The Commission requests Cyprus to apply the 15% tax to multinationals

The Commission also initiated infringement proceedings against Cyprus

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Reasoned opinion, the last stage before referral to the Court of Justice of the EU, regarding the non-implementation by Cyprus and other member states of the agreement to impose a minimum tax of 15% on large multinational companies, is contained in the set of infringement decisions for May which published on Thursday by the European Commission.

The package of infringement decisions also contains a reasoned opinion against Cyprus and other member states for the non-implementation of legislation regarding corporate transparency and the strengthening of public control of multinational companies.

Furthermore, the Commission initiated a new infringement procedure against 18 member states, including Cyprus, in relation to the Data Governance Act, and specifically the definition of competent authorities to monitor its implementation.

Infringement proceedings concern member states' non-compliance with the acquis communautaire and legislation, and can result in the Commission taking a member state to the Court of Justice of the EU and imposing fines, although many decisions are concluded without the need for such measures.

The first stage of the process is the sending of a letter of warning to which the Member State initially has two months to respond. In case any answers are not considered satisfactory, the Commission sends a reasoned opinion. If the Member State does not comply, the Commission can choose to appeal to the CJEU.

Taxation in multinational and large enterprises

The Commission decided to send reasoned opinions to Cyprus (INFR(2024)0020) as well as to Spain, Latvia, Lithuania, Poland and Portugal for not notifying measures to transpose the Directive on a minimum level of taxation for multinational business groups and large-scale domestic groups in the EU (Directive (EU) 2022/2523, known as the Pillar 2 directive under the OECD and G20 global tax reform agreement).

The directive lays the legal foundations for the implementation of the part of the agreement concerning the imposition of a minimum tax rate of 15% on large multinational companies. EU Member States had until 2 December 31 to implement the relevant Pillar 2023 legislation.

Although most Member States have moved forward, Cyprus, Spain, Latvia, Lithuania, Poland and Portugal have not yet communicated their national implementing measures. The Commission has therefore decided to issue a reasoned opinion to the Member States in question, who have two months to respond and take the necessary measures. Otherwise, the Commission may decide to refer the case to the Court of Justice of the European Union.

Reporting for corporate transparency

The Commission also sent reasoned opinions to Cyprus (INFR(2023)0118), as well as to Belgium, Italy, Slovenia, Austria and Finland due to incomplete transposition of the Public Country-by-Country Reporting Directive (Directive (EU ) 2021/2101) which amends the so-called "accounting directive" (directive 2013/34/EU).

The country-by-country public reporting directive is about strengthening corporate transparency and strengthening public scrutiny of multinational enterprises. It contains rules for the disclosure of information on the taxation of income by certain multinational enterprises with revenues of more than €750 million, including third-country multinational enterprises operating in the EU.

As noted in the infringement package, any delays in the implementation of this policy will undermine efforts to strengthen the accountability of these companies in relation to the income tax they pay in each Member State, thereby jeopardizing citizens' confidence in national taxation systems.

The Commission issued reasoned opinions to the six countries which now have two months to respond and take the necessary measures. Otherwise, the Commission may decide to refer cases to the Court of Justice of the European Union.

Data governance

The Commission also opened infringement proceedings against Cyprus (INFR(2024)2056) and 17 other Member States (Belgium, Czech Republic, Germany, Estonia, Greece, France, Italy, Latvia, Luxembourg, Malta, Austria, Poland, Portugal, Romania , Slovenia, Slovakia and Sweden), as they did not designate competent national authorities to control compliance with the Data Governance Act, or did not demonstrate that the authorities they designated have the necessary powers.

The Data Governance Act facilitates the exchange of data between EU sectors and countries for the benefit of citizens and businesses by establishing rules for the neutrality of intermediaries connecting individuals and companies with data users.

Data brokerage activities must be strictly independent of any other services they provide, must be registered and identifiable by the use of an EU-wide audience logo.

The legislation will also facilitate the re-use of some data held by the public sector and stimulate voluntary data sharing.

Based on the principle of "data altruism", citizens will be able to give their consent for the data they generate to be made available for the common good, for example for medical research projects. Organizations that handle such data will want to be included in the public register and bear the relevant EU mark must be non-profit and meet transparency requirements, as well as offer special guarantees for the security of citizens' and companies' data.

From 24 September 2023, competent authorities are responsible for registering data altruism organizations and monitoring the compliance of data brokerage service providers.

The 18 Member States to which the letter of formal notice was sent now have 2 months to respond and address the shortcomings identified by the Commission. If there is no satisfactory response, the Commission may decide to issue a reasoned opinion.

Source: KYPE