On Friday 10 October in Luxembourg, the European finance ministers will continue their discussions on a future macro-financial loan (‘Reparation Loan’) from the European Union to Ukraine.
Financial support for Ukraine. Following on from the discussions of the heads of state or government of the EU countries in Copenhagen (see EUROPE 13721/2), they will discuss this future loan which, through a complex legal construction, would make it possible to use the Bank of Russia’s immobilised assets in the European Union, but without going so far as to confiscate them (see EUROPE 13720/4).
This loan could amount to €140 billion over a period of at least four years. It would be used to help Ukraine continue its war effort, with knock-on benefits for the European military industry.
“There will definitely be no decision tomorrow”, said a European source on Thursday 9 October, citing “legal, political and technical” problems.
EU countries will have to address the concerns of Belgium, which hosts the Euroclear clearing house where the vast majority of Russian assets are held. Brussels is calling for guarantees from other Member States or the EU to support it in the event that Russia asserts its claim on the frozen assets before Ukraine has repaid the loan (see EUROPE 13722/2).
The Member States will also have to try to convince Hungary or, failing that, overcome its reluctance to continue its financial support for Ukraine and maintain the European sanctions against Russia. The EU’s maintenance of these sanctions – until Moscow pays war reparations to Ukraine – is a key element in the financial and legal package envisaged. The Commission states that the renewal of sanctions can be decided by a qualified majority of Member States.
A political decision at the European Council on 23 and 24 October would enable the legislative procedures to be set in motion with a view to finalising them by the end of the year and starting payments in 2026.
To see the Commission’s note on the ‘Reparation Loan’: https://aeur.eu/f/ios
Taxation. During a public debate, the European Commission will present to ministers its proposal to revise the directives on excise duties and their general arrangements applicable to tobacco and tobacco products. Announced in July (see EUROPE 13683/15), this proposal would generate new tax revenues, which would contribute as own resources to the EU budget (see EUROPE 13682/1).
This proposal follows the request made in December by sixteen EU Member States to modernise tobacco taxation legislation (see EUROPE 13541/13).
In addition to tax revenue, this revision also aims to limit fraud and contains public health objectives. It is proposing to include new products, in particular heated tobacco products, liquid for electronic cigarettes and nicotine sachets (see EUROPE 13711/17).
Ministers are also expected to approve without debate the revised EU ‘black’ list of uncooperative jurisdictions in tax matters and the EU ‘grey’ list of jurisdictions that have made commitments on good tax governance. According to our information, few changes are planned compared with the last update, dating from February (see EUROPE 13582/18).
Finally, the ministers are also expected to approve without debate the amendment of the agreements between the EU and Liechtenstein, San Marino, Monaco, Andorra and Switzerland on the automatic exchange of information relating to financial accounts in order to comply with the changes to the common reporting standard drawn up by the OECD (see EUROPE 13694/27).
They should decide as well to authorise the opening of negotiations with Norway with a view to an administrative cooperation agreement in the field of direct taxation.
MFF. In another public debate, the ministers will review the package of five new own resources proposed in July by the European Commission as part of the 2028-2034 MFF (see EUROPE 13682/1).
According to the Commission, it is essential to add new revenue to the EU budget at a time when repayment of loans under the European Recovery Plan, Next Generation EU, will begin in 2028 and the EU’s political priorities are increasing (defence, competitiveness, etc.). The Member States seem to prefer to review the EU’s priorities, even if it means making cuts (see other news).
It is important to consider the question of own resources as a piece in the wider MFF puzzle, said this European source.
Finance. In the area of financial services, the ministers will have the opportunity to discuss the recent Commission recommendation on a savings and investment account project (see EUROPE 13720/5).
The Danish Presidency of the Council of the EU also intends to continue discussions on the simplification of European legislation currently being drafted, with a view to reducing costs, following on from the discussions at the informal ministerial meeting in Copenhagen (see EUROPE 13714/11).
Stability Pact. On Friday, the ministers will briefly discuss the European economic governance framework.
They will adopt Germany’s multiannual budget programme for the period 2025-2031, which sets out the following path for growth in German net primary expenditure: 4.4% in 2025, 4.5% in 2026, 2.3% in 2027, 1.7% in 2028 and 1.6% in 2029.
The German public deficit is expected to exceed the 3% of GDP threshold in 2025 (-3.3% of GDP), in 2026 (-3.8%) and in 2027 (-3.2%). It should be noted that Berlin has activated the national escape clause in the Stability Pact, which will allow it to increase its annual military spending by up to 1.5% of national GDP for four years.
To see the EU Council draft recommendation on the German budget programme: https://aeur.eu/f/iuc
Finally, the ministers will be invited to draw lessons from the 2025 exercise of the ‘European Semester’ fiscal process, the first based on the reformed Stability Pact in 2024. (Original version in French by Anne Damiani, Mathieu Bion, Florent Servia)