Main Results of the Economic and Financial Affairs Council, 21 January 2020

Digital taxation
Finance ministers had an exchange of views on tax challenges arising from digitalisation. They took stock of the progress achieved in the context of the OECD, both on the reallocation of profits of digitalized businesses (“Pillar 1”) and on the general reform of international corporate taxation (“Pillar 2).

The OECD has been working intensively in the past months with a view to agreeing on the architecture of a global solution at its meeting on 29-30 January 2020.

The debate confirmed that an international solution on digital taxation was the best way forward, as it would prevent fragmentation and unilateral measures. Ministers acknowledged that the OECD was working against a tight deadline to reach a global consensus by the end of 2020, and many highlighted the importance of making good use of the current political momentum.

The presidency concluded that it would continue attending international meetings on this issue. It will organise technical discussions in the Council in order to prepare, as far as possible, negotiations taking place at the OECD and address member states’ concerns.

European Green Deal

Ministers discussed the financial and economic aspects of the European Green Deal. The Commission presented its communication on the Sustainable Europe Investment Plan published on 14 January.

The plan aims to mobilise at least EUR 1 trillion of investments over the coming decade. The Commission proposes to achieve this by drawing on EU’s budget, through a “Just Transition Fund”, as well as bringing in private funding by leveraging guarantees under the InvestEU programme. The plan also foresees a greater role for the EIB in financing sustainable projects.

During the debate, ministers stressed the importance and relevance of the European Green Deal and their readiness to examine, as a matter of priority, the concrete actions to be put forward by the Commission under the deal in the months to come.

European Semester

The Council initiated the annual ‘European Semester’ process for the monitoring of the member states’ economic, employment and fiscal policies.

The Commission presented its Autumn package published on 17 December 2019, including:

  • its report on the annual sustainable growth strategy, highlighting the main challenges for 2020,
  • the ‘alert mechanism report’ for 2020 and
  • the draft Council recommendation on the economic policies of the euro area.

The Council is scheduled to approve the recommendation and adopt conclusions on the two reports at the Ecofin meeting of 18 February 2020. The recommendation will then be endorsed by the European Council at its March meeting.

The 2020 European Semester will conclude in July with the adoption of country-specific recommendations.

Compliments of the European Commission