Taxation of the digital sector will be on the agenda of the meeting of the EU Heads of State or Government on Friday 26 March, although there is a possibility that the work of the European Council will be completed by Thursday evening.
According to draft conclusions dated 15 March, the European Council should reaffirm its “strong preference and (its) commitment to a global solution on international digital taxation” and advocate “a consensus solution by mid-2021 within the OECD framework”. Nevertheless, it will confirm that it is “ready to go ahead, if a global solution is not found” (see EUROPE 12682/15).
The draft text also notes that the European Commission has undertaken to present a proposal for a digital levy by June as a new resource for the EU budget.
According to a European diplomat, the text is not expected to undergo any major changes. All Member States agree to “give the OECD a chance”, he explained.
The change in attitude of the new US administration, including the abandonment of the demand for a voluntary scheme (see EUROPE 12667/4), is in effect widely seen as a new dynamic that greatly strengthens the chances of an agreement at the OECD.
According to the same diplomat, however, the following issue could be debated: what should the EU do should OECD negotiations fail this summer?
In mid-March, the ‘Ecofin’ Council had already set the tone for the discussion by calling on the Commission to exercise caution in its work on taxation of the digital sector so as not to jeopardise the OECD negotiations (see EUROPE 12679/4).
European Semester. Furthermore, in the budgetary field, the European Council is invited to deliver its annual message on the ‘European Semester’ budgetary process (https://bit.ly/3vKb9ZN ) in order to guide Member States in the preparation of their national recovery plans – which are due by the end of April at the latest – within the framework of the Next Generation EU European Recovery Plan.
One issue that could possibly emerge is the extension – until the end of 2022 – of the freeze on European fiscal rules (see EUROPE 12679/2), but this will only be definitively decided in May or June in light of updated economic data.
Finally, EU leaders will take stock of the work carried out to strengthen the international role of the euro and the banking union (see EUROPE 12685/5) and will also adopt the fiscal policy recommendation for the euro area (https://bit.ly/3tCWHkI ). (Original version in French by Mathieu Bion and Marion Fontana, with editorial staff)