The EU Commission wanted to offer the public insight into companies’ tax reports. The idea: Not only tax offices, but you and me as well should know about companies’ economic activities and tax obligations in all EU member states. However, the Commission’s attempt failed. Why? Because member states, including Austria, voted against this policy.
EU member states lose 1,000 billion euros in tax income every year. Because corporations and wealthy people smuggle their profits and income past tax authorities – by using legal and illegal methods. The “Panama Papers” and “Lux Leaks” showed how this works.
All in all, transnational corporations shift around 40 per cent of their profits to low-tax countries and tax havens.
On average, member states lose ten per cent of their income because of these methods.
In 2017, the European Union introduced so-called “Country-by-Country Reporting” (CbC-Reporting) in order to obligate profit and tax transparency for corporations. These are reports that corporations with an annual turnover of more than 750 million euros have to submit. They have to disclose to tax authorities in which countries they do business and make profits. The goal is: Companies pay taxes in those countries where they have branches and make sales.
EU Commission wants to make CbC-Reportings transparent – Austria does not
The EU Commission wanted to make CbC-Reportings of corporations publicly available. Not only tax authorities but also experts and people with interest should gain insight
The first challenge was to bring this policy into the so-called “trilogue”. The trilogue is a tripartite meeting between the EU Commission, the EU Council and the EU Parliament. To ensure that the topic of “public reporting” is discussed at this meeting, the member states – specifically the ministers for economic affairs of the EU member states – were asked to vote at the “EU Competition Council”.
Austria and 11 other countries declined the policy. The Austrian minister of economic affairs, Elisabeth Udolf-Strobl, held on to the position of the previous right-wing government led by Sebastian Kurz (Conservatives, ÖVP). She thinks it “does not make sense to introduce additional regulations”. Germany abstained – here, too, it was the Conservatives who blocked transparency.
This means that the EU Commission’s proposal failed. For the time being, no further “Competition Council” with the ministers of economic affairs is planned.
One option would be for the Council Presidency to raise the issue again. The next country to do so is Croatia. But since Croatia itself voted against the EU Commission’s proposal in the “Competition Council”, this is unlikely.
Criticism from Social Democrats and Greens
In Austria, Social Democrats and Greens criticised the Austrian government for declining transparency. In fact, Austria could have made the difference. One country would have been sufficient to allow negotiations on the Commission proposal.
Austrian Parliament binds government to vote for transparency next time
In December, the Austrian parliament voted for more tax transparency at EU level. Via a proposition, the parliament bound the government to vote for more tax transparency the next time the topic comes up. This could mean that there is a majority for the EU Commission’s proposal as soon as the issue is dealt with again.