The European Commission this week issued reasoned opinions, the final step before referring cases to the European Court of Justice (ECJ), to Cyprus and other member states for failing to implement the agreement on a minimum 15 per cent tax rate on large multinational corporations. This action is part of the commission’s May infringement package, which was publicly released on Thursday.
The infringement package also includes reasoned opinions against Cyprus and other member states for not enacting legislation on corporate transparency and enhancing public oversight of multinational enterprises. Additionally, the commission has initiated new infringement proceedings against 18 member states, including Cyprus, related to the Data Governance Act, specifically the designation of competent authorities to monitor its implementation.
Infringement procedures address member states’ non-compliance with EU law and regulations, potentially leading to the commission taking a member state to the ECJ and imposing fines if issues are not resolved. Many cases, however, are resolved without requiring such measures. The first stage of this process involves sending a warning letter, giving the member state two months to respond. If the responses are deemed unsatisfactory, the commission issues a reasoned opinion. If non-compliance persists, the commission may refer the case to the ECJ.
Corporate Tax on Multinationals and Large Enterprises
The commission has issued reasoned opinions to Cyprus (INFR(2024)0020), Spain, Latvia, Lithuania, Poland, and Portugal for failing to notify measures transposing the directive on a minimum level of taxation for multinational 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 establishes the legal basis for implementing a minimum 15 per cent tax rate on large multinational corporations.
EU member states were required to implement the relevant Pillar 2 legislation by December 31, 2023. While most member states have complied, Cyprus, Spain, Latvia, Lithuania, Poland, and Portugal have yet to notify their national implementation measures. Consequently, the commission has issued reasoned opinions to these countries, giving them two months to respond and take necessary actions. If they fail to comply, the commission may refer the cases to the ECJ.
Country-by-Country Corporate Transparency Reporting
The commission has also issued reasoned opinions to Cyprus (INFR(2023)0118), Belgium, Italy, Slovenia, Austria, and Finland for not fully transposing the directive on public country-by-country reporting (Directive (EU) 2021/2101), which amends the so-called “accounting directive” (Directive 2013/34/EU). The public country-by-country reporting directive aims to enhance corporate transparency and public scrutiny of multinational enterprises.
It mandates the disclosure of income tax information by certain multinational enterprises with revenues exceeding €750 million, including those from third countries operating in the EU. Delays in implementing this policy could undermine efforts to improve accountability regarding income tax payments by these companies in each member state, potentially eroding public trust in national tax systems. The commission has given the six countries two months to respond and take necessary actions. If they fail to comply, the commission may refer the cases to the ECJ.
Data Governance Compliance
The European Commission has also launched infringement proceedings against Cyprus (INFR(2024)2056) and 17 other member states for failing to designate national authorities responsible for monitoring compliance with the Data Governance Act or for not demonstrating that the designated authorities possess the necessary powers. The other countries involved are Belgium, Czechia, Germany, Estonia, Greece, France, Italy, Latvia, Luxembourg, Malta, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, and Sweden.
The Data Governance Act aims to facilitate data sharing across sectors and EU countries to benefit both citizens and businesses. It establishes rules to ensure the neutrality of intermediaries that connect data holders with data users. Under this legislation, data intermediation activities must be strictly independent of other services provided. They must also be registered and identifiable through a common EU logo.
The act also promotes the reuse of certain public sector data and encourages voluntary data sharing. According to the “data altruism” principle, individuals can consent to their data being used for the common good, such as in medical research projects. Organisations handling such data must be non-profit, meet transparency requirements, and offer special guarantees for data security. They also need to be registered and marked with an EU label.
Since September 24, 2023, designated authorities have been responsible for registering data altruism organisations and monitoring the compliance of data intermediation service providers. The 18 member states receiving the warning letter have two months to respond and address the deficiencies identified by the commission. If the responses are unsatisfactory, the commission may issue a reasoned opinion.
