The European finance ministers are expected to reach a unanimous political agreement on Tuesday 5 November on the legislative package on value added tax (VAT) in the digital age (ViDA), which aims to combat VAT fraud, support businesses and promote digitalisation (see EUROPE 13515/18).
Presented in December 2022, the ViDA package comprises three proposals: - single registration; - the exchange of information based of electronic invoicing; - digital platforms.
The Member States reached agreement on the first two points in May, but Estonia vetoed the latter (see EUROPE 13409/2). The Estonian minister, Mart Võrklaev, rejected the deemed service provider scheme because he feared distortions of competition and did not want small and medium-sized enterprises (SMEs) that provide their services via a platform to be affected (see EUROPE 13437/1).
This veto could be lifted on Tuesday at the Ecofin Council thanks to the efforts of the Hungarian Presidency of the EU Council. The latest Hungarian compromise proposal, which was approved by the Member States’ ambassadors to the European Union (Coreper) on Wednesday 30 October, introduces a transition period for the implementation of the deemed service provider system. The scheme will be voluntary from 1 July 2028, and compulsory from 1 January 2030.
These provisions constitute “the landing zone”, confirmed a European diplomat on Thursday 31 October.
The compromise also includes an opt-out system for SMEs: the tax will apply by default, but a Member State may decide not to apply the rules to SMEs.
Climate finance. In the run-up to COP29, which starts on 11 November in Baku, the EU Council will unveil the figures for the contribution of the European Union and its Member States to the fight against global warming and to efforts to adapt to the effects of climate disruption.
These figures will supplement the conclusions recently adopted on the subject (see EUROPE 13504/14, 13503/12).
Ukraine. The Ecofin Council will review Ukraine’s macroeconomic and budgetary situation. It will focus on the implementation of the ‘Ukraine Facility’, the EU’s €50 billion macroeconomic assistance budgetary instrument for the period 2024-2027 (see EUROPE 13444/18). After several early payments from the EU, Kyiv received a €4.2 billion tranche of aid in July (see EUROPE 13460/25).
The ministers will also be informed of the decisions taken concerning the G7 countries’ granting of bilateral loans to Ukraine totalling $50 billion for 2025. These advantageous loans will be pledged against future revenues generated by Bank of Russia assets frozen in the EU. The EU’s contribution, which could be as high as €35 billion, will be reduced to €18.12 billion (see EUROPE 13513/7).
Fiscal policy. The ministers will also have an exchange of views on the annual report of the European Fiscal Board, which predicts a difficult start to the revised Stability and Growth Pact from January 2025 (see EUROPE 13495/19).
As of Wednesday 30 October, 19 Member States had submitted their macro-budgetary plans, covering periods ranging from four to seven years.
See the plans: https://aeur.eu/f/djs
In the second half of November, the European Commission will provide an assessment of these multiannual plans as well as the euro area countries’ draft budget plans for 2025.
RRF. The Ecofin Council will take stock of the implementation of the Recovery and Resilience Facility (RRF), the fiscal instrument of the Next Generation EU European Recovery Plan. According to European Commission Executive Vice-President Valdis Dombrovskis, the RRF is on track, with almost half of the overall envelope, i.e. nearly €300 billion, due to be paid out to Member States before the end of 2024 in exchange for investment and reforms (see EUROPE 13515/17).
On Tuesday, new revisions to the post-Covid-19 recovery plans of the Czech Republic and the Netherlands (see EUROPE 13269/20) will be adopted without debate, the two countries having justified the change on the grounds of objective circumstances.
See the changes to the Czech recovery plan: https://aeur.eu/f/e2v ; and the Dutch recovery plan: https://aeur.eu/f/e2u
Statistics. The EU Council will adopt conclusions assessing the progress made in the provision of statistics and will provide guidelines for future work. Without debate, it will adopt a regulation aimed at improving the production and dissemination of European statistics (see EUROPE 13104/11). (Original version in French by Anne Damiani and Mathieu Bion)