Finance ministers to discuss fiscal dumping inside the EU at Berlin meeting

Finance Minister and vice Chancellor, Olaf Scholz (SPD), during a press conference on the Federal Budget Supplement in Berlin, Germany, 17 June 2020. [EPA-EFE/MICHELE TANTUSSI / POOL]

EU finance ministers will discuss how to combat harmful tax practices within the EU during their informal meeting in Berlin this weekend, according to the German presidency’s preparatory documents seen by EURACTIV. 

Taxation is on top of the agenda of the German presidency of the Council for this semester. The efforts for setting up a digital tax and a minimum corporate tax at the global level will be part of the tax discussions on Saturday.

But Germany also wants to address the fiscal dumping inside the EU, facilitated by “sweetheart deals” that some governments offer to multinationals to bring their tax bill close to zero.

Economy agenda: Recovery and taxation to dominate the EU's priorities

The implementation of the EU’s recovery fund and taxation will dominate the second half of the year, as both issues will top the German presidency agenda, and new resources are needed to finance the stimulus package to respond to the coronavirus crisis.

In order to combat these practices, the EU finance ministers (Ecofin Council) will discuss a reform of the Code of Conduct Group, which was set up to fight against unfair tax competition inside Europe and elsewhere.

Ministers will explore which elements of the Group’s mandate, unchanged since 1997, should be amended.

“The group’s mandate should, in particular, reflect the developments in international tax law that have happened in the meantime, as well as further developments in international tax law,” said the German presidency preparatory document for the discussion sent to the finance ministries.

“These changes to the mandate are necessary to ensure that the group can continue to make a constructive contribution to fair and effective taxation,” the document said.

According to an Oxfam report, Cyprus, Ireland, Luxembourg, Malta and the Netherlands would be listed as tax havens if the EU criteria for foreign jurisdictions were applied to member states.

In 2015 alone, corporate tax dodging costs France, Spain, Italy and Germany an estimated €35 billion.

Own resources

Another tax-related matter to be discussed by the Ecofin will be the design of new duties and levies to finance the €750 billion EU recovery fund to overcome the crisis caused by the COVID-19.

The German presidency wants to exchange views on Friday on the member states’ priorities and concerns ahead of the Commission’s proposal for a carbon border adjustment mechanism, a digital levy, or a revised Emissions Trading System. 

Parliament wants to top up EU budget with €110 billion

The European Parliament on Monday (7 September) requested a €110 billion increase to the EU’s seven-year budget and legally binding commitments on the introduction of new levies to finance the bloc’s €750 billion stimulus against the COVID-19 crisis, EURACTIV has learnt.

Ministers will be also asked whether other new taxes that support certain EU priorities (like the green agenda) should be created to finance the unprecedented borrowing from the markets to finance the recovery.

“Linking EU policies with revenue for the EU could be a new route in the enforcement of common policies while creating revenue which can be described as a true ‘own resource’ for the EU, which in turn can contribute to overcoming the ‘juste retour’ dilemma,” the German document reads.

Recovery Facility

The ministers will not only debate how to finance the recovery fund but also how to spend the big stimulus, in particular the €672.5 billion of the ‘Recovery and Resilience Facility’.

The ministers will discuss on Friday the economic situation, what policies should be prioritised in the recovery, and how to use the recovery facility to overcome the most severe recession in the EU’s history.

The preparatory document says that member states’ plans to unlock the EU funds should include “ambitious” reforms and investment projects to make their economies and the EU more resilient. They should address country-specific challenges, especially those identified by the Commission in the context of the country recommendations.

The Ecofin foresees deciding by next spring on the national plans submitted to access the recovery funds.

Council brokers historic stimulus pact as budget cuts, rule of law retreat plague deal

Leaders of the 27 EU countries finally compromised on a €1,074 billion long-term budget and recovery fund instrument early on Tuesday (21 July) morning, but it took one of the longest-lasting summits in European Council history and the final deal cut funding for some of the bloc’s key priorities.

[Edited by Zoran Radosavljevic]

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