The rules, that should take effect later this year, are a response to growing concerns about corporate tax avoidance which costs the EU public €70bn a year, according to a European Parliament estimate.
“Today we reached a political agreement on co-operation between tax administrations, country- by-country reporting. This is part of our work on the anti-tax avoidance package,” said Dutch Finance Minister Jeroen Dijsselbloem who chaired the meeting of EU ministers in Brussels.
The new rules will oblige large companies to disclose data on revenues, profits and taxes to the administrations of all EU countries where they operate. That data will then be exchanged between the 28 EU states.
The EU deal goes beyond international guidelines known as anti-base erosion and profit shifting, agreed by the G20 and the Organisation for Economic Co-operation and Development.
Those guidelines do not force subsidiaries of foreign countries to disclose the tax data of their parent group, whereas the EU rules will affect foreign multinationals that have subsidiaries in the European Union, EU officials said.
“Once adopted and enforced this directive will, as of 2016, oblige the large multinational companies to file country-by-country reports to tax authorities and this information will then be automatically exchanged between member states.
“This will permit to have a clearer picture about potential transfer pricing risks that business activities of such large company groups may generate,” they said.
Due to concerns expressed by Germany and some other EU states that the measures could scare away foreign investors , the new rules will only be mandatory for foreign companies from 2017.
The rules are expected to be formally adopted by June, Mr Dijsselbloem said. The unanimous approval of all 28 EU states is required.
The introduction of country-by-country reporting is part of a wider global crackdown on corporate tax affairs with the European Commission conducting probes into the tax arrangements of a number of companies across Europe.
Earlier this week, EU competition chief Margrethe Vestager tempered expectations that a ruling on Apple’s tax affairs in Ireland would be delivered soon, telling reporters not to hold their breath on the outcome.
Reuters with additional reporting by Irish Examiner© Irish Examiner Ltd. All rights reserved