On Friday 3 July, German Finance Minister Olaf Scholz said that OECD negotiations on international tax reform were difficult, but “necessary”, upon the occasion of presenting Germany’s economic and financial priorities, which has held the Presidency of the Council of the European Union since the beginning of July.
With the US presidential elections in the autumn, an agreement on taxation of the digital sector, including the US, seems increasingly compromised, even though negotiations on minimum effective corporate taxation have advanced (see EUROPE 12518/21).
The German authorities, who do not want to face another open conflict with the Americans, still want to give the OECD negotiations a chance. Earlier in the week, in an interview with the Financial Times, Irish Finance Minister and Eurogroup presidential candidate Paschal Donohoe warned Europeans against going it alone when it comes to taxing digital giants.
As part of its six-month programme, the German Presidency of the EU Council states that it intends to implement the results achieved at OECD level in the EU “after the conclusion of negotiations”.
It also advocated the introduction of a financial transaction tax at a European level, calling for a revision of the Mutual Assistance Directive to effectively combat tax fraud.
Despite the Wirecard scandal (see EUROPE 12515/13), the German Presidency’s programme remains silent regarding any tightening of the rules on the supervision of these companies that provide payment services. However, the German government wants to learn from this case. According to them, reforms could be envisaged at a European level, in particular intended to better control the entities of a group, not just at head office level.
Next Generation EU. Germany is prepared to show solidarity for the European recovery plan entitled Next Generation EU (EUROPE 12494/2). It is of the opinion that the safety nets or ‘backstops’ already in place for Member States (such as the European Stability Mechanism credit line), for workers affected by short-time working (the SURE instrument) and for companies (EIB Pan-European Guarantee Fund) should be used since they are already available.
According to Berlin, Italy should not fear the conditions attached to the ESM assistance as they have nothing to do with the imposition of reforms by a ‘troika’ of institutional creditors, as was the case in Greece.
Finally, in terms of European fiscal rules that were frozen in 2020 to allow Member States to deal with the Covid-19 pandemic (see EUROPE 12518/18), the German authorities have welcomed the flexibility of the European framework for economic governance and the fact it will remain in place for as long as the crisis remains.
However, “as soon as economic conditions allow, Member States’ budgetary policy should once again aim to take up a prudent medium-term budgetary position, as this is crucial for the stability, resilience and growth prospects of the Economic and Monetary Union”, they emphasised in their presidential programme. (Original version in French by Mathieu Bion)