Sven Giegold, a member of the European Parliament, has issued a release on a recent letter sent together with Lisa Paus, a member of the Bundestag, to the German Federal Ministers of Justice, Finance, and Economics regarding the introduction of public Country-by-Country (CbC) reporting in the EU. The letter essentially blames the German government for blocking the introduction of public CbC reporting in the past and requests that public CbC reporting be revisited during the German Presidency of the Council of the European Union, which began 1 July 2020.
An English translation of the letter is as follows:
German EU Council Presidency – end blockade on tax transparency
Dear Federal Minister of Justice, Ms. Lambrecht,
Dear Federal Minister of Finance, Mr Scholz,
Dear Federal Minister of Economics, Mr Altmaier,
Germany took over the EU Council Presidency on July 1, 2020. The challenges in Europe are great, but there is also reason to be hopeful: with the right decisions, the coming months can make a significant contribution to breathing new life into the idea of a just and sustainable Europe.
A number of important projects are on your agenda. However, the European initiative for more public tax transparency by international corporations, the so-called country-by-country reporting, has not yet appeared on the agenda. Negotiations on this are well advanced in the Council, as you know. A compromise proposal prepared under the Finnish Presidency was supported by a large number of Member States and was only narrowly rejected at the Competitiveness Council meeting on 28/29 November 2019. There is reason to believe that the majority situation has changed and that there is now a majority for this proposal. As you also know, there has long been widespread support in the European Parliament by all pro-European parties for this initiative – including your social democratic and conservative sister parties.
In line with its self-image as an “honest broker”, the German Council Presidency should push ahead with this ongoing legislative proposal and bring it to a vote again. Blocking a vote would not be compatible with this image.
We are convinced that a minimum level of public transparency about where international groups are economically active, make their profits and pay tax is more important than ever. More public tax transparency is both the basis for further reforms to curb aggressive tax avoidance and the prerequisite for an effective and fair implementation of international taxation principles, including the planned minimum taxation.
Practical experience with expanded disclosure requirements has dispelled many of the initial concerns about the disclosure of this information. This is borne out by examples from individual sectors such as the banking sector or raw materials and forestry, where such transparency requirements have been standard for years without negative consequences for competitiveness. An increasing number of academic studies are demonstrating the positive effects of public control: in relation to the decline of aggressive tax avoidance, profit shifting and tax dumping by states. Legal preparatory work and practice show that public transparency and the right of companies to maintain business secrets can be meaningfully reconciled. We therefore urge you, as the responsible ministers, to work in the federal government to ensure that Germany puts the disclosure of income tax information (the so-called Country-by-Country Reporting on Taxes – CBCR) on the agenda of the upcoming Competitiveness Council in September and brings it to a vote.
Germany can no longer block this European progress. During the German EU Council Presidency there is a unique opportunity to make tangible progress in the fight against aggressive tax avoidance and for a just Europe. Not taking advantage of this opportunity would be shameful. Give Europe reason to hope and breathe new life into the idea of a just and sustainable Europe.
We wish you every success and a good justice compass in the upcoming negotiations.
Lisa Paus, MdB & Sven Giegold, MEP