EU Insight, 15 January 2021

Brussels, 15 January 2021

COMMISSION LAUNCHES CONSULTATION ON A POTENTIAL EUROPEAN DIGITAL TAX

The European Commission launched a four-week consultation on its inception impact assessment on the introduction of a digital levy for the digital economy. The EU executive argues that this initiative will promote a fairer contribution from the companies and businesses operating in the digital sphere. Work is ongoing at the G20 and OECD level to find a global solution that can support a reform of the international corporate tax framework in order to address some of the challenges related to the digitalisation of the economy. However, if no agreement is found at international level by mid-2021, the EU will be moving forward with its own digital tax.

EU CONDEMNS IRAN’S ACTIVITIES IN THE NUCLEAR DEVELOPMENT FIELD

On 11 January, the High Representative of the European Union, Josep Borrell, issued a statement on behalf of the EU on the latest developments in Iran on the Joint Comprehensive Plan of Action (JCPoA). In the statement, the EU expresses serious concerns regarding Iran’s recent decision to increase its uranium enrichment up to 20%, which is inconsistent with Iran’s commitment under the JCPoA. As a result, the EU urges Iran to refrain from further escalation and reverse this course of action immediately. The EU hopes that under the incoming Biden Administration, diplomatic efforts can be intensified to ensure Iran abides by the JCPoA.

COMMISSION ADDS COVID-19 VACCINE TO ITS PORTFOLIO, AMIDST INTENSIFYING CLOSURES

On Tuesday, the European Commission and Valneva concluded preliminary discussions for the provision of up to 60 million doses of the company’s COVID-19 vaccine. The Commission is also ready to step up its efforts to help EU countries with their (lagging) vaccination campaigns and will release a communication on the matter next week. But amidst the vaccination frenzy, Member States are talking about potential lockdown extensions. Notably, Italy extended its state of emergency until May, Germany’s lockdown may continue beyond 1 February, and the Netherlands and Belgium extended their own until, respectively, February 9 and March 1, while the French government announced a nationwide curfew from 6 p.m. onwards.

EU-UK AGREEMENT WELCOMED AS A GOOD, ALBEIT THIN SOLUTION

Members from the Foreign Affairs and Trade committees of the European Parliament discussed the EU-UK agreement, in view of a plenary vote on it likely to be held at the end of February. Members welcomed the deal as a good, but thin framework for a rules-based relationship going forward. They also welcomed the inclusion of non-regression on level-playing field conditions, but regretted that many aspects – including Erasmus, foreign policy, and security and defence cooperation were ignored in the overall deal. Equally, Members stressed that European parliamentary scrutiny of the deal must go beyond mere ratification, insisting on a clear role for Parliament in the implementation and future monitoring of the agreement.

BANK RESOLUTION STILL MISSING KEY ELEMENTS, HIGHLIGHTS COURT OF AUDITORS’ REPORT

The European Court of Auditors (ECA) released a report on Resolution planning in the Single Resolution Mechanism (SRM). The ECA found that further steps are needed in crucial areas – resolution plans are not always in line with the requirements, and the Single Resolution Bank (SRB) has not properly identified and dealt with obstacles to a bank’s resolvability. In addition, the Auditors believe important policies are missing at SRB level, including solid governance and information-sharing during bank resolution, and that there is the need for a better alignment between the resolution framework and the national insolvency frameworks.

COMING UP NEXT WEEK

• 18-22 January: European Parliament Plenary session. On the agenda: EU global strategy on COVID-19 vaccinations, inauguration of