLUSION 

The Commission supports the results of the inter-institutional negotiations and can therefore 
accept the Council's position at first reading. 

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