![European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources](https://eaccny.com/wp-content/uploads/2020/06/eaccny-logo.png){kind=logo}
The Irish General Election has been called for Friday, 29th November
Following the passage of the Finance Bill earlier this week, Taoiseach Simon Harris announced his intention to dissolve the Dáil on Wednesday ahead of a general election on 29 November. When speaking on his rationale for this process, the Taoiseach outlined that it was important to unveil an election date in a fashion “that was respectful to the budgetary process” and ensure the coalition Government “could come to an amicable end.” This election date came as little surprise to anyone in political circles, given that last month, Leader of the Green Party Green Roderic O’Gorman became the first coalition leader to publicly state a preference for an election date of 29 November.
There has been sustained pressure on the Taoiseach to call an early election, given the sharp rise in popularity of Fine Gael in political polls, culminating in becoming the most popular party in the country. Despite this, the most recent opinion poll for the Sunday Independent/Ireland Thinks illustrated how the gap in public support between Fine Gael and Fianna Fáil is tightening with the former at 23 per cent and latter at 20 per cent.
What makes this particular poll unique is that it asked respondents to select a first-preference candidate from among the candidates in their own constituency after being shown a list of the already declared and expected runners. This polling approach is likely more reflective of the actual feeling on the ground in constituencies, where factors such as geography, incumbency and a candidate’s personal brand often play a bigger role than party preference.
Given current polling, it is not out of the realm of possibility that Fine Gael and Fianna Fáil may return a sufficient number of combined seats to deliver a mandate for the next coalition without the need for a third party. At present, it is possible that if both parties fall short of having the seats to form a government, a select grouping of Independents (16 per cent overall) or potentially the Labour Party (4 per cent), may finalise the next coalition.
As for Sinn Féin (18 per cent), the party has endured a tumultuous period of sustained decline in popularity following its disappointing performance in June’s local and European elections and recent high-profile scandals and resignations. Overall, the party finds itself in a difficult position but will continue to target the policy areas of housing and health, which worked to unprecedented effect in 2020.
It is noteworthy to consider that these issues still hold huge importance to the electorate, with housing being the most important and Sinn Féin still retains a strong core voter base. Overall, it promises to be an intense three weeks of campaigning and political debates and an unexpected result similar to what was seen in 2020 should not be dismissed.
New era of trade: end of global cooperation, shift to U.S. protectionism
With Donald Trump stepping into the presidency, we can anticipate a trade policy fueled by the “America First” mantra. Hinting at a further shift toward U.S. protectionism, aiming to shield and boost domestic industries and potentially reshape international trade dynamics. Rather than promote new market opportunities or ensure consumer quality and protections, Trump’s policies will likely focus on reducing the U.S. trade deficit and supporting national security. Trump’s victory will likely affect every area of EU policy, from drug pricing to green technology standards.
President Trump said in an interview with Bloomberg, “The most beautiful word in the dictionary is ‘tariff.’” Despite economists’ warnings, the President views tariffs as an avenue to grow the U.S. economy, protect jobs, and raise tax revenue. He vowed to act quickly and aggressively with his new tariff strategy, punishing adversaries with across-the-board tariffs ranging from 10 to 20 per cent on European goods and up to 60 per cent on Chinese goods, possibly resulting in the euro dropping as much as 10 per cent against the dollar.
Trump’s victory could mark the end of U.S. cooperation with certain international and transatlantic bodies responsible for drafting global trade rules to prevent global financial crises like the World Trade Organization (WTO), the Financial Stability Board, the International Organization of Securities Commissions (IOSCO), and the Basel Committee on Banking Regulations. The Trump presidency could be detrimental to implementing Basel III, a set of global bank capital rules following the 2008 financial crisis, ensuring lenders have enough reserves to withstand economic shocks. A massive wave of lobbying from the U.S. banking industry already led to these rules being altered and their rollout postponed. A Trump presidency could see the regulations scrapped altogether.
European automobile and aerospace industries are in for some turbulence. President Trump has said he wants “German car companies to become American car companies.” Promising “lower taxes, the lowest energy costs, and the lowest regulatory burden” to car manufacturers that comply and threatening to impose “a very substantial tariff” on everyone else. Furthermore, a wave of aerospace protectionism pointed at rescuing Boeing from its financial troubles could spell disaster for Airbus and the rest of the European aircraft sector. These sectors and the shipping industry, which is very exposed to the adverse effects of tariffs, will closely monitor the Trump administration.
Trump’s victory could push Europe to pursue an economic security strategy emphasizing domestic production and a wide range of international trade partners while relying less on the U.S. as a trade partner.
VAT in the Digital Age: the Council reaches landmark agreement
On 5 November, the Council of the European Union reached a significant political agreement on the “VAT in the Digital Age” (ViDA) package, modernizing the EU’s value-added tax (VAT) system to address the challenges of the digital economy. After nearly two years of negotiations, this comprehensive package was agreed upon to modernize VAT rules, enhance tax compliance, and reduce VAT fraud.
Hungarian Finance Minister Mihály Varga, who chaired the meeting, highlighted the importance of this agreement as a “cornerstone for the digital transition” that will “improve the competitiveness of the EU.” In addition, he highlighted that the new rules will “help combat VAT fraud and ease administrative obligations for small companies and individual service providers”.
The ViDA initiative consists of three key pillars:
- Digital Reporting Requirements: the centrepiece of the ViDA agreement is the introduction of mandatory e-invoicing and real-time digital reporting for cross-border business-to-business (B2B) transactions within the EU by 2030. Businesses will issue e-invoices that automatically report VAT data to national tax authorities. It will provide tax administrations with immediate visibility into transactions, enabling early detection of fraudulent activities. By 2035, all national systems must be interoperable with the EU system, ensuring seamless cross-border data sharing.
- Platform Economy and VAT collection: The ViDA package also tackles the VAT challenges posed by the platform economy. Starting in 2028, digital platforms will be required to collect and remit VAT on short-term accommodation rentals and passenger transport services in cases where individual service providers do not charge VAT. This “deemed supplier” model aims to improve VAT compliance in the gig economy, though Estonia raised concerns that it could negatively impact national businesses like Bolt.
- Single VAT Registration (One-Stop Shop): the agreement expands the existing One-Stop Shop (OSS) VAT registration, allowing businesses to use a single EU-wide VAT registration for certain sales activities, including domestic sales of items like gas and electricity within the EU. Additionally, a mandatory reverse charge mechanism for B2B transactions will apply, shifting VAT liability from suppliers to buyers when the supplier is not established in the buyer’s country.
Next steps
The European Parliament will be consulted again due to significant changes made by the Council to the directive. Following this, the Council must adopt the text unanimously before it can be published in the EU’s Official Journal and take effect.
The new VAT rules are expected to be gradually implemented between 2027 and 2035, providing businesses time to adapt their invoicing, reporting, and registration processes. The agreement represents an essential evolution in VAT compliance that is aligned with digital economic realities.
Compliments of Vulcan Consulting – a member of the EACCNY