On Tuesday 13 March, the European ministers for the economy and finance will be called upon to negotiate an agreement on the reduction of risks in the banking sector and on the transparency of tax intermediaries, and to update - without discussion - the list of non-cooperative countries and territories for taxation purposes (‘blacklist’).
An agreement on reducing bank risks is vital to move on to discussing the sharing of risks. in order to complete a Banking Union in the Eurozone.
Despite the ongoing differences of opinion referred to at recent meetings of the Ecofin Council (see EUROPE 11945), the states appear to be close to a political agreement in principle (‘general approach’). According to a note from the Bulgarian Presidency of the Council of the EU dated Friday 9 March, of which EUROPE has had sight, a compromise on the four legislative texts of the ‘banking risk reduction’ package was presented to the ambassadors of the member states to the EU (Coreper) on 7 March, during a discussion that lasted more than two and a half hours.
This compromise is supported by some member states, while others still have their doubts. For instance, there are three political matters still outstanding: - the prudential standard concerning the market risk (fundamental review of the trading book – FRTB); - the adjustment of minimum capital requirements (MREL) that can be mobilised in the event of bank resolution; - the scope of application of the regulation and directive on capital requirements (CRR/CRD). EUROPE will return to this.
A political agreement by Tuesday on the ‘banking risk reduction’ package is, however, by no means certain. Although there is plenty of optimism on the French side, several diplomatic sources are more reserved, choosing instead to talk of an agreement over the coming weeks, once the German government is operational. However, the possibility that the key elements to reach an agreement are in place cannot be ruled out.
The discussions will precede the Eurozone summit, which will bring together the heads of state or government on 23 March, when orientations will be adopted with a view to a further summit in June.
Progress on tax intermediaries. The Ecofin Council will also be called upon to discuss the latest proposed compromise of the Bulgarian Presidency concerning the transparency of the activities of tax intermediaries.
Readers may recall that this proposal, which was presented at the end of June 2017 (see EUROPE 11812), aims to shed light on the aggressive tax planning schemes designed by these tax intermediaries (advisers, accountants, lawyers).
Although the member states seem to agree on most of the points, there is still not consensus on the definition of what constitutes a planning scheme, as one of the markers on deductible cross-border payments is still being discussed.
Although one European source expressed hopes of an agreement soon, it is not certain that the ministers will be able to agree on all of the text on Tuesday.
Blacklist of tax havens. On Tuesday, the ministers will also update the European blacklist of non-cooperative third countries for taxation purposes. As announced, three countries will be placed onto the ‘blacklist’: the Bahamas, the American Virgin Islands and St Kitts and Nevis (see EUROPE 11977).
For their part, Anguilla, Antigua and Barbuda, Dominica and the British Virgin Islands are expected to be put onto the ‘grey’ list of countries and territories that have made commitments, but are still under supervision. As for Bahrain, the Marshall Islands and St Lucia, they are expected to be taken off the ‘blacklist’ and put on the ‘grey list’.
This means that after the meeting, there will be nine states on the European ‘black’ list: American Samoa, the Bahamas, Guam, the US Virgin Islands, Namibia, Palau, St Kitts and Nevis, Samoa and Trinidad and Tobago. Readers may recall that originally, 17 states and territories were on this list on 5 December of last year (see EUROPE 11913).
European Semester. The Commission will also present recent country-by-country reports and in-depth balance sheets it has carried out on the macro-economic imbalances within the EU, in the framework of the budgetary process of the ‘European Semester 2018’ (see EUROPE 11976). Also to be examined is the implementation of the country-by-country recommendations published by the Commission on 22 May of last year (see EUROPE 11793).
This examination will precede the orientations to be laid down by the European summit on EU socio-economic policy, on 23 March.
Finally, the Commission will present its proposals, awaited for Monday 12 March, on the completion of the Capital Markets Union by 2019, and its proposals on financial technologies (‘FinTech’) and sustainable finance (see EUROPE 11977). (Original version in French by Lucas Tripoteau and Marion Fontana)