Tax authorities sometimes lack the information that would allow them to better detect tax avoidance strategies of MNEs and act on it. Increasing transparency should strengthen the ability of tax authorities to act against aggressive tax planning. Coupled with the strengthening of the legal framework, this should discourage companies from engaging in such practices.
It is therefore proposed to amend the Directive on administrative cooperation to implement the outcome of the OECD/G20 BEPS Action 13, regarding non public Country-by-Country reporting.
MNEs (with a total consolidated turnover above EUR 750 million) should file country-by-country reports with their tax administration. It will provide an overview of all the constituent entities of the MNE group per tax jurisdiction, as well as an overview of the allocation of income, taxes and business activities by tax jurisdiction. It also includes information on the number of employees, stated capital, retained earnings and tangible assets in each tax jurisdiction. The MNEs should submit information to the tax authorities of their jurisdiction of residence. The information would be subsequently shared between tax authorities, on the basis of the existing arrangements on Administrative Cooperation in the field of taxation 87 , and in respect for the fundamental rights as enshrined in the EU Charter of Fundamental Rights and in particular the right to protection of personal data, and in line with the applicable data protection laws.
