At their informal meeting in Tallinn on Friday 15 and 16 September, Europe's financial decision-makers will discuss the deepening and potential reforms of Economic and Monetary Union (EMU) and the taxation of the digital economy.
Over lunch on Friday, discussions on deepening EMU will be based on the reflection document published by the European Commission at the end of May and calling for a new convergence of budgetary and economic policy within the Eurozone. They will also be fed into by the vision expressed by the President of the institution, Jean-Claude Juncker, during his State of the union speech on Wednesday 13 September (see EUROPE 11861).
The Estonian Presidency of the Council of the EU has also provided its thoughts, steering the debate towards the scope of application of the current rules, the competent institutions and bodies to create more convergence in the Eurozone. It also hopes for a debate on reinforcing the conditionality between the disbursement of European aid and the adoption of structural reforms.
The ministers will also be sounded out on the distribution of responsibilities between the European and national levels and on relations between the countries inside and outside the Eurozone.
No decision is anticipated by the end of this informal meeting, but the discussion will pave the way for the work towards specific Commission proposals, promised by Juncker for December.
Hearing what the ministers have to say about creating a post of European economy and finance minister (by merging the positions of Commissioner and President of the Eurogroup) and a European Monetary Fund (Community method as opposed to inter-governmentalism) with the capacity to support countries reforming their economy will be indicative of the forthcoming political battle.
France will unveil its position a few days after the German general elections, its European affairs minister Nathalie Loiseau told EUROPE on Wednesday (see EUROPE 11861).
Taxation of the digital economy. The Estonian Presidency will ask the ministers for their thoughts on taxing the Internet giants. Its preparatory document warns against what it describes as 'quick fixes' (see EUROPE 11856). At a conference in Tallinn on Thursday 7 September, however, the Deputy Secretary General for Taxation at the Estonian Finance Ministry, Dmitri Jegorov, acknowledged that the compromise could be a quick fix in the short term, whilst continuing work on a long-term solution at international level (see EUROPE 11857).
France has some very detailed ideas. It has submitted a seven-page document to the Commission and its peers setting out short, medium and long-term solutions, also mooting a European turnover tax (see EUROPE 11859). According to our information, this would be a turnover consolidated at European level on which the tax would be divided up (apportionment) between member states on the basis of a formula to be determined. This concept is introduced to the draft common consolidated corporate tax base (CCCTB). France has teamed up with Spain, Italy and Germany to call for a proposed tax on the turnover of the Internet giants. This proposal will probably come in 2018, but the Commission is mainly hoping for a clear signal from the ministers in Tallinn.
“We need to see how we can identify turnover in a given territory. It is also possible to consider 'digital presence' to define a tax base. Both are possible. We could also look at the need to move towards digital taxation in order to make faster progress on the CCCTB”, Taxation Commissioner Pierre Moscovici told the French daily newspaper Les Echos on Wednesday (our translation).
FinTech. On the financial plank, the ministers will discuss the opportunities provided by new technologies in the financial services field, the digital agenda being a clear priority of the Estonian Presidency.
Exchanges will in particular look at the steps towards improving the competitiveness of European FinTech companies. The EU's action has still to be defined, with plans for a regulation governing the use of new technologies in order to reinforce the single market and competitiveness.
Customs. The Estonian Presidency also intends to start talks on customs IT systems. There is a paradox here, it explains: “a single European framework is in force, yet the IT systems that implement it are largely decentralised at national level under the responsibility of the member states, with the additional costs this implies”. (Original version in French by Lucas Tripoteau and Élodie Lamer)