Excise duties, digital taxation, European blacklist and VAT. Tax issues will dominate the agenda of the European Finance Ministers, who are meeting on Friday 17 May. Before the Ecofin Council meeting, they will hold an economic and financial dialogue between the EU and the countries of the Western Balkans and Turkey and adopt joint conclusions.
Excise duties. Ministers will seek political agreement ('general approach') on three legislative proposals: - the Directive on the harmonisation of the structures of excise duties on alcohol; - the Regulation on administrative cooperation on the content of electronic register; and - the Directive on general arrangements for excise duty.
Several questions remain open (see other news) and the subject has been added to the agenda of the ministers' in camera breakfast in order to settle the last questions and to be able to reach unanimous agreement during the public deliberation.
Digital taxation. The Council of the EU will then discuss the preparation of negotiations within the OECD on digital taxation and will try, as far as possible, to coordinate positions.
The discussions will take place on the basis of a Commission working document (see EUROPE 12250/13), and a note from the Romanian Presidency of the Council of the EU. As the subject is no longer a legislative issue since the Ecofin Council officially rejected a European solution last March (see EUROPE 12221/6), the discussion will therefore take place behind closed doors.
The task does not look so easy. "Some Member States highlighted that direct taxation was within Member States’ sovereign competence and cautioned that Member States should therefore be entitled to safeguard their interests and express their positions in an international context", says the Romanian Presidency's note.
"Earlier this month, I wrote to EU finance ministers to urge that we begin the work towards a common position (…) We all know that agree an EU common position would be a challenge, but it is certainly worth the effort", European Taxation Commissioner Pierre Moscovici told a handful of journalists on Thursday 16 May.
The Commissioner hopes for a "position as common as possible" by the time of the ‘June G20’ Finance meeting in Fukuoka, where the OECD will report on progress made, at least on the allocation of tax rights and effective minimum corporate taxation.
A diplomatic source was very cautious about the outcome of the discussion on Wednesday, considering that this was the first time the subject would be discussed at ministerial level from this angle. On Thursday, another European source was sceptical about the willingness of Member States to discuss a possible European position.
European blacklist. Ministers are also expected to take note of the removal of three new territories from the European blacklist of non-cooperative jurisdictions for tax purposes: the Dutch island of Aruba, the British archipelago of Bermuda and Barbados. These three territories were added to the blacklist in March because of their regulatory loopholes favouring tax evasion (see EUROPE 12212/5).
Bermuda and Barbados will therefore join the ‘grey' list of countries that present tax risks but have committed to take corrective action. However, contrary to what we have written (see EUROPE 12255/27), Aruba will be completely removed from European supervision, as the Dutch island adopted a new law on 4 April 2019 that removes the harmful features of its tax transparency regime.
VAT. VAT carousel fraud - highlighted by several European media last week (see EUROPE 12250/14) - has been added to the ministerial breakfast agenda, at Mr Moscovici's request. On Friday, he intends to ask ministers once again to speed up their work to reach an agreement on the definitive VAT system for the taxation of trade between Member States, proposed in 2017 (see EUROPE 11876/15).
Indeed, the dossier has not made much progress in the Council of the EU. "The attitude of the Council for me is more than disappointing. It is just unacceptable", he said.
EMU. Ministers will also adopt conclusions on the results of the in-depth reviews and the implementation of the country-specific recommendations 2018, presented by the Commission in February as part of the budget process for the 'European Semester' for 2019 (see EUROPE 12203/1).
EIB. Over breakfast, ministers will also discuss the possibility of the European Investment Bank (EIB) developing country strategies.
The Romanian Presidency of the Council of the EU would indeed like to launch the debate on a possible change of approach, explained this European source, which would aim to take into account a whole series of factors for the allocation of EIB financing, such as the size of the Member State or the need to finance projects.
Climate. Finland and the Commission will also inform Ministers of the results of the first meeting of the "Coalition of Finance Ministers for Climate Actions", held in April in Washington (see EUROPE 12236/17). Twenty-six countries now participate and have endorsed the six basic principles, known as the "Helsinki Principles". The Finnish Minister, co-chairman with the Chilean Minister, should ask his European counterparts to join the coalition (see EUROPE 12249/7).
Over lunch, ministers will also return to the issue of the impact of labour mobility in the EU on Member States' public finances - a subject dear to the Romanian Presidency of the EU Council, already discussed at the informal meeting in Bucharest in April (see EUROPE 12231/19). They will also discuss the way forward on the architecture of Economic and Monetary Union. (Original version in French by Marion Fontana with Lucas Tripoteau)