The Committee on Economic and Monetary Affairs of the European Parliament voted in favor of the proposal for automatic exchange of country-by-country reports.
MEPs approved a report on the proposal by 45 votes, with 11 abstentions. Dariusz Rosati, who prepared the report, said that the initiative is “an important step in the fight against harmful tax practices within the EU. This should increase transparency and reduce harmful tax competition.”
Under the proposal, multinational companies with total consolidated revenues of EUR 750 million or more will need to submit statements of EU countries. This rule will apply to all countries with which the company operates.
The report stresses that the Commission should have full access to the information exchanged between the tax authorities of the countries to give the opportunity to assess whether they practice in accordance with the rules of state aid. This is especially important for small and medium-sized companies who work in one country only, as they “usually pay an effective tax rate which is much closer to the official rates than multinational firms.” The Commission also added that “the domestic companies do not have to face disadvantages due to their size or the lack of cross-border trade.”
The report also recommended that EU countries should impose sanctions for companies that fail to provide tax reporting to other countries.