Brussels, 08 January 2018
Interinstitutional files:
2016/0107 (COD)
WK 14969/2017 REV 1
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DRS
COMPET
ECOFIN
FISC
CODEC
WORKING PAPER
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WORKING DOCUMENT
From:
Presidency
To:
Working Party on Company Law (CBCR)
N° prev. doc.:
ST 13685/17 REV1
N° Cion doc.:
ST 7949/16 + ADD 1 + ADD 2
Subject:
Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND THE
COUNCIL amending Directive 2013/34/EU as regards disclosure of incoming tax
information by certain undertaking and branches
- Presidency NOTE on the subject
The only change in this REV version concerns the number of the previous document (ST 13685/17 REV1
instead of ST 13687/17 REV1).
Delegations will find attached a NOTE from the Presidency for further work in the legislative file Public
CBCR
WK 14969/2017 REV 1
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EN
NOTE
Under Estonian Presidency, the Working Party on Company law convened on three occasions
to examine the proposal of public CBCR. The progress made during that period is reflected in
Presidency compromise text (doc.13687/17 REV).
The REV document fixes few cross reference mistakes and also changes a part of Art 48c (3)
as follows:
“The information shall be attributed to each relevant tax jurisdiction on the basis of
the a
legal presence, the existence of a fixed place of business or of a permanent business
activity which, arising from the activities of the group
or non-affiliated standalone
undertaking, can
give rise to income tax liability be subject to income tax in that tax
jurisdiction.
Where the activities of several affiliated undertakings can
give rise to a tax liability be
subject to income tax within a single tax jurisdiction, the information attributed to that
tax jurisdiction shall represent the sum of the information relating to such activities of
each affiliated undertaking and their branches in that tax jurisdiction.”
This change is intended to address situations where a jurisdiction has corporate income tax
rate of zero and therefore no income tax liability can arise.
Due to a number of reservations from delegations, work on the proposal will continue under
the Bulgarian Presidency, to whom we wish every success.
The outgoing Estonian Presidency recognizes that one issue, as outlined below, still deserves
the attention of delegations.
In WK 12193/2017 INIT, we flagged our concern that the current text of Art 48b(3) makes it
very easy for subsidiary undertakings of third countries ultimate parents undertakings to
ignore the Directive, as they are required to take action if they are within its scope, but not to
take steps to clarify whether that is the case. Consequently, we submitted the following
question to delegations:
Should medium-sized and large subsidiary undertakings be first required to ask their third
countries ultimate parents undertakings if they are within the scope of the Directive - and
possibly report the consolidated revenue of the MNE group (or the fact that they were not
given this info) within their financial statements?
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However, similar problems also apply to branches. According to latest compromise text,
Member States shall apply the rules set out in paragraph 4 of Art 48b to branches only where
the criteria described in points (a) and (b) are met.
In the light of Art 48b paragraph (4) and in particular of point (a), delegations are invited
to consider:
- if their national authorities would have sufficient information at their disposal to establish
whether a branch fulfills the criteria described therein?
- should their national authorities not have sufficient information, should they be able to
impose on branches of third country undertakings an obligation to provide additional
information, in order to enable adequate enforcement of the proposed Directive?
A drafting proposal from NL delegation, partially addressing this issue, has been received
after the Working Party on 14.11 and is in the Annex of this WK document.
***
The Estonian Presidency is extremely grateful for polite and constructive approach of all the
delegations, as well as for valuable suggestions we received from you during the last six
months.
We also wish to thank the Council Secretariat and Commission services for their impeccable
professional support and reliability.
We wish you all a relaxing holiday and a successful New Year!
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ANNEX
Text proposals of the Netherlands (changes are in italic)
Article 48b(3)
Member States shall require the medium-sized and large subsidiary undertakings referred to in Article 3(3) and
(4)
that which are governed by their national laws and control ed by an ultimate parent undertaking which
on
its balance sheet date exceeded for each of the last two consecutive financial years a total consolidated
revenue of EUR 750 000 000 as reflected in its consolidated financial statements has a consolidated net
turnover exceeding EUR 750 000 000 and which is not governed by the law of a Member State, to publish
and
make accessible the
a report on income tax information of that ultimate parent undertaking on an annual
basis
as regards the later of the last two consecutive financial years, to the extent that the this information
or report is available to the subsidiary undertaking.
For that purpose the Member States shal require the subsidiary undertaking to request its ultimate parent
undertaking if this undertaking exceeds on its balance sheet for each of the last two consecutive financial
years a total consolidated revenue of EUR 750 000 000 as reflected in its consolidated financial statements
and if so, to provide the subsidiary with al information required to enable it to meets its obligation. When
this information or report is not available, the subsidiary undertaking shal request its ultimate parent
undertaking not governed by the law of a Member State to provide it with al information required to enable
it to meet its obligation.
In case this information or report is not provided, the subsidiary undertakings shal publish and make
accessible a statement as to why the report on income tax information could not be published and made
accessible.
(NB. In paragraph 3a has to be amended accordingly: “as referred to in paragraph 3 subparagraph 2” has to be
replaced by “as referred to in paragraph 3 subparagraph 3”.
Article 48b(4)
Member States shall require branches which are opened in their territories
and stil operated by an
undertaking which is not governed by the law of a Member State to publish
and make accessible on an annual
basis the
a report on income tax information of the ultimate parent undertaking
or the non-affiliated
standalone undertaking referred to in point (a) of
this paragraph 5 of this Article
as regards the later of the
last two consecutive financial years, to the extent that the this information or report is available to the
person(s) designated to carry out the disclosure formalities referred to in Article 48e(2).
For that purpose the Member States shal require the branch to request its ultimate parent undertaking or
the standalone undertaking if this undertaking exceeds on its balance sheet for each of the last two
consecutive financial years a total consolidated revenue of EUR 750 000 000 as reflected in its consolidated
financial statements and if so, to provide the branch with al information required to enable it to meets its
obligation.
When the this information or report is not available, such person(s) shal request the ultimate parent
undertaking not governed by the law of a Member State or the non-affiliated standalone undertaking
referred to in point (a) of this paragraph to provide al information required to meet their obligations.
In case the this information or report is not provided, the branches shal publish and make accessible a
statement as to why the report on income tax information could not be published and made accessible
report shal contain an explanation as to why this is the case.
(…)
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Article 48f
Member States
may require shal ensure that, where the financial statements of an affiliated undertaking
governed by the law of a Member State referred to in Article 48b(1), (3) and (6)(b) are
required to be audited
by one or more statutory auditor(s) or audit firm(s) pursuant to Article 34(1), the statutory auditor(s) or audit
firm(s) also check
state(s) in the next audit report after publication or, if applicable after the expiration of
the time limit for publication
(a) whether
the subsidiary undertaking referred to in Article 48b(3) or the branch referred to in Article
48b(4) has requested its ultimate parent undertaking or standalone undertaking if this undertaking
exceeds on its balance sheet for each of the last two consecutive financial years a total consolidated
revenue of EUR 750 000 000 as reflected in its consolidated financial statements and if so, to provide
the subsidiary or branch with all information required to enable it to meets its obligation,
(b) whether the undertaking is required to draw up a report on income tax information in accordance
with Article 48b,
(c) and if applicable, that the ultimate parent undertaking has refused to provide the information
required.
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Document Outline