Agenda Eurogroep en Ecofin: Griekse budgetstatistieken, EU-budget 2007-2013, BTW, alcoholaccijnzen, wijziging van fusie-richtlijn (en)

(Maria Assimakopoulou, Oliver Drewes, Ewa Hedlund, Amelia Torres)

EUROGROUP (AT)

Eurogroup ministers will meet on Monday, 6 of December, at 19:00. The meeting will start with a discussion on the economic situation, to be followed by a discussion on the excessive deficit procedures (EDP) under way on the basis of a presentation by Commissioner Almunia. Ten Member States are currently subject to the excessive deficit procedure: Germany, France, the Netherlands, Greece, the Czech Republic, Cyprus, Hungary, Malta, Poland and Slovakia.The ministers will also discuss the Commission's recent communication on the revision of the Greek budget statistics for 1997-2003 (see below).

ECOFIN COUNCIL

The European Union's Council of Economics and Finance Ministers will start 10.00 hrs on Tuesday 7 November. The European Commission will be represented at the Council by Economic Affairs Commissioner Joaquín Almunia and Taxation and Customs Commissioner László Kovács.

Revisions of the Greek budget data (AT)

Ministers are expected to follow up on the revisions of the Greek budget data on the basis of the Commission report on accountability (see IP/04/1431 and final report on the Greek figures between 1997-2003 on DG Eurostat's website).

Convergence Reports 2004 (AT)

Ministers will discuss the reports of the Commission and of the European Central Bank on progress made by the 10 new Member States and Sweden regarding compliance with the Treaty criteria for euro membership. The Commission's report of 20 October 2004 concluded that none of the countries currently fulfill all conditions (see IP/04/1251).

Financial Framework for 2007-2013 (EH)

The Presidency will give an overview of the state of play of the negotiations on the Financial Framework that was proposed by the Commission in February 2004. The proposal fleshes out the budget plans for the period 2007-2013 and provides a detailed overview of the Union's goals and what resources are needed. The proposal is now being discussed in the Council and the European Parliament.

An agreement on principals and guidelines for future negotiations is expected by the European Council in December (IP/04/189 and IP/04/910).

VAT - Place of supply of services (MA)

The Council will have a discussion on the Commission proposal of December 2003 (see IP/03/1808) to change the place of supply of services for Value Added Tax (VAT) purposes where the customer is a trader.

Taxation Commissioner László Kovács believes that the compromise reached under the Dutch Presidency represents a fair balance between the expectations of the trade sectors and the different preoccupations of the Member States, therefore will urge all Member States to reach an agreement on the proposal.

The Commission's proposal would shift taxation in most cases from the place where the supplier is established or has a fixed place of business to the place where the customer is located. The rule of taxation in the place where the supplier is located worked adequately when the VAT system was first introduced but, with increased supplies of services across borders, this rule can now lead to administrative complexities, distortions of competition and double or non-taxation of international supplies of services. The Commission intends to put mechanisms in place to ensure that the proposal would not lead to increased tax evasion.

VAT - Reduced rates (MA)

At the request of France, Ministers are due to have an exchange of views on reduced rates of VAT and in particular towards establishing a calendar with a deadline for agreement.

Commissioner Kovács will point out that there is no time to lose concerning this proposal given the expiry date, 31 December 2005, for the existing reduced rates for labour-intensive services. He will underline that the best basis for discussion remains the Commission proposal of 2003 (see IP/03/1024 and MEMO/03/149), as completed by its non-paper of February 2004 analysing areas where Member States could be allowed greater autonomy than at present to decide individually on the goods and services to which reduced rates of VAT should be applied, where this does not give rise to distortions of competition.

Alcohol Taxation (MA)

Commissioner Kovács will present to Member States the Commission's report on alcohol taxation of May 2004 (see IP/04/669).

Company taxation: Proposal to amend Mergers Directive (MA)

The Council is due to reach political agreement on a proposal to amend the EU Directive for tax deferral in the case of cross-border mergers and divisions of companies, transfers of assets and exchanges of shares (90/434/EEC). The amendment that is based on a Commission proposal of October 2003 (see IP/03/1418) would, in particular, broaden the existing Directive's scope to cover a larger range of companies including the European Company (see IP/01/1376) and the European Co-operative Society (see IP/03/1071); provide for a new tax neutral regime for the transfer of the registered office of a European Company or of a European Cooperative Society between Member States; clarify that the Directive applies in the case of the conversion of branches into subsidiaries; and cover a new type of operation, known as a 'partial division' or 'split-off'.

A Points (to be adopted without discussion)

Company taxation: Code of Conduct concerning transfer pricing (MA)

The Council is due to adopt a Code of Conduct to eliminate the double taxation that can arise where an EU Member State, by making a transfer pricing adjustment, increases the taxable profits of a company from its cross-border intra-group transactions. The Code will ensure a more effective and uniform application by EU Member States of the 1990 Arbitration Convention (90/436/EEC) that is designed to deal with such double taxation. The Code establishes rules such as the starting points of time limits for dealing with complaints and practical arrangements concerning the mutual agreement and arbitration phases of the Convention. It recommends the suspension of tax collection during the dispute resolution period. The Code is based on a Commission proposal of April 2004 (see IP/04/542 and MEMO/04/96) arising from the work of the EU Joint Transfer Pricing Forum (see IP/02/1105). The Council is also expected to welcome the Commission's decision to prolong the work of the Forum for a further two years and to agree on an Accession Convention that will, when ratified, allow the ten new Member States to adhere to the Arbitration Convention.

