What should tax transparency and reporting consist of?

On 1 June 2021, the Council of the EU reached an agreement with the EU Parliament on public reporting by Member State. The agreement was based on the proposal for a Directive of the European Parliament and of the Council amending Directive 2013/34/EU as regards disclosure of information on income tax of 13 January 2021(2016/0107(COD)). The proposal extended its scope to the largest domestic traders, i.e. international traders or those whose total annual income for the last two financial years exceeds €750 million, thus obliging them to file tax reports on their activities. The €750 million is subject to conversion into national currency for countries that have not adopted the euro as their national currency. According to the proposal, these entities will be obliged to publish and make available (also on the Internet) information about the income tax they pay. Moreover, entrepreneurs will be obliged to submit a reporting report in which they will publish information such as the company name, type of business activity, number of full-time employees, the amount of income tax and the actually accumulated tax, as well as the accumulated income. The list of required data is specified in detail in Article 48c of the proposal, in order to establish indisputable and uniform rules for obliged entities. It is required that the information is exhaustive and not intended to omit material facts. The entrepreneur is entitled to defer certain information for a period not exceeding 5 years, however, he must substantiate the reasons for his action – the motivation may be the desire not to disclose certain information about his activity for fear of competition.

The foundations of the agreement; previous regulation of the issue

The problem of tax fraud and tax avoidance by profitable companies has affected many EU Member States – but they have not been able to tackle the problem at national level. As a result, the issue came to the attention of EU authorities, who decided to develop international solutions. The emergence of the proposal described was preceded by Directive 2013/34/EU of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings. It already required entities to report on the financial activities of the businesses they ran – the level of detail depended on the position, importance and structural complexity of the entities. The reports would be subject to in-depth scrutiny by the EU Commission, and the purpose of their creation was dictated by the maintenance of corporate governance and by providing insight into the transactions carried out by the companies and, consequently, with a check on the integrity of their operations.

In April 2016 the European Commission proposed a solution for the adoption of corporate tax transparency rules, which laid the foundations for the proposal adopted on 1 June 2021.

Significantly, not all countries approved the solutions of the 2013 and 2016 Directives – in 2019, 10 Member States filed a motion alleging the inadequacy of the regulation of income tax disclosure. They invoked the requirement that this regulation be approved by the ECOFIN Council, taking into account the applicable procedural rules. The proposal described in this text appears to be the answer to this ambiguity and was intended to finally resolve the problems that had arisen in the area of reporting.

Adopted solutions – an unnecessary burden or a practical means of combating abuse?

It is debatable whether the solution adopted by the EU authorities is not an unnecessary intrusion into confidential data and an unnecessary hindrance to the activities of top companies. However, a different position is represented by the authorities of Member States, such as Portugal, for example. Portugal’s Minister for the Economy and Digital Transformation, P.S. Vieira, believes that the actions of large companies, such as tax avoidance and aggressive tax policies, have led the country to lose an estimated €50 billion in revenue annually. He stressed that such actions are unethical and harm the interests of honest earning citizens. His views are shared by the main negotiators of the proposal (E. Regner, I.G. del Blanco), who are happy to stress that they have been fighting for its adoption for the last 5 years. It is unquestionable that the desire to eliminate unfair tax practices guided the EU bodies, which explicitly in para. 14 of the preamble to the proposal states that they are taking action in the face of Member States’ failure to deal with the problem. In order to eliminate unfair business practices as effectively as possible, the obligations described were imposed on entities below the ceiling of €750 million in annual revenue, provided that it is proven that they were created in order to allow companies above the ceiling to avoid filing a report.


The agreement reached must then be approved by the Committee on Economic and Monetary Affairs and the Committee on Legal Affairs, as well as by the Council together with the EU Parliament. A vote on the matter is now expected – at which point it will become clear how the further fate of tax controls at EU level will take shape.


  2. EU Council and Parliament agree text of country-by-country reporting Directive | STEP
  3. Public country-by-country reporting by big multinationals: EU co-legislators reach political agreement – Consilium (
  4. Public country-by-country reporting by big multinationals: EU co-legislators reach political agreement – Consilium (
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