EU Finance Ministers were still largely divided on the new own resources to be put in place to reimburse the European Recovery Plan as well as a possible overhaul of the budgetary architecture (see EUROPE 12556/21), at the end of their informal meeting in Berlin on Friday 11 and Saturday 12 September.
“I don't know what we'll decide in the end, but there has to be a decision!”, said German Finance Minister Olaf Scholz, for whom this informal exchange of views was “good preparation” for further discussions once the Commission has presented its concrete proposals.
According to one source, countries such as Luxembourg, the Netherlands, Sweden, Estonia, Bulgaria and the Czech Republic have considered that there is no need to change the current own resources system. But they would, on the other hand, be open to analysing proposals for new own resources.
Invited to provide advice to Ministers, Professors Clemens Fuest and Jean Pisani-Ferry presented their latest study for the Bruegel think-tank, which concludes, after assessing the different options, that the revision of the Emissions Trading Scheme (ETS) would be the most appropriate measure to increase the EU budget’s own resources.
“Compared to the ETS, the other candidates for EU own resources are less convincing. Carbon border adjustments are intended to limit international competitive distortions rather than to generate revenue. Digital taxes and minimum corporate taxes are best left to the process underway in the Organisation for Economic Co-operation and Development. On a financial transactions tax there is no agreement within the EU”, the two researchers said.
According to our information, the conclusions of the study would have provoked strong reactions, notably a strong opposition from Poland. On the other hand, countries such as Slovakia, France, Spain, Sweden, Italy and Denmark would have been in favour of revising the ETS. Spain, Italy and Poland would have unequivocally supported a carbon border adjustment mechanism (see EUROPE 12557/7).
Digital taxation
A potential new own resource, digital taxation was also discussed on Saturday as part of a wider discussion on “fair and efficient taxation in the EU”.
According to our information, France has reportedly taken a firm stance, reiterating once again its irritation at the American blockade on digital taxation at the OECD (see EUROPE 12557/23). But the country would have been somewhat isolated in its position.
French Minister Bruno Le Maire believes an agreement in 2020 to be impossible, even with a new US president. He would also have asked the Commission to draw up a roadmap on how to implement the elements discussed at the OECD at EU level.
For his part, the Executive Vice-President of the European Commission, Valdis Dombrovskis, confirmed that if the OECD negotiations fail, the Commission will present a proposal for a digital tax in the first half of 2021.
At a press conference, Olaf Scholz, for his part, was much more optimistic than his French counterpart about the outcome of the international negotiations.
“I'm optimistic we'll find a solution, slowly, step by step. (...) We must never give up”, he said.
For the rest, the discussion on taxation between Ministers did not go into detail, according to our information, since the Commission only presented an action plan in July containing measures to better combat tax evasion (see EUROPE 12528/2) and not concrete legislative proposals. And the European Action Plan for “Company Taxation for the 21st Century” is not expected until later, in autumn.
According to one source, all Ministers spoke during the round table. The discussions would have covered in particular the proposed VAT reforms and the reform of the Code of Conduct Group on business taxation.
On the proposal (DAC7) to amend EU Council Directive (2011/16/EU) on administrative cooperation in the field of taxation to extend automatic exchange of information to digital platforms such as Uber and Airbnb (see EUROPE 12528/3), Ministers all agree on the need for this reform, but are divided on how to do it.
In the course of the discussion, some ‘small’ countries finally reiterated their attachment to the rule of unanimous voting in the EU Council on tax matters. (Original version in French by Marion Fontana)