Ministers agree to new EU rule to curb corporate tax dodging

Multinational companies operating in Europe will be required to report profits, taxes and activities on a country-by-country basis.

Euro notes.

Multinational corporations operating in Europe will be required to report their earnings and taxes on a country-by-country basis after the continent's finance ministers agreed to new tax transparency measures this week.

Finance ministers from the European Union’s 28 member states met in Brussels on Tuesday, where they approved a new directive on the exchange of corporate tax-related information. The new rules are aimed at curbing profit shifting and corporate tax avoidance by large multinational companies.

The initiative is driven by a string of recent corporate tax scandals in Europe, including ICIJ’s Luxembourg Leaks investigation which revealed how hundreds of the world’s biggest companies were using secret agreements with Luxembourg to cut their tax bills by billions. The European Commission estimates that Europe’s governments lose 70 billion euros (about $78 million) to corporate tax avoidance each year. 

The new rules are expected to be adopted by June, and will be applied to foreign companies with European subsidiaries from 2017. Under the rules, corporations will be required to report revenues, profits, taxes and the number of employees in all European countries where they operate. 

Transparency campaigners called on the EU to go a step further, and make this information available to the public. 

It comes at a time of increasing tensions between Europe, the United States and multinational companies looking to reduce their tax bills.

Following a January ruling by the European Commission forcing Belgium to reclaim about $765 million from 35 multinational companies, some corporations were reportedly considering shifting their operations out of the country. 

In recent months the U.S. has criticized Europe’s tax investigations as unfairly targeting American companies and indicated that it is considering retaliatory measures against European companies. 

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