EU Economic and Financial Affairs Council (Ecofin) 15 February 2011

The video of the Eurogroup press conference Monday, 14 February 2011, has now been posted on the Council website, under the heading European Stability Mechanism. You can also find the video recording of the press conference following the official Economic and Financial Affairs Council (Ecofin) 15 February 2011.

Here is an overview of the Ecofin documents published, even if they reflect only some of the macroeconomic issues being discussed.


Ecofin conclusions

The Ecofin conclusions seem to be available in English only, at this stage:

3067th Council meeting Economic and Financial Affairs; Brussels, 14 February 2011 (document 6514/11; 18 pages)

The date is still wrong, because the meeting took place 15 February 2011.

The general and thematic conclusions form a hefty reading package. The issues include economic governance, steps on savings taxation and anti-fraud agreements, guidelines for the 2012 EU budget and preparation of the March European Council.


European Semester

Separate conclusions about macroeconomic and fiscal guidance were adopted, but only English and French language versions are accessible at this time (document 5991/11):

Council conclusions on European Semester: macroeconomic and fiscal guidance; 3067th ECONOMIC and FINANCIAL AFFAIRS Council meeting; Brussels, 15 February 2011 (5 pages)

Conclusions du Conseil sur Semestre européen: Orientations macroéconomiques et budgétaires;
3067ème session du Conseil AFFAIRES ECONOMIQUES et FINANCIERES; Bruxelles, 15 février 2011


Combating tax fraud

There are English, French and Hungarian versions of the conclusions concerning efforts against tax fraud (document 6554/11). Here is the English text:

Combating tax fraud: Adoption of directive on strengthened mutual assistance and the exchange of information (document 6554/11; 2 pages)


EU budget 2012

The member states agreed on guidelines for the negotiations regarding the budget of the European Union for 2012 (document 5895/11). There seem to be 22 language versions available, described as drafts. Here are the budget guidelines in English:

Draft Council conclusions on the budget guidelines for 2012 (9 pages)

***

It is intellectually stimulating to have the common euro currency, but basically 17 (or 27) different national economic policies.



Ralf Grahn



P.S. Yesterday foreign minister Carl Bildt presented the annual foreign policy statement of the Swedish government in the parliamentary debate: Utrikesdeklarationen 2011 in Swedish and the Government Foreign Policy Statement 2011 in English.

P.S. 2: Political and macroeconomic guidelines emanating (or not) from the European Council at the top are indispensable to know, but details of internal market reform (Single Market Act) and the Europe 2020 strategy (EU2020 flagship initiatives) are going to be among the recurring themes as well. On my Euroblogs I want to discuss legal and political issues relevant to European enterprises, jobs, employers and employees, consumers and citizens, especially in cross-border situations.

Hopefully my blogs succeed in educating and guiding readers towards relevant sources. For me the blogs offer disciplined study as basic training and continuous updating for my teaching and legal counseling activities.

My blogs are: upstream Grahnlaw (in English), Grahnblawg (in Swedish) and Eurooppaoikeus (in Finnish), as well as usually downstream the trilingual Grahnlaw Suomi Finland (later, with more sediment).

If you are interested in the European economy, business, politics or law, we can get acquainted through Twitter @RalfGrahn or Facebook.

EU tax policy: ECOFIN 19 January 2010

I start by mentioning two interesting documents for those who want to see the big picture of European Union activities in the area of taxation.



Developments 2004-2009



A suitable starting point is the Commission booklet Achievements in the areas of taxation and customs 2004-2009, published 8 February 2010 (75 pages including annexed speeches, from page 20).



Objectives



From recent developments it is natural to advance to the work programme of the Spanish presidency of the Council of the European Union. The part concerning the ECOFIN Council has a section on the aims regarding tax matters: Taxation: The fight against fraud (pages 5 to 7).



ECOFIN





We should then be ready for the Council (Economic and Financial Affairs; ECOFIN) meeting 19 January 2010, which led to the following conclusions on tax issues (document 5400/10; page 7 to 8):

SAVINGS TAXATION AND OTHER TAX GOVERNANCE MEASURES

The Council examined a package of measures aimed at improving tax governance and clamping down on tax evasion in Europe.

It reached agreement on a general approach, pending the opinion of the European Parliament, on one of the measures, namely a draft directive aimed at strengthening mutual assistance between member states in the recovery of taxes.

The directive will be adopted at a forthcoming Council meeting, once the Parliament's opinion is available.

The other measures in the package comprise:

– a draft directive aimed at enlarging the scope of directive 2003/48/EC on the taxation of savings interest;

– a draft directive aimed at strengthening cooperation between the member states in the field of direct taxation;

– a draft agreement with Liechtenstein on measures to combat tax fraud;

– a draft decision authorising the Commission to negotiate anti-fraud agreements with Andorra, Monaco and San Marino, as well as a new anti-fraud agreement with Switzerland.



Mutual assistance in the recovery of taxes

The draft directive is aimed at better meeting the member states' needs with regard to the recovery of taxes, providing an overhaul of directive 76/308/EEC (codified by directive 2008/55/EC), on the basis of which the member states have engaged in mutual assistance since 1976 aimed at clamping down on tax evasion.

National provisions on tax recovery are limited in scope to national territories, and fraudsters have taken advantage of this to organise insolvencies in member states where they have debts. Member states therefore increasingly request the assistance of other member states to recover taxes, but existing provisions have only allowed a small proportion of debts to be recovered.

The draft directive is intended to provide for an improved assistance system, with rules that are easier to apply, including as regards information held by banks and other financial institutions; it is intended to provide for more flexible conditions for requesting assistance, requiring the spontaneous exchange of information.

Ralf Grahn

EU against tax fraud

The work programme of the Spanish presidency of the Council of the European Union has described as unfocused and full of good intentions, but the part concerning taxes, under the ECOFIN Council, is quite concrete: Taxation: The fight against fraud (pages 5 to 7).

It is worth quoting as a background note on EU aims in tax policy, both internally and with regard to third countries:

The meeting of the G-20 held in London in April 2009 and the efforts made by the OECD in order to increase the transparency of tax systems, with particular attention being paid to tax havens, have given a renewed political momentum to the fight against tax fraud within a framework that the European Union has defined as “good governance in tax matters”. In this context, achieving international transparency raises two kinds of challenges for the European Union: internal cooperation in the relations between Member States, and increasing transparency in foreign relations.

The Spanish Presidency will thus pay special attention to the cooperation of Member States in the fight against tax fraud. These efforts will be made in the fields of both direct and indirect taxation.

In the field of direct taxation the priority will be to work on three Directive proposals linked to the fight against tax evasion and to the achievement of appropriate rules governing transparency. The Savings Taxation Directive will expand its scope, both objectively (incorporating a larger number of taxable incomes), and subjectively (incorporating certain entities and legal instruments whose effective beneficiaries are natural persons), thus contributing towards increased efficiency and fairness of taxation on savings. The Directive on Administrative Cooperation will imply the adoption by all Member States of the OECD standards for the exchange of information and, therefore, the end of bank secrecy in the European Union, and it will impose a new general framework on the exchange of information on taxation that will allow the adaptation of the current regulation to the kind of automatic information we need, so that a modern efficient tool will be available in the fight against fraud. Finally, the Directive on Mutual Assistance for Tax Recovery, will improve the tools for recovery of debts that require assistance of other Member States, if either the debtors or their assets are within these states.

If these legislatory proposals are to be effective, it is also necessary for the EU to reach anti-fraud agreements with third-countries (a political agreement with Liechtenstein will be used as a model for negotiations with Andorra, Monaco, San Marino, and Switzerland). During the Spanish Presidency, we will try to achieve the signing of agreements that comply with OECD standards on transparency and information exchange.

Finally, within the field of coordination in direct taxation, the Spanish Presidency will seek to achieve a commitment on anti-abuse clauses. This will be a joint effort by Member States on matters of direct taxation in which problems may appear as a consequence of the fundamental rights contemplated in the Treaty of the EU and of the satisfactory operation of the internal market, and which may also put an end to the infringement procedures opened by the Commission. Likewise, a report will be presented to the Council on follow-up work on the application of the Code of Conduct for Business Taxation corresponding to the period of the Spanish Presidency (Report of the Council). This code of conduct refers to the suppression of tax measures that have or may have a significant harmful influence on business activities within the Union because of the tax competition they create. During the Presidency, the subgroup working on the Code of Conduct will continue its task. This subgroup is in charge of debating anti-abuse issues, such as those related with outbound and inbound dividends.

Likewise, the Spanish Presidency will boost administrative cooperation in the fight against fraud in the field of indirect taxation. In order to do so it will strive to promote the work to make EUROFISC a decentralized network for the exchange of information on VAT fraud among Member States. The EUROFISC network is based on an early warning mechanism and a multilateral risk analysis platform. Moreover, the Presidency will work on the new proposal of a Directive on VAT electronic invoicing rules, an important element of administrative simplification and cost reduction for businesses.

Likewise, the Spanish Presidency will strengthen administrative cooperation in the field of Excises, promoting the implementation of the Excise Movement Control System (EMCS), a new computerised system for monitoring movements of excise goods by electronic means, through the interconnection of customs agencies of various Member States and operators.


Towards a more efficient taxation system

The Spanish Presidency will also ensure that fiscal coordination leads to a more efficient taxation system in various fields. A well designed taxation system can make a decisive contribution to the promotion of energy efficiency, which is indispensable if sustainable long-term growth is to be achieved. The Spanish Presidency will thus give precedence to the proposals of Directives pursuing energy efficiency objectives. It is therefore important to make progress in the modification of the Directive establishing a new framework for the taxation of energy products on the basis of environmental criteria. In this context, during the Spanish Presidency the proposal for the modification of the Directive on the taxation of energy products will be addressed.

As for the VAT, work will be encouraged with respect to the interpretation of new rules of location, together with the taxation of financial services and insurance, and the Special Scheme for Travel Agencies.

Finally, in order for public finances to have a revitalising effect on the economy, it is necessary to take into account the Community budget rules, an essential element of the Union’s daily activities. The entry into force of the Lisbon Treaty requires the modification of some budget rules.

Firstly, the Spanish Presidency will push forward the negotiation of the Financial Regulation Review proposal, which will be presented by the Commission during this semester. This regulation includes the rules on the drafting, approval, execution, and monitoring of the European Union budget, and Spain’s objective will be to take a closer look at simplification, transparency, and rigour in the execution of the budget.

Secondly, the Spanish Presidency will promote the necessary work in order to adapt to the Lisbon Treaty, as soon as possible, the rules applicable to the Union budget.

In short, the next six months will pose significant challenges to the EU in economic and financial issues. The ECOFIN therefore has a considerable task ahead of it in order to successfully exit from the unprecedented economic crisis and at the same time lay the foundations of sustainable and stable growth for the future and of a more social, more competitive, and more environmentally committed Europe.

However, for the EU to move from aims – even widely supported ones – to results in the area of taxation is still a daunting task due to unanimity rules, despite the Commission booklet Achievements in the areas of taxation and customs 2004-2009, published today (8 February 2010; 75 pages including annexed speeches, from page 20).





Ralf Grahn







P.S. The Pirate Party challenges the existing order concerning intellectual property, especially copyright, and attempts to limit the freedoms of Internet users.

In the Swedish political blogosphere the Pirate Party has become the most visible political party, and in the June 2009 European Parliament elections the PP secured two MEPs, although the second one has to wait for the question of the 18 “phantom MEPs” to be resolved before she can officially take up her duties.

Henrik Alexandersson is a prolific blogger about Pirate Party and libertarian causes, from his position as assistant to the Pirate MEP Christian Engström (who blogs in Swedish and English).

Henrik Alexandersson.se (in Swedish) is listed on multilingual Bloggingportal.eu, which by now has grown to 532 great Euroblogs.

Bloggingportal.eu is your useful one-stop-shop for fact, opinion and gossip on EU affairs, i.a. politics, more than thirty policy areas, communication, economics, finance, business, civil society and law.

At the same time Euroblogs are an agreeable way to brush up one’s skills in foreign languages.

If you are interested in the EU or the euroblogosphere, you can also subscribe to the RSS feed for new blog posts appearing on Bloggingportal.eu.

By the way, I also discuss European issuesin Finnish on Eurooppaoikeus and in Swedish on Grahnblawg. At this point in time, my main themes are the European knowledge society, including data protection and intellectual property, the internal market, and the relations between the EU and Switzerland, where banking secrecy and taxation are among the topical issues.

Hot tax row between Germany and Switzerland

Here are only a few samples of what has become front page news in Germany, generating hundreds of newspaper articles. Deutsche Welle reports that a number of offers have been made to German authorities on Swiss banking data, although buying stolen data is also politically controversial in Germany: Luft für Steuersünder wird dünner (6 February 2010). Sueddeutsche.de basically tells the same story, adding a few details: Steuerdaten – jetzt prüft auch Bayern (7 February 2010).



According to Welt Online the meagre public information about stolen bank data was sufficient to start a wave of self-incriminatory reports to German tax authorities. About 50 tax evaders had already given themselves in: Verwirrspiel mit System (7 February 2010).


If the story is big in Germany, in Switzerland the breach of the sacred banking secrecy and the potential loss of banking business for wealthy clients has reached almost existential proportions. On 6 and 7 February NZZ Online was practically dominated by different aspects of the issue:

Wiederstand gegen Handel mit gestohlenen Daten regt sich

Auch bayerische Behörden auf der Spur von Steuersündern

Neue CD mit Bankdaten aufgetaucht

„Wir müssen den Mut haben, solchen Fragen jetzt zu stellen“(interesting interview with Hans-Rudolf Merz, Minister of Finance, weighing Switzerland’s responses to the mounting pressure: OECD double taxation agreements; cost of market access versus defiance of EU norms)

„Bern hat den Kopf verloren“ (Konrad Hummler, President of Swiss Private Bankers‘ Association accuses the government of losing ist head)

Wolfgang Schäuble: „Das Bankgeheimnis ist am Ende“ (German Finance Minister ringing the death knell of banking secrecy)

„ Drakonische Strafen – Gewalttäter sind besser dran als Steuersünder (draconic justice for tax fraudsters in Germany – worse than for violent robbers)

Nun droht ein Banksterben (the less than rosy future of a banking sector dependent on market access and business globally)




Ralf Grahn







P.S. If the EU member states continue to pursue their narrow interests in foreign, security and defence policies, the face marginalisation in global affairs.

Global Europe blog and the accompanying website offer a daily summary of interesting articles and additional materials in English on European foreign affairs.

The Global Europe blog is listed on multilingual Bloggingportal.eu, which has now grown to 532 great Euroblogs.

Bloggingportal.eu is your useful one-stop-shop for fact, opinion and gossip on EU affairs, i.a. politics, more than thirty policy areas, communication, economics, finance, business, civil society and law.

At the same time Euroblogs are an agreeable way to brush up one’s skills in foreign languages.

If you are interested in the EU or the euroblogosphere, you can also subscribe to the RSS feed for new blog posts appearing on Bloggingportal.eu.

