Eurogroep: Solbes wil maatregelen tegen Frankrijk wegens blijvend hoog begrotingstekort (Artikel 104-8) (en)

Eurogroup Finance Ministers are due to meet in the FIL Conference Center, 5 rue Carlo Hemmer, Luxembourg at 19h00 hrs on Monday 6 October. A press conference is due at the end of the Eurogroup meeting. The European Union's Council of Economics and Finance Ministers will meet at 9.30 hrs the following day. The European Commission will be represented at the Council by Economic Affairs Commissioner Pedro Solbes and Internal Market and Taxation Commissioner Frits Bolkestein.

Eurogroup (GT)

The Eurogroup will start with an exchange of views on the economic developments and macroeconomic policies. Minister Tremonti is expected to inform Ministers about the discussion and outcome of the last G7 meeting in Dubai. Ministers will then discuss public finance developments. Commissioner Solbes is expected to present an overview of the Commission's analysis of budgetary developments in member states with an excessive deficit, i.e. France, Germany and Portugal. He will also comment budgetary developments in Italy and the Netherlands. The Ministers of these countries are expected to present their respective budgets and medium term plans. Commissioner Solbes will also inform Ministers about the Commission's decision to proceed with the next steps of the excessive deficit procedure in the case of France. The Commission is expected to decide - in the sense of Article 104.8 of the Treaty - on Wednesday 8 October whether France has taken effective action as a response to the Council recommendation of 3 June last.

Council of Economics and Finance Ministers

European Initiative for Growth (GT)

The idea for a European Initiative for Growth was endorsed by the European Council in Thessaloniki. Since an initial outline last July (IP/03/960) the Commission has made quick progress on a series of policy and legislative proposals in the fields of Trans European Networks (TENs) and European Research, Development and Innovation. In a Report to the European Council, the Commission is now proposing a detailed road map for action and a series of recommendations to the October European Council (IP/03/1321).

The European Initiative for Growth aims to mobilise investment in key areas of the Lisbon agenda: networks and knowledge. And in particular :

• Trans-European transport and energy networks;

• Broadband communication networks and e-Tens;

• Research and Development and Innovation (RDI).

Unlike previous attempts the European Initiative for Growth presented by the Commission constitutes an integrated package of policies, delivery mechanisms and institutional arrangements to ensure implementation within a tight time period. The timing of the launch of the Initiative is aimed at sending a powerful signal of strong economic governance and of confidence in the potential of the European economy. A signal in support of key structural reforms that must be accelerated in the framework of the Lisbon agenda.

In elaborating its report the Commission has worked in close collaboration with the European Investment Bank (EIB), which has prepared an interim report on the financial aspects of the European Initiative for Growth. The Commission has also taken due account of the important discussions in member states on this issue, notably the French and the German government.

The Ecofin Council is expected to adopt an Interim Report on the European Initiative for Growth for the European Council on 16-17 October.

Strengthening the social dimension of the Lisbon strategy (GT)

The Commission Communication on " Strengthening the social dimension of the Lisbon strategy: streamlining open co-ordination in the field of social protection (COM/2003/261) outlines how the existing co-ordination procedures in the field of social protection should be merged into the new streamlined framework for the Broad Economic Policy Guidelines (BEPGs) and the Employment Guidelines. Both the Economic Policy Committee (EPC) and the Social Protection Committee (SPC) agree with this approach but have requested some more visibility of the individual processes within the new streamlined co-ordination framework.

The Council is expected to welcome the streamlining and synchronisation of the co-ordination procedures. Within that framework a good co-operation of the economic and social side are important, while at the same time ensuring a reasonable balance between the information requirements of the various procedures.

Investment Services Directive (ISD) (JT)

The Council will seek to reach a political agreement on the proposed Investment Services Directive, on the basis of a compromise text prepared by the Italian Presidency. Mr Bolkestein will remind Ministers that the European Council has called for adoption by April 2004 and urge them to be prepared to compromise with each other and with the European Parliament to ensure that deadline is met. The proposed ISD is a crucial part of the Financial Services Action Plan and central to creating an effectively integrated financial market. Without a political agreement now the chances of adoption before the arrival of the new Commission and before the European Parliament elections would be slight. That would mean a delay of at least a year.

The Commission presented its proposal in November 2002 (see IP/02/1706 and MEMO/02/257). It aims to create an effective single passport for intermediaries to provide investment services throughout the EU on the basis of authorisation in their home Member State. It seeks to create a regulatory framework for the emergence of a competitive and integrated trading infrastructure, and which supports issuers in raising capital across the Internal Market. In furtherance of these aims, the proposal establishes a coherent regulatory package to protect investors and to sustain the orderly and efficient functioning of EU financial markets.

The European Parliament adopted its opinion on the Commission's proposal on 25^th September (see IP/03/1291). Discussions in the Council have focussed, as they did in the Parliament, on the exact arrangements covering the "internalisation" by investment firms of client orders to buy and sell equities without going through a regulated market and in particular on requirements for "pre-trade transparency", by which investment firms have to reveal to details of client orders and, if the firms are trading on their own account, some indication of the terms on which they themselves stand ready to buy or sell a specified share.

