For their first Economic and Financial Affairs Council (ECOFIN) under the Croatian Presidency of the Council of the EU on Tuesday 21 January, the EU Finance Ministers will discuss digital taxation and the economic and financial aspects of the European Green Deal.
Croatia will also take this opportunity to present its work programme in the economic and financial fields (see EUROPE 12396/13, 12396/14).
Digital taxation. Ministers will take stock of the digital tax reform negotiated at the OECD (see EUROPE 12385/7) and in particular of Member States' positions with a view to the next meeting of the OECD BEPS Inclusive Framework on 29-30 January, where agreement could be reached on the architecture of Pillar I (digital taxation) if the US gives its green light, while only a progress report is currently foreseen for Pillar II (minimum effective taxation).
It was Luxembourg which requested that the item be placed on the agenda, confirmed several sources (see EUROPE 12402/11). According to a diplomatic source nothing "new" is to be expected from the discussion, the Croatian Presidency is "dissatisfied" with the inclusion of the item on the agenda, considering that it is too early to return to it when the last discussion dates back to the Ecofin Council in November (see EUROPE 12385/7).
The meeting of the EU Council's High Level Group on Taxation on Wednesday 15 January has already set the tone. Unsurprisingly, Sweden, Ireland and Denmark argued against coordination of positions at EU level, but have agreed to work together on the compatibility with EU law of solutions discussed at the OECD and on the implications of these solutions for EU law and EU competitiveness. In a note prepared for the meeting, dated 17 January and copied to EUROPE, the Croatian Presidency of the Council of the EU states that "whilst delegations acknowledge that the deadline of 2020 is tight for reaching global consensus, most would like to make good use of the political momentum". According to the Presidency, delegations were open to the idea of defining common elements that EU Member States could, as far as possible, address in the framework of the OECD negotiations. It also notes that there is a readiness to explore the options put forward by the OECD Secretariat, "even if substantive views on the two pillars vary".
While transatlantic tensions over the French GAFA tax were not addressed on Wednesday, it is hard to imagine that they will not be raised at the Ecofin Council, as Paris and Washington have given themselves until the World Economic Forum in Davos to come to an agreement (see EUROPE 12398/6). The French Finance Minister, Bruno Le Maire, is likely to insist on European solidarity.
At a press conference on Friday 17 January, the French Minister and OECD Secretary-General Angel Gurría expressed their hopes for a breakthrough.
"I have been in contact throughout this week to convince our American friends to accept this international solution at the OECD. On Tuesday, I met with the American Secretary of the Treasury, Steven Mnuchin, and yesterday I had a long meeting with President Trump's economic advisor, Larry Kudlow. We're making progress. Things remain difficult, but we are making progress", said Bruno Le Maire.
In doing so, he announced that he would meet with Steven Mnuchin on 22 January in Davos, along with Mr Gurría, to "try to find a compromise". Without going into detail, he said that France had already made a number of proposals to the United States and would be making new ones.
Mr Le Maire and Mr Gurría said they were ready to move forward "in stages", first with "a global agreement on the framework of this taxation", then, in June, an agreement on "the parameters of this taxation" and finally "an implementation that could take place a little later".
European Green Deal. On Tuesday, the European Commission will also present to Ministers the financial and economic aspects of its European Green Deal, unveiled on 11 December (see EUROPE 12388/1).
Ministers will hold a first exchange of views, which should also address the investment plan for a sustainable Europe presented earlier this week (see EUROPE 12403/1), which aims to mobilise at least €1 trillion of sustainable investment by 2030.
On Friday 17 January, our sources differed in their expectations for this discussion. For some, this would be only a very general presentation by the Commission and a relatively brief exchange of views by Ministers.
For others, on the contrary, this first discussion could be both interesting and complex and could bring out many issues, such as the distribution of resources and new financing, which have already given rise to a first lively discussion at the meeting of Member States' Ambassadors to the EU (Coreper) on Wednesday (see EUROPE 12404/12).
EBRD. Over breakfast, ministers will also take stock of the process of selecting a single European candidate to be proposed for the post of president of the European Bank for Reconstruction and Development (EBRD).
France and Italy would be particularly interested in the idea of putting forward candidates, but no official announcement has yet been made.
European Semester. Finally, the EU Council will launch its work on the 2020 exercise of the 'European Semester' budgetary process. The Commission will present to Ministers: - the annual strategy for sustainable growth highlighting the main challenges for 2020; - a report on the alert mechanism and; - a draft EU Council recommendation on the economic policy of the euro area.
Ministers will exchange views on these texts and are expected to approve the recommendation. They will adopt conclusions on the first two reports at the Ecofin Council in February. (Original version in French by Marion Fontana and Mathieu Bion)