Company taxation: Report of Code of Conduct Group (MA)

The Council will take note of a report from the Code of Conduct Group (Business Taxation) concerning implementation of rollback and standstill. The Code of Conduct that the Council formally implemented as part of a tax package in June (see IP/03/787) requires Member States to refrain from introducing any new harmful business tax measures ("standstill") and amend any laws or practices that are deemed to be harmful in respect of the principles of the Code ("rollback"). The code covers tax measures (legislative, regulatory and administrative) which have, or may have, a significant impact on the location of business in the Union.

Third Money Laundering Directive - General approach (OD)

The Council is expected to agree a general approach to the draft third Directive on the prevention of the use of the financial system for money laundering and terrorist financing. The Directive was proposed by the Commission in June 2004 (see IP/04/832).

The main purpose is to provide the European Union with state-of-the-art defences in this field by giving the force of EU law to the revised 40 recommendations of the Financial Action Task Force (FATF) on Money Laundering. This instrument will be an important tool in the fight against financial crime and in particular against terrorist financing, which is addressed for the first time with preventive measures of this kind.

Discussions in the European Parliament have recently started and the Commission is hopeful that adoption in a single reading may be possible.

Commissioner McCreevy will congratulate the Dutch Presidency and the Council for the swift progress on this issue, a concrete step towards delivering the overall EU strategy against terrorist financing, which the Council will also be discussing after a presentation by the EU's Counter Terrorism Co-ordinator, Gijs de Vries.

Capital Adequacy Directive - General approach (OD)

The Council will also seek to agree a general approach on the Capital Adequacy Directive, which provides a new capital requirements framework for banks and investment firms in the EU, suitable for the 21st century. The Commission presented its proposal in July 2004 (see IP/04/899, MEMO/04/178). The Directive will ensure the coherent application throughout the EU of the new international capital requirements framework agreed earlier this year by the Basel Committee on Banking Supervision (`Basel II').

By making sure that financial institutions' capital is more closely aligned with the risks they face, the new framework will enhance consumer protection, reinforce financial stability and promote the competitiveness of European industry. Instead of the current `one-size-fits-all' approach, the proposed new framework would consist of three different approaches allowing financial institutions to choose the approach most suited to them: simple, intermediate and advanced. The simple and intermediate approaches would be available by end 2006 (but banks could still opt to apply the current rules until end 2007) and the most advanced approaches from end 2007.

The Directive reflects the flexible structure and the major components of the Basel II Accord, but has been tailored to the specific features of the EU market, after unprecedentedly close consultation with stakeholders over a five-year period.

Mr McCreevy will say that this meticulous preparation by the Commission and the Council's own efficient and thorough work demonstrate that Europe is capable of moving quickly and effectively to deliver positive benefits. The Commission will encourage the Council and European Parliament to continue in this positive way and to adopt the Directive in good time to secure the benefits of timely implementation.

Statutory Audit Directive - general approach (OD)

The Council aims to adopt "a general approach" with the objective of agreeing the Statutory Audit Directive with the European Parliament in a single reading by mid-2005.

The Commission proposed this Directive in March 2004 (IP/04/340, MEMO/04/60). Mr McCreevy will reiterate that it is a key part of the Commission's drive to enhance the EU's protection against the type of scandals that recently occurred in companies such as Parmalat and Ahold.

The proposed Directive would clarify the duties of statutory auditors and set out certain ethical principles to ensure their objectivity and independence. It would introduce a requirement for external quality assurance, ensure robust public oversight over the audit profession and improve co-operation between regulatory authorities in the EU.

The Directive would also allow for swift European regulatory responses to new developments by creating an audit regulatory committee of Member State representatives, so that detailed measures implementing the Directive could be rapidly taken or modified.

The proposal also foresees the use of international standards on auditing for all statutory audits conducted in the EU and provides a basis for balanced and effective international regulatory co-operation with third country regulators such as the US Public Company Accounting Oversight Board (PCAOB).

The Directive also details how to ensure that statutory auditors remain independent. The Commissioner will argue that the Directive should contain sound and robust principles, able to ensure auditors' independence with regard to audit quality and costs. The independence of auditors is crucial for European capital markets which have to have full confidence in the statutory audit as basis for investment decisions.

The Commissioner will also argue that the requirement to set up audit committees should apply to all listed companies, whatever their size. Doing so will make companies attractive to a wider group of investors. Companies which have a small administrative and supervisory board may, under the proposed text, decide not to set up a separate audit committee, but to let the functions assigned to the audit committee be performed by such a board as a whole.

Better Regulation: review of joint initiative on regulatory reform (OD)

The "six Presidencies" (Ireland, The Netherlands, Luxembourg, UK, Finland and Austria) are expected to present a statement on better regulation. Mr McCreevy will express the Commission's support for this work and emphasise that regulatory burdens on the private sector must be proportionate and without duplication.

He will say that the European Commission is well aware that it must seek to minimize the regulatory requirements imposed at EU level. It will continue its efforts to limit duplicative reporting obligations for European companies and to encourage Member States to limit implementation differences.

However, to achieve better regulation in practice, the other two institutions must play their role as well, by giving priority to Commission proposals for simplification, by carefully considering the regulatory impacts of their own amendments and by reducing administrative burdens at domestic level.

In many cases European regulation has replaced 25 different regulations with a single set of rules, making life much easier for stakeholders.