A busy agenda awaits European Finance Ministers at the meeting of the Economic and Financial Affairs Council of the EU (ECOFIN) on Friday, 8 November. They will try to reach a political agreement on several legislative proposals on VAT and excise duties. They will discuss digital taxation and stable cryptocurrencies and are also expected to adopt conclusions on the financing of climate action and EU statistics.
Excise duties. Member States will make a further attempt to agree on the legislative package on excise duties (see EUROPE 12360/2), but its adoption, which requires unanimity in the EU Council, remains suspended due to Romania's position.
So far, the country has adopted a strategy of blocking the adoption of the Regulation on administrative cooperation as regards the content of the electronic register and the Directive on the general arrangements for excise duty, because it has not succeeded in obtaining the exemption it wants on its 'homemade' alcohols under a third, also blocked piece of legislation, namely the Directive on the harmonisation of the structures of excise duties on alcohol (see EUROPE 12211/15).
According to a European source, there are, at this point, three possible scenarios. The most optimistic would be an agreement on all three texts. Another scenario would be for Romania to agree to separate the two consensus texts and for an agreement to be reached at least on them. Finally, a third possibility would be for Romania to persevere in its blocking strategy and continue to hold the three texts hostage.
The position of the new Romanian government should be clarified on Wednesday 6 November at the meeting of Member States' ambassadors to the EU (Coreper).
VAT. Ministers also hope to reach a political agreement ('general approach') on the proposals for a regulation and directive to better combat VAT fraud in the e-commerce sector (see EUROPE 12361/3).
However, an agreement is less likely on the Directive on VAT simplification for SMEs (see EUROPE 11942/2), which will also be discussed.
On Monday, 4 November, a diplomatic source indicated that there were still "reservations" from some Member States.
The main outstanding issue concerns the national and European thresholds for VAT exemption for small businesses, set at €85,000 and €100,000 respectively in the compromise text to be submitted to ministers (see EUROPE 12268/10). The Netherlands and Ireland also claim that the planned system is too complex to be applied to very small companies (see EUROPE 12361/4).
As announced, the EU Council will also adopt, without discussion, its position on the proposal for a Directive exempting supplies to armed forces participating in a European defence effort from VAT and excise duties (see EUROPE 12360/1).
Digital taxation. Ministers will then discuss the preparatory work at EU level on the digital tax reform negotiated at the OECD (see EUROPE 12345/11).
In a note prepared for the meeting and copied to EUROPE, the Finnish Presidency of the Council of the EU states that most Member States support the preparatory discussions at EU level, although some Member States have been more hesitant.
First, it proposes to examine the first findings on the compatibility with EU law of the solutions discussed at OECD level by the end of the year and to work, as a priority, on the impact assessments currently being carried out by the Commission. The Presidency also suggests that certain elements discussed at OECD level be examined in order to identify points of common interest to EU Member States.
A diplomatic source said on Monday that the intention was not to adopt EU Council conclusions, but simply to discuss this proposal in order to have a common approach on the way forward.
Blacklist. Ministers should also note the removal of Belize from the European 'black' list of non-cooperative tax jurisdictions and of the Republic of North Macedonia from the European 'grey' list of non-Member States which present a risk but have committed to take corrective action (see EUROPE 12360/25).
FTT. Also in the area of taxation, the ten Member States participating in the enhanced cooperation to introduce a financial transaction tax (FTT) could meet on Friday morning on the margins of the ECOFIN Council of the EU at the initiative of Austria, to make further progress in their work (see EUROPE 12275/2), according to a European source.
Stable coins. The Finnish Presidency will present to the ministers a draft joint EU Council and Commission statement on stable coins, such as Facebook’s Libra (see EUROPE 12361/5).
While France, Germany and Italy have already announced, in mid-October, that they are jointly preparing a series of measures to ban the Libra (see EUROPE 12353/11), the EU Council is said to now want to adopt a common position on this issue.
At this stage, it should be a simple exchange of views on the text, a diplomatic source said on Monday. The declaration is intended to be adopted at the December ECOFIN Council of the EU. "We do not want to rush on this issue to do a good job", it said.
Climate. The EU Council will also adopt conclusions on climate finance aspects in order to complete the EU's negotiating mandate for COP25. They should also confirm that in 2018, the EU maintained its position as the largest public donor to support developing countries' climate action with €21.7 billion and recall the EU's continued commitment to this issue (see EUROPE 12362/14).
Statistics. It will also adopt conclusions on EU statistics, which review progress and provide guidelines for further work in this area.
ECB. Finally, the ministers are expected to adopt a recommendation on the appointment of Isabel Schnabel as a member of the ECB's Executive Board, succeeding Sabine Lautenschläger (see EUROPE 12355/16).
They will also attend a presentation of the 2019 Annual Report of the European Fiscal Board (see EUROPE 12360/5). In the morning, finance ministers will also be invited to the meeting of education ministers for a joint policy debate on the importance of effective and high-quality education and training to achieve a strong economic base for Europe. (Original version in French by Marion Fontana and Mathieu Bion)