EU to Cut Tax Reporting for Big Multinationals in Overhaul

The European Commission will propose exempting large multinationals subject to the EU’s 15% corporate minimum tax law from reporting on their cross-border tax arrangements.

The proposal is part of a comprehensive overhaul of the EU’s tax data sharing and reporting rules under the Directive on Administrative Cooperation in taxation, or DAC.

The measure is included “since (a) the 15% minimum taxation is expected to neutralise aggressive tax planning and (b) tax administrations already receive a considerable amount of information on these companies” via other reporting obligations, the commission said in a draft seen by Bloomberg, which could still be subject to change.

The global minimum tax applies to multinationals wherever they operate and is part of the international tax agreement brokered by the Organization for Economic Cooperation and Development.

The EU overhaul forms part of the commission’s broader competitiveness and simplification agenda, which seeks to reduce administrative burdens on companies by at least 25% and by 35% for small and medium-sized enterprises.

The proposal would also eliminate a host of hallmarks—generic indicators that trigger disclosure obligations—stating that they have little value in fighting tax fraud and “generate disproportionate levels of reporting.”

Business groups have long argued that the current rules meant to curb cross-border aggressive tax planning, known as DAC6, exact high compliance costs and burdensome reporting obligations.

Digital platforms would also see reporting obligations eased. The commission will propose raising the reporting threshold for sales of goods from €2,000 ($2,320) to €3,000 per year, and remove reporting obligations made on the number of sales. The change is intended to exclude occasional low-value sellers while preserving reporting for economically significant activity.

The commission proposes to merge reporting obligations under OECD rules: Country-by country reporting and reporting related to the global minimum tax agreement would be turned into a single filing. The notification could be submitted centrally for the entire group using a common template and harmonized deadline, replacing multiple filings across EU countries.

The draft didn’t indicate how much the measures would save in compliance costs, but it said the package would deliver “significant simplification benefits” for businesses and tax administrations. The commission is expected to publish an impact assessment alongside the bill.

The commission said it would develop a new EU-wide verification tool that would allow reporting entities and tax administrations to validate taxpayer IDs electronically before filing information.

The overhaul would also broaden tax authorities’ access to government databases and anti-money-laundering registers and introduce new reporting on beneficial ownership of real estate, “in line with the latest developments at the OECD level,” the draft said.

The bill is expected to be published June 24.

Ireland, which will hold the EU’s rotating six-month presidency from July and as such is responsible for shepherding EU bills through the legislative process, said it aims to conclude the bill by the end of year. EU tax legislation requires unanimity for approval.

The commission declined to comment.