Another key issue is the application of the "suitability test" when assessing clients needs and interests. According to the amendments proposed by the Parliament and acceptable to the Commission, a suitability test would be required only in cases where the client is receiving investment advice. This means that "execution only" services where the investment firm is merely carrying out clients' instructions - could be provided without any need for a full suitability test.

Value Added Tax (VAT) reduced rates (JT)

The Council is due to have an orientation debate on the Commission proposal of July 2003 for simplifying the rules on reduced rates of VAT (see IP/03/1024 and MEMO/03/149). The proposal aims to afford all Member States an equal opportunity to apply reduced rates in certain fields currently restricted to just some Member States (e.g. restaurants, housing, domestic care services and the supply of gas and electricity) and to rationalise the numerous derogations currently applying in some Member States. The objective is to improve the functioning of the internal market and avoid potential distortions of competition, which have given rise to numerous complaints from traders.

Commissioner Bolkestein will welcome the Presidency document that is intended to establish common ground amongst the Member States and will acknowledge the political sensitivities evoked by this proposal. However, he will also stress that the spirit of the Commission's proposal should not be lost during the negotiating process.

Any new VAT Directive must fulfil the objectives of the EC Treaty. Existing harmonisation in the VAT area must be enhanced by any new Directive, and the Commission could only support a compromise that represented a step-forward for the Internal Market. Furthermore, the EU must ensure more equitable treatment of all Member States, both old and new. Therefore any compromise concerning the derogations should have regard to the fact that these derogations were, from the first, intended as transitional measures which would only apply temporarily. Finally, any extensions to the list of goods and services to which a reduced rate can be applied under Annex H of the Sixth VAT Directive beyond the Commission's proposal should be very carefully drafted, as the Commission's proposal represents an extremely fragile balance which takes into account the interest of the Union as a whole.

Mr Bolkestein will urge the Council to continue to work towards a compromise on this proposal, so that a Directive can be adopted before the end of the year. This would ensure that there is no gap between the 31^st December 2003 expiry date of the experimental reduced rates for labour intensive services (see IP/02/1367) and a replacement regime for those services that under the Commission proposal would continue to benefit from a reduced rate.

Administrative co-operation between tax authorities (JT)

The Council is due to adopt without discussion a Regulation that would strengthen co-operation between Member States' tax authorities to combat fraud relating to value added tax (VAT). The Regulation has three main objectives: to lay down clearer and more binding rules governing the exchange of information, to provide for more direct contact between national anti-fraud agencies, and to facilitate more extensive exchange of information. The aim is to remedy weaknesses in information exchange and administrative co-operation between tax authorities that had been identified in the Commission report of February 2000 on VAT fraud (see IP/00/115) and the report of the Council's ad hoc group on tax fraud of June 2000. The Council is also due to adopt without discussion a Directive that would extend the scope of the Mutual Assistance Directive (77/799/EEC) so as to allow Member States to exchange information concerning taxes levied on insurance premiums. The two legal texts are based on a Commission proposal of 19 June 2001 (see IP/01/857 and MEMO/01/230).

VAT rules for gas and electricity supplies (JT)

The Council is due to adopt without discussion a Directive that would modify the rules for applying value added tax (VAT) to the supplies of gas and electricity so as to facilitate the Single Market for energy. The new rules, based on a Commission proposal of 5 December 2002 (see IP/02/1823), would eliminate current problems of double taxation and non-taxation and distortions of competition between traders. They would do so by changing the place of taxation of natural gas in pipelines and of electricity from the place of supply to the place of consumption. The current rules worked adequately in a national context but are not appropriate now with market liberalisation and increasing cross-border supplies of gas and electricity. Member States would have to implement the new measures by 1 January 2005.

Company tax Parent-Subsidiary Directive (JT)

The Council is due to have an orientation debate on the European Commission's proposal to amend the European Community's Parent-Subsidiary Directive (90/435/EEC) (see IP/03/1214). The proposal is intended in particular to broaden the scope of the existing Directive to cover a larger range of companies, lower from 25% to 10% the inter-company holding threshold required for the application of its tax benefits and improve the mechanisms the Directive provides for the prevention of double taxation. The European Company which can be created from 2004 (see IP/01/1376) is among the new entities proposed for addition to the list of companies covered by the Directive.

Commissioner Bolkestein will thank the Presidency for its efforts over the last few weeks to ensure progress in the Council's discussions on this proposal. A great deal of useful technical work has been accomplished. He will ask Ministers to encourage their delegates in the Council Working Group to be as constructive and inventive as possible in finding solutions to the remaining issues.

He will remind Ministers that this proposal would improve the functioning of the Internal Market, promote cross-border investment and stimulate economic growth and employment. This type of initiative would also improve the global competitiveness of EU companies. Swift adoption of the proposal would send a clear signal to the business community that the Union can and will tackle real tax obstacles in the Internal Market.