International tax reform was on the agenda of the EU finance ministers’ videoconference meeting on Tuesday 1 December. While the election of Joe Biden as US President gives them hope that OECD negotiations can be unblocked, the EU Member States also want to ensure that the European Commission is ready to propose a European solution in the event of failure.
The discussion in the Ecofin Council took place on the basis of specific conclusions approved at the end of November. These confirm Member States’ support for the OECD’s work on international tax reform with a view to reaching a consensual solution at the global level by mid-2021 at the latest (see EUROPE 12607/19).
At the same time, the text recalls that the Commission has already committed itself to presenting proposals for new own resources in the EU budget, including a digital sector resource, by June 2021. The European Council is expected to take stock in March.
At a press conference, Commission Executive Vice-President Valdis Dombrovskis confirmed that if there is no international solution by mid-2021, the Commission will put its own proposal on the table.
On Tuesday in Paris, the French Finance Minister, Bruno Le Maire, said that the European Commission should rework its 2018 text to improve it and to take into account the OECD’s work. “Having a European project is a way to have a lever for negotiations at the OECD”, he said.
The French minister believes that an agreement in 2021 at the OECD is possible, thanks in particular to the change in the American administration. In this regard, he welcomed the decision to appointformer Federal Reserve Chair Janet Yellen as head of the US Treasury.
The same goes for German Finance Minister Olaf Scholz, who said he is “convinced that multilateralism will be more present in the new US administration than in the past”.
According to our sources, during the in camera discussion between ministers, the European Commission also hoped that the change of US administration would give new impetus to international negotiations and insisted on the need to have an agreement on the two pillars of the reform. It also reportedly considered that the forthcoming Italian G20 presidency would give the EU a stronger voice on this issue.
Italy, for its part, has confirmed that it intends to make this issue an essential element of the incoming G20 presidency.
Bruno Le Maire has also confirmed to the press that his country will increase the rate of its national tax on digital giants (see EUROPE 12609/34), which is expected to bring in around EUR 400 million in 2020, despite threats of US customs retaliation.
“ If there are American sanctions against the French decision (...), we would immediately call for a response at the European level”, he warned. (Original version in French by Marion Fontana)