Fri. May 27th, 2022

Chair: Bruno Le Maire, Minister for Economic Affairs, Finance and Recovery

European Commission representatives: Executive Vice-President Valdis Dombrovskis, Executive Vice President Margrethe Vestager, Commissioner Paolo Gentiloni, Commissioner Mairead McGuinness, Commissioner Johannes Hahn

Starting time: 9.30

Press conferences:

  • after the Eurogroup meeting (Monday evening, +- 19.30)
  • after the Economic and Financial Affairs Council (Tuesday afternoon, +- 14.00)

Over breakfast, the Council will discuss the economic and financial consequences of Russia’s military aggression against Ukraine, including the state of play as regards sanctions.

The Economic and Financial Affairs Council will then start with a discussion on the coordination of our economic policy in the light of the geopolitical crisis. The exchange of views will draw upon a presentation from the Commission of its communication regarding fiscal policy guidance for 2023 and on the state of play regarding the economic governance review. The Commission will also present its ongoing reflections on the state aid regime as well as on the tools to be used to respond to the situation on the energy markets, following the REPowerEU communication.

The Presidency will inform ministers on the main results of the informal European Council summit in Versailles of 10-11 March.

In public session, ministers will discuss the proposed Council directive on ensuring a global minimum level of taxation for multinational groups in the Union. They will also discuss the proposed regulation establishing a carbon border adjustment mechanism (CBAM). The aim is to reach Council positions. Both items will be streamed live.

The Council is expected to approve conclusions on the budget guidelines for 2023. The Council is also expected to adopt a recommendation on the discharge to be given to the Commission in respect of the implementation of the EU budget for 2020.

The Council is expected to adopt conclusions on export credits as well as conclusions on the implementation of the VAT e-commerce package.

Economic and Financial Affairs Council – meeting page Eurogroup – meeting page

Economic and Financial Affairs Council – video coverage in broadcast quality (MPEG4) and photo gallery

Eurogroup – video coverage in broadcast quality (MPEG4) and photo gallery Press conferences and public events by video streaming


Economic and financial consequences of Russia’s military aggression against Ukraine

Over breakfast, the Council will discuss the economic impact of EU sanctions on Russia and the impact of the war on European economies. Ministers will be given an update by the European Commission on the current economic situation in Russia following the sanctions adopted so far. The Council will discuss the state of play as regards the packages of sanctions.

EU economy and finance ministers are following developments closely. On 25 February, they issued a statement together with the European Commission and the European Central Bank outlining their unity, their commitment to consider all possible sanctions, as well as their will to strengthen the economic independence of Europe.

On 2 March, EU economy and finance ministers held an informal video conference dedicated entirely to the discussion of sanctions. Member states agreed to further investigate actions to avoid any circumvention of the sanctions, especially by the use of crypto assets.

Since then, the Council adopted additional packages of sanctions, including on crypto assets.

Russia’s military aggression against Ukraine: EU agrees new sectoral measures targeting Belarus and Russia (press release, 9 March 2022)

Informal video conference of economy and finance ministers, 2 March 2022

Ukraine: press statement from the EU Ministers for Finance, European Commission and the European Central Bank (press release, 25 February 2022)

EU restrictive measures in response to the crisis in Ukraine (background information)

 

Economic governance review & fiscal guidance

The Commission will present its fiscal guidance for 2023 which should help member states in coordinating their economic policies in response to the Ukrainian crises as well as in preparing their Stability and Convergence Programmes due in April. More broadly the Commission will also present tools to be used to respond to current challenges.The Commission will also provide an update of the state-of-play on the economic governance review following the public consultation and discussions in the relevant committee with member states.

 

European Council 10-11 March

The Presidency will inform ministers on the main results of the informal European Council summit in Versailles of 10-11 March.

Main results

 

Carbon border adjustment mechanism

In a public session, ministers will discuss the proposed regulation establishing a carbon border adjustment mechanism (CBAM). The Presidency’s aim is to reach a general approach on this regulation. To that end, Ministers will be asked to confirm that they can agree to the proposed text, while noting that further work will be needed on certain other issues discussed in other legislative texts before negotiations with the European Parliament can start.

