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Brussels, 6 June 2005
Preparation of Informal Eurogroup and Council of Economics and Finance Ministers, Luxembourg 6 and 7 June
Eurogroup ministers will meet at 19:00 hrs on Monday 6 June. Joaquín Almunia, Commissioner responsible for Economic and Monetary Affairs, will attend.
The meeting will start with a discussion on the G8 pre-summit finance minister’s meeting which will take place on 10-11 June. Ministers will then have an exchange of views on the economic situation and recent developments. Getting down to more specific items, ministers will discuss statistical governance with a view to reaching (the following day at the ECOFIN Council – see below) a general orientation on the draft Regulation proposed by the Commission in March to improve the quality of public finances statistics. Other topics include: the Commission’s recommendation to abrogate the excessive deficit procedure for the Netherlands; the state of play regarding the amendments to the Stability and Growth Pact Regulations; and a number of recommendations concerning the euro coins such as a new design for the common side to reflect the enlarged Union.
The European Union's Council of Economics and Finance Ministers will start at 11.00 hrs on Tuesday 7 June.. The European Commission will be represented at the Council by Economic and Monetary Affairs Commissioner Joaquín Almunia, Internal Market and Services Commissioner Charlie McGreevy, Financial Programming and Budget Commissioner Dalia Grybauskaité and Taxation and Customs Union Commissioner László Kovács.
Ministers are expected to adopt a general orientation on the draft Regulation proposed by the Commission in March to improve budgetary statistics (IP/05/234).
This regulation is part of a broader strategy outlined in December (see IP/04/1530) and culminated with the adoption, on May 25, of a Communication designed to enhance the independence, integrity and accountability of the statistical authorities at both nation and EU level (IP/05/599).
Euro coins (AT)
Ministers are expected to adopt conclusions of the following:
On 3 June, the Commission updated recommendations regarding the national side of the euro coins to make sure that they are easily recognisable throughout the euro area as their number is set to increase (IP/05/663)..
The common side of the bi-colour (1- and 2-euro) and the “Nordic gold” coins (10, 20 and 50 cents) currently represents the European Union before its enlargement to 25 Members States. Necessary technical preparations for the amendment of the common side of these coins should be completed so as to ensure that all EU Member Stats will in the future be represented. The revised map of Europe is an extended one without country borders.
Preparation of the European Council (16-17 June) - Integrated guidelines package – Broad Economic Policy Guidelines 2005-2008 (AT)
The Ministers are due to adopt a draft Council report on the Broad Economic Policy Guidelines which will be submitted to the European Council on 16-17 June for their consideration. After the European Council, the Council will finally adopt the recommendation on the BEPGs for 2005-2008. (see IP/05/414).
Stability and Growth Pact (AT)
On 18 May 2005, the Commission recommended closing the excessive deficit procedure for the Netherlands after the Dutch government cut the deficit to below 2.3% in 2004 from 3.2% in 2003 (IP/05/568).
The ECOFIN Council is expected to abrogate the excessive deficit procedure for the Netherlands.
Financing of assistance to development – fiscal and non-fiscal instruments (MA)
EU Economic and Finance Ministers are due to discuss a document prepared by the current and forthcoming (UK) Presidencies and passed to the ECOFIN via the Economic and Financial Committee which looks at mechanisms to finance development aid. The paper addresses in particular in this connection the question of introducing a contribution on airline tickets on an EU wide-basis. Ministers will be called to define a European strategy for the financing of development for the September United Nations summit.
Financial Services (OD)
The text before the Council was approved by the European Parliament on 26 May 2005 (IP/05/616). The Third Directive builds on the 1991 and 2001 Anti-Money Laundering Directives (IP/04/832) and will incorporate into EU law the best international practices set out in the June 2003 revision of the Forty Recommendations of the Financial Action Task Force (FATF), The Directive will be applicable to the financial sector as well as lawyers, notaries, accountants, real estate agents, casinos, trust and company service providers.
