Administrative Cooperation on Tax Transparency Adopted
The 28 EU Finance Ministers this Tuesday adopted the 4th Directive on Administrative Cooperation (DAC4). This new text aims at increasing transparency on tax matters in the EU and requires multinationals to report their revenues, profits and tax obligations in every country in which they operate. Commissioner for Economic and Financial Affairs, Pierre Muscovici, welcomed the agreement, as it “will provide national authorities with the necessary insight to combat aggressive tax planning structures.”
The EU proposal responds to calls from the European Parliament and pressure groups to increase transparency in the operations of Multinational Corporations in Europe. It is largely inspired from the Base Erosion and Profit Shifting (BEPS) initiative of the OECD and, therefore, proved relatively easy for Council Members to agree upon.
The text has nevertheless come under heavy criticism from NGOs and the Greens in the European Parliament who want to see the information disclosed by these companies made directly available to the public. To respond to those concerns, the Commission is expected to put forward a proposal to make some of this information public.
Long negotiations expected on the Posting of Workers Directive
Employment Commissioner Marianne Thysen presented to the Parliament on Tuesday a proposal for the revision of the contentious ‘Posting of Workers’ Directive. The directive sets the rules for workers who are employed in one member state and temporarily sent to another by their employer. However, it dates from 1996, well before the 2004 and 2007 Eastern enlargements. The Commission’s intention is to address the issue of “social dumping” in which companies employ cheap labour from low-wage Member States on the soil of another Member State. Commissioner Thyssen advocated in favour of a principle of ‘the same pay for the same work in the same place.’
Negotiations over this piece of legislation are likely to be long and tense. In Tuesday’s debate, the European Parliament was split between centre-left MEPs who considered the proposal was not ambitious enough and centre right MEPs concerned by its potential impact on competitiveness.
Member States are equally divided over this issue. A group of countries including France, Germany and Belgium has indeed urged the European Commission to review the 1996 text but Central and Eastern European Member States have been critical about any such proposal, which would impair the competitiveness of their companies in the Single Market.
Business Europe, the Brussels-based representative of European business, is also sceptical about the Commission proposal and argued that the 1996 Directive and the new enforcement rules addressing fraud, circumvention of rules and exchanges of information between member states suffice. According to the body, the enforcement roles dating from 2014 already “ensure both the free provision of services across internal EU borders and an adequate protection of posted workers”.