The objective of the Commission’s proposal for a CBAM is to prevent – in full compliance with international trade rules – that the emissions reduction efforts of the EU are offset by increasing emissions outside its borders through relocation of production to non-EU countries (where policies applied to fight climate change are less ambitious than those of the EU) or increased imports of carbon-intensive products.

CBAM would function in parallel with the EU’s Emissions Trading System (EU ETS), to mirror and complement its functioning on imported goods. It will gradually replace the existing EU mechanisms to address the risk of carbon leakage, in particular the free allocation of EU ETS allowances.

EU plan for a green transition (background information)

 

Corporate taxation: Fair and effective taxation for multinational groups

In public session, ministers will discuss the proposed Council directive on ensuring a global minimum level of taxation for multinational groups in the Union. The Presidency will aim to make as much progress as possible on this proposal. The Presidency has been working towards reaching a general approach on this directive. Ministers will hold a policy debate and may be asked to agree a Council position on the text.

The aim of the directive is to transpose the global OECD/G20 Inclusive Framework (IF) on base erosion and profit shifting (BEPS) on a two-pillar reform of the rules on international corporate taxation into EU law. This international agreement, which brings together 137 countries and jurisdictions, constitutes a major milestone towards an effective and fair system of profit taxation. The directive concerns the so-called Pillar Two of the reform, which precedes Pillar One, on which technical work is still ongoing in the OECD BEPS IF.

Once unanimously adopted by the Council, the directive would require member states to transpose the necessary elements of the globally agreed rules on minimum effective taxation of profits of the largest multinational corporations.

At the January 2022 Ecofin meeting, ministers had a policy debate on the proposal.

Background

On 8 October 2021, the OECD/G20 BEPS IF reached an agreement on a statement and a detailed implementation plan (reference below). The October statement is not the final agreement, but rather a political commitment: the parties supporting the statement undertake to continue their negotiations on all remaining details and draft legal texts/model rules/commentaries thereof.

The reform of international corporate tax rules will consist of two pillars. Technical work on Pillar 2 in the OECD/G20 BEPS IF precedes work on Pillar 1.

Pillar 1 covers the new system of attributing taxing rights over the largest multinational enterprises to jurisdictions where profits are earned. The key element of this pillar will be an international convention to be opened for signature in mid-2022.

Pillar 2 contains rules aimed at reducing the opportunities for tax base erosion and profit shifting to ensure that the agreed minimum rate of corporate tax is paid. The core element of Pillar 2 is a set of model rules and their commentary. Jurisdictions are expected to design their domestic rules on the basis of this model.

The BEPS IF has almost completed its technical work on the commentary of the detailed rules of Pillar 2. The detailed rules on Pillar 1 are expected to be finalised a little later this year.

The Commission tabled its proposal for a directive on 22 December 2021, the purpose of which is to ensure a consistent and EU-law compatible implementation of the new rules in the EU

Recording of the discussion at Ecofin Council on 18 January 2022

(5015/22; 15294/21).Fair Taxation: Commission proposes swift transposition of the international agreement on minimum taxation of multinationals (European Commission)

Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy – 8 October 2021 (OECD)

Taxation (background information)

 

EU budget guidelines for 2023

The Council is expected to approve conclusions on the budget guidelines for 2023. Fiscal policy guidance for 2023: Communication from the Commission

The EU’s annual budget (background information)

 

EU budget discharge

The Council is expected to adopt a recommendation on the discharge to be given to the Commission in respect of the implementation of the EU budget for 2020.

Council recommendation on the discharge to be given to the Commission in respect of the implementation of the general budget of the European Union for the financial year 2020

EU budget (background information)

 

Conclusions on export credits

The Council is expected to adopt, as point without discussion, conclusions on export credits. Draft conclusions

 

Conclusions on the implementation of the VAT e-commerce package

The Council is expected to adopt, as point without discussion, conclusions on the implementation of the e-commerce package. The VAT e-commerce package entered into force on 1 July 2021. It provided for a number of changes in the VAT legislation to overcome the barriers to cross-border online sales and to address challenges arising from the VAT regimes for distance sales of goods and business-to-consumer supplies of services, and for the importation of low value consignments.