Its scope also encompasses all providers of goods, when payments are made in cash in excess of €15.000. The Directive introduces additional requirements and safeguards for situations of higher risk (e.g. trading with correspondent banks situated outside the EU
The Council will discuss the Commission’s October 2004 proposal (IP/04/1318) for amendments to the Fourth and Seventh Company Law Directives. This proposal would make four key revisions to the Directives, in order to enhance confidence in financial reporting by companies. First, establishing that board members are collectively responsible for financial statements and key non-financial information. Second, making unlisted companies’ transactions with related parties more transparent. Third, ensuring that all companies provide full information about off-balance sheet arrangements, including Special Purpose Vehicles which may be located offshore. Fourth, requiring listed companies to issue an annual “corporate governance statement”. The proposals are part of the Commission’s Company Law Action Plan, published in May 2003 (see IP/03/716 and MEMO/03/112).
EU Economic and Finance Ministers will assess the state of play of the transposition by the Member States of the Savings Directive (see IP/03/787) as well as the ratification and implementation of the savings tax agreements with third countries and with the dependant and associated territories of EU Member States. As agreed by Member States in July 2004 (see IP/04/958), the Savings Directive will become applicable in the EU from 1 July 2005 only if Switzerland, Liechtenstein, Monaco, Andorra, San Marino and the territories implement measures that will allow effective taxation of savings income paid to EU residents. As far as the Agreements with the relevant territories are concerned, Member States are due to provide written confirmation that the territories will apply the measures as set out therein from 1 July next. Ministers will also assess the commitments made by the Member States, third countries and territories at their meeting on 12 April to apply a 15% "de minimis" rule to income from undertakings for collective investment (UCITS). It has been agreed that only income from UCITS which invest directly or indirectly only 15% or less of their assets in debt claims can be excluded from the definition of interest payments set out in Article 6(1) of the Directive.
Ministers will try to reach an agreement on the Presidency compromise proposal concerning reduced VAT rates in the EU. The Presidency compromise tries to find a balance between the Commission's 2003 proposal for a rationalisation of these reduced rates (see IP/03/1024 and MEMO/03/149) and the divergent positions of the Member States in this area.
Commissioner Kovács will stress his full support for the Luxembourg Presidency's efforts to find a compromise. He will add that the Commission will do its best to facilitate the decision of the Council and will examine with an open mind any compromise that could be reached on the basis of the Luxembourg compromise. He will urge all the Member States to contribute constructively to reaching such a compromise.
A decision needs to be taken before the end of this year concerning VAT rates, given that both the measure applying a minimum standard rate of VAT and the reduced rates of VAT currently applicable to specified labour-intensive services such as renovation of private dwellings, hairdressing, window-cleaning and small repairs expire at the end of the year (see IP/03/1693).
The Council is expected to reach a political agreement on a Commission proposal (see IP/04/105) to broaden the scope of the EU Directive that provides for the elimination of withholding tax in the case of payments of interest and royalties between associated companies of different EU Member States (2003/49/EEC). The changes introduced by the proposal will see the Directive cover a larger range of companies including the European Company (see IP/01/1376) and the European Co-operative Society (see IP/03/1071). The proposal will also, at the request of the EU's Council of Ministers, amend the Directive so that it will not apply to companies that are exempt from tax on interest and royalties received (so as to prevent double non-taxation).
Germany proposes to raise the issue of the impact on budgets of tax decisions of the European Court of Justice which Ministers discussed over lunch at their meeting of 17 February 2005.
The Council is due to approve without discussion 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 2003 (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.
Financial Perspectives 2007-2013 (EH)
Ministers will have an exchange of views on the negotiations on the next Financial Perspective 2007-2013. This is the last ECOFIN where the Financial Perspective will be discussed before the European Council in Brussels on June 16-17. For background on the Financial Perspective see: