Luxembourg, 03/06/2003 (Agence Europe) - On Tuesday, the Ecofin Council reached an agreement for settling the problem of Italian milk quotas, which has made it possible to bring the issue of adopting the tax package linked by Rome to the question of quotas out of deadlock. According to the terms of the compromise reached after several hours of negotiation, the reimbursement of fines amounting to EUR 1.486 billion to be paid to the Italian State by Italian dairy producers for exceeding quotas may be spread over 14 years as of 1 January 2004, without interest and without any distinction between producers. Italy undertakes, on the other hand, to scrupulously comply with quota requirements and to report on reimbursements. Council President Christos Christodoulakis welcomed the decision after the meeting, stressing that approval of the tax package after 14 years of deliberations is, with the agreement on energy tax, a major success for his Presidency.
Italy originally asked for reimbursement over 30 years without interest. Its margin of negotiation on interest rates was low, after adoption of a decree based on this scheme in the Senate and in the Chamber in Rome, but a majority of Member States were opposed to it. Early in the afternoon, seven Member States called for reimbursement over 15 years with at least symbolic interest rates of 1-2%, and penalties for producers who exceeded their quotas by over 50%. This proposal was already a concession in so far as the United Kingdom mainly urged for reimbursement over 5 years if it were to be without interest. After a final appeal to their capitals, ministers finally agreed on reimbursement over 14 years and declared this State aid compatible with the common market, under Article 88 of the Treaty.
The agreement has allowed the Fifteen to adopt the tax package, comprising the directive on levying withholding on interests and charges paid between subsidiaries of a European-wide company, the code of conduct on corporate taxation, and the directive on savings tax. Before Italy could take the final decision hostage in order to obtain concessions on milk quotas, the Council had already defined an unanimous agreement on these three chapters during its January meeting. At the last minute on Tuesday, Belgium obtained a concession so that current tax relief for "coordination centres" of multinational companies on its territory may be extended till 2005 against the opinion expressed by the Commission. The Fifteen have still to formalise a decision under Article 88 of the Treaty, but "there is political agreement", Christos Christodoulakis assured. The main element of the tax package is the directive on savings tax to take effect in January 2005. It will set in place a system for the exchange of information between tax administrations of twelve member States. Belgium, Luxembourg and Austria obtained a dispensation and will apply withholding on the income from savings on their territory, according to the model given in the agreement concluded with Switzerland. These three States will only enter the information exchange system once Switzerland has agreed to do so.