Vulcan View: The latest EU developments 9 December – 13 December

Ireland set for record corporate tax revenue in 2024

November is the most important month of the year in terms of tax collection. The Department of Finance noted how total tax revenues collected to end-November was €99.1 billion, which was 20.8 per cent ahead of November 2023. €22.8 billion in total was collected in November, which is 46.1 per cent higher than in November last year.

Unsurprisingly, corporation tax receipts were the main driver of the increase in tax revenues. Not counting the Apple payments, corporation tax receipts for the year to date are up €4 billion or 18 per cent. Corporation tax receipts amounted to €13.7 billion, up €7.4 billion (116.8 per cent) from November 2023. The Department of Finance noted that two-thirds of the total liability from the CJEU ruling has been paid. However, when these receipts are excluded, corporation tax still showed strong growth year-to-date, though it is slightly below the Budget 2025 projection.

The Irish Fiscal Advisory Council warned on Thursday that spending was rising twice as fast as would be sustainable if spending is not tapered. The €4 billion does not include the €8 billion, expected by year’s end, of the Apple Tax money – stored until now in an Escrow account.

In terms of other area of tax revenues, €32.3 billion in income tax receipts were recorded, which was €1.9 billion (6.4 per cent) ahead of the same period in 2023. November is important for income tax, as it accounts for the majority of self-assessed income tax payments. In November alone, receipts totalled €4.7 billion, which reflects a 1.3 per cent increase in comparison to November 2023. For VAT, November is the last VAT-due month of the year. Receipts had decreased slightly to €3.1 billion due to a technical factor. However, cumulative VAT receipts stood at €21.4 billion to end-November, which was a 6.4 per cent increase in comparison to November 2023.

Overall, an Exchequer surplus of €13.8 billion was recorded to end November which is an €8.4 billion improvement on November 2023 figures. Minister for Finance Jack Chambers outlined how this shows “steady growth across the year.”

EU and Mercosur seal historic trade deal

On Friday, 6 December, European Commission President Ursula von der Leyen and her counterparts from four Mercosur countries (Brazil, Argentina, Paraguay and Uruguay) finalised negotiations for a groundbreaking EU-Mercosur partnership agreement. The deal will drop tariffs on more than 90% of goods and create a market of 700 million people.

The deal is expected to secure and diversify the EU’s supply chains, create new opportunities by removing prohibitive tariffs on EU exports to Mercosur, aid EU businesses in saving €4 billion worth of duties each year, help SME’s export, and secure an efficient, reliable and sustainable flow of raw materials critical for the global green transition.

The deal will also contribute to boosting strategic trade and political ties, supporting economic growth and boosting competitiveness by opening up trade and investment opportunities. The deal includes commitments to stop deforestation and to uphold the EU’s standards on animal health and food safety, preventing unsafe products from entering the EU market.

Several countries, including France, continue to be opposed to the deal, arguing that it does not require imports to follow strong enough sanitary standards and environmental rules and subject the agriculture industry to unfair competition. Nevertheless, in non-agricultural industry circles, the conclusion was broadly welcomed, particularly given the expected increasing trade obstacles with China and the United States over the coming years.

The ratification process is expected to face significant challenges, particularly from the European side. After the agreement is translated into all EU member state languages, it will go to the Council for ratification. A minimum of four states representing at least 35% of the European Union’s population could block the agreement. France, Austria, and Poland have already stated that they oppose the agreement. They just need one more large country to follow their lead. If the agreement is not blocked, it then must be ratified by the European Parliament. If the European ratification process runs smoothly, the tariff reductions will take several months to a year to enter into force.

The EU-Mercosur agreement represents a significant milestone in global trade, offering supply chain diversification and improved market access for businesses on both sides. The ratification process is expected to be challenging with several European countries raising objections. The signing of this partnership does however demonstrate the strong interest in trade liberalisation among countries.

EU Inter-parliamentary meeting addresses Rule of Law situation in Europe

On Thursday (12 December), the European Parliament’s Committee on Civil Liberties, Justice, and Home Affairs (LIBE) convened an inter-parliamentary meeting to address the state of the Rule of Law across EU member states and candidate countries. Participants included Commissioner for Democracy, Justice, the Rule of Law and Consumer Protection Michael McGrath, MEPs, national MPs, experts, and civil society organisations. The meeting, divided in two sessions, focused on mechanisms to strengthen democratic values amid challenges such as foreign election interference, judicial independence, and media freedom.

Session I: Enhancing Rule of Law Mechanisms

The first session examined how the EU’s Democracy, Rule of Law, and Fundamental Rights (DRF) mechanism can better uphold Union values. Commissioner McGrath underscored the Rule of Law as a cornerstone of the EU, connecting it to fundamental rights and economic stability. He highlighted improvements in the Annual Rule of Law Report, which monitors judicial independence, anti-corruption measures, media freedom, and other institutional checks. McGrath noted that 68% of recommendations from the report have been implemented, though challenges persist. He also announced plans to incorporate a single-market dimension to the next edition and align financial mechanisms with Rule of Law recommendations.

Laurent Pech, Dean of Law at University College Dublin, criticised delays in enforcing existing tools, emphasising that fine-tuning mechanisms alone are insufficient without decisive implementation. Claire Bazy Malaurie, President of the Venice Commission, advocated for stronger alignment with its recommendations to ensure broader accountability. Michael Farrugia from Malta highlighted national reforms following the assassination of journalist Daphne Caruana Galizia, including enhancing judicial independence and anti-corruption measures, presenting his country as a success story. Finally, Dutch senator Boris Dittrich highlighted the need to balance judicial independence with proposals for establishing a constitutional court in the country, ensuring requirements of no political interference.

Nonetheless, some participants argued that the EU’s scrutiny of some countries such as Hungary has been “overly politicised”, accusing the European Parliament of pressuring the European Commission to overreach its competencies

Session II: Civil Society as a Pillar of Democracy

The second session focused on the role of civil society in safeguarding the Rule of Law. Gabriel Toggenburg from the European Union Agency for Fundamental Rights emphasised that a robust civic space is essential for democracy. Michael Hamilton from Amnesty International highlighted threats to freedom of assembly and called for stronger protections for civil society actors.

Moreover, András Léderer of the Hungarian Helsinki Committee described the deteriorating conditions for civil society in Hungary, citing surveillance and discrediting campaigns by government agencies. He warned that independent organisations face significant risks, including retaliation for exposing democratic backsliding.

Conversely, some speakers raised concerns about NGO involvement in political affairs. Some MPs stressed the importance of transparency in NGO funding to prevent undue influence.

Compliments of Vulcan Consulting – a member of the EACCNY