Directive 2021/2101 - Amendment of Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches - Main contents

EN

Official Journal of the European Union

L 429/1

Transparency is essential for the smooth functioning of the internal market. The Commission, in its communications of 27 October 2015 entitled ‘Commission Work Programme 2016 – No time for business as usual’ and of 16 December 2014 entitled ‘Commission Work Programme 2015 – A New Start’, identified as a priority the need to respond to the call of citizens of the Union for fairness and transparency and the need for the Union to act as a global reference model. It is essential that the efforts to achieve greater transparency take into account reciprocity between competitors.

In its resolution of 26 March 2019 (3), the European Parliament stressed the need for ambitious public country-by-country reporting as a tool for increasing corporate transparency and enhancing public scrutiny. In parallel with the work undertaken by the Council to fight corporate income tax avoidance, it is necessary to enhance public scrutiny of corporate income taxes borne by multinational undertakings carrying out activities in the Union, in order to further foster corporate transparency and responsibility, thereby contributing to the welfare of our societies. Providing for such scrutiny is also necessary to promote a better-informed public debate regarding, in particular, the level of tax compliance of certain multinational undertakings active in the Union and the impact of tax compliance on the real economy. The setting of common rules on corporate income tax transparency would also serve the general economic interest by providing for equivalent safeguards throughout the Union for the protection of investors, creditors and other third parties generally, and thus contribute to regaining the trust of citizens of the Union in the fairness of national tax systems. Such public scrutiny can be achieved by means of a report on income tax information, irrespective of where the ultimate parent undertaking of the multinational group is established.

Public country-by-country reporting is an efficient and appropriate tool for increasing transparency in relation to the activities of multinational undertakings and for enabling the public to assess the impact of those activities on the real economy. It also improves shareholders’ ability to evaluate properly the risks taken by undertakings, leads to investment strategies being based on accurate information and enhances the ability of decision-makers to assess the efficiency and the impact of national legislation. Public scrutiny should be conducted without harming the investment climate in the Union or the competitiveness of Union undertakings, including small and medium-sized undertakings as provided for in Directive 2013/34/EU of the European Parliament and of the Council (4).

Public country-by-country reporting is also likely to have a positive impact on employees’ rights to information and consultation as provided for in Directive 2002/14/EC of the European Parliament and of the Council (5) and, by increasing knowledge of undertakings’ activities, on the quality of the dialogue that takes place within...