By the way, I also discuss in EU law and European Union politics Finnish on Eurooppaoikeus and in Swedish on Grahnblawg. The main themes at this point in time include the European Digital Agenda with data protection and intellectual property, the internal market and the free movement of persons, as well as the important relations between the EU and Switzerland.

Tax matters for Switzerland and the European Union

The basic positions on tax could hardly be more different: virtuous tax competition or criminal tax fraud?




The official Swiss view is that tax competition is healthy. Not only do federalism and [direct] democracy promote sound public finances, but they also enhance trust between citizens and the state, said then President of the Confederation (Bundespräsident) Hans-Rudolf Merz in a lyrical speech 2 November 2009: Die Schweiz im internationalen Steuerwettbewerb.



European Union



The Communication by the European Commission Promoting Good Governance in Tax Matters; Brussels, 28.4.2009 COM(2009) 201 final takes almost the contrary position, calling for urgent action to stem tax fraud and evasion through coordinated action:

The European Union and its Member States face serious challenges in addressing the current economic and financial crisis. The crisis has exacerbated concerns about the sustainability of tax systems in the face of globalisation. The promotion of good governance in the tax area on as broad a geographical basis as possible is now recognised to be the appropriate way of addressing these concerns. It balances the tax sovereignty of individual countries with the legitimate protection of tax revenues.

Accordingly, the EU and its partners have a strong common interest at this time in promoting tax cooperation and common standards on as wide a geographical basis as possible. The time is now right for Member States and third countries to work together and to encourage and support the move that has now started towards a broader acceptance of international standards of tax co-operation

This Communication presents for consideration a series of steps to promote good governance in the tax area, entailing action both within and outside the EU and both at EU and at individual Member State levels. ---

A few days ago, in the European Parliament, the Committee on Economic and Monetary Affairs overwhelmingly voted on a report (A7-0007/2010) on promoting good governance in tax matters, echoing calls for resolute action. (Procedure (2009/2174(INI)); rapporteur: Leonardo Domenici).




The third major political EU institution is the Council. In the pipeline is a draft Council decision (document 16308/09; only partially declassified 6 January 2010) to authorise the Commission to open negotiations between the EU and its member states with the Swiss Confederation to combat direct tax fraud and direct tax evasion and to ensure administrative cooperation through exchange of information on tax matters. (Negotiations are also foreseen with Andorra, Monaco and San Marino.)



Switzerland and Germany


There are also bilateral issues between individual EU member states and Switzerland. The most visible right now is the potential circumvention of the legendary Swiss banking secrecy contemplated by Germany through buying stolen bank data.



In the press release Federal Council takes decision on further course of action concerning Germany (3 February 2010), the Swiss executive stated that it is not willing to provide administrative assistance to Germany based on stolen bank data, but it is willing to continue negotiations on a new double taxation agreement (DTA), in accordance with the OECD Model Tax Convention.




The Swiss decision comes as a reaction to German reports. According to Deutsche Welle the German government is likely to buy stolen bank data on possible tax evaders: Germany willing to pay for secret Swiss bank data (1 February 2010).



As we see, there are contentious issues between the European Union and its member states, on the one hand, and Switzerland, on the other hand.







Ralf Grahn







P.S. The BBC’s Europe editor Gavin Hewitt writes a blog, which presents European politics to readers in Britain and worldwide.

Gavin Hewitt's Europe is listed on multilingual Bloggingportal.eu, which has now grown to 532 great Euroblogs.

Bloggingportal.eu is your useful one-stop-shop for fact, opinion and gossip on EU affairs, i.a. politics, more than thirty policy areas, communication, economics, finance, business, civil society and law.

At the same time Euroblogs are an agreeable way to brush up one’s skills in foreign languages.

If you are interested in the EU or the euroblogosphere, you can also subscribe to the RSS feed for new blog posts appearing on Bloggingportal.eu.

By the way, I also discuss European issues, including the relations between the EU and Switzerland, in Finnish on Eurooppaoikeus and in Swedish on Grahnblawg.