Please find below updates from the European Association of Corporate Treasurers re LIBOR and Taxation.

LIBOR CESSATION - FCA ISSUES FORMAL ANNOUNCEMENT

The UK’s Financial Conduct Authority (FCA) has this morning issued the formal announcement for the definitive cessation of LIBOR, effective end of 2021 for most currencies and tenors. The FCA will also be consulting on the possibility of asking the administrator of LIBOR (IBA benchmarks) to continue publishing a synthetic LIBOR rate for sterling (1 month, 3 month, and six month) for a period of one year after 31 December 2021 and for USD for a period of 1 year after 30 June 2023.

The FCA announcement can be found here.

The statement clarifies that all LIBOR in all currencies and tenors except for the 1 month, 3 month, 6 month, and 12 month USD LIBOR settings will cease effective 31 December 2021. For the mentioned USD LIBOR settings the end date is 30 June 2023.

In parallel to the FCA’s announcement, ISDA has issued a statement – here – indicating that the fallback spreads under the ISDA protocol will be fixed for all LIBOR settings on the basis of the Bloomberg spread adjustment published for today.

This announcement will also constitute the cessation trigger on the EU side for the European Commission to begin the process of designating the statutory fallback rates for LIBOR under the new mechanism that was signed into law earlier in February with the review of the EU Benchmarks Regulation. The European Commission will therefore likely issue a public consultation in the coming months to determine the specific statutory fallback rates for the relevant LIBOR currencies that will operate as the last resort safety net for the immediate period after definitive LIBOR cessation.

Tax - Public Country by Country Reporting - Member States reach agreement

Last night Member States in the Council reached an agreement on a negotiating mandate for interinstitutional discussions with the European Parliament on new rules for corporate public country by country (pCBCR) tax transparency.

You can find the negotiating mandate of the Council here and that of the European Parliament here.

Under these rules, any multinational with a global consolidated revenue of more than EUR 750 million would have to disclose income tax paid (and related information) in each Member State of the EU and in any non-EU jurisdiction on a consolidated basis. The legal text (once finalised) includes the definitive list of all information that would be required to be disclosed as well as exceptional provisions under which disclosure can be deferred for a maximum of 6 years (e.g. in the event that disclosure could jeopardise commercially sensitive information).

In terms of next steps, the coming weeks will see interinstitutional negotiations with the European Parliament begin. With the Parliament likely to push for even stricter requirements than Member States were able to compromise on after 5 years of negotiations, it will remain to be seen how quickly a final agreement can be struck on these rules.

Tarek Tranberg
Head of Public Affairs & Policy, European Association of Corporate Treasurers – EACT

M +32 485 1884 03

E tarek.tranberg@eact.eu I L: LinkedIn

EU Transparency Register No: 9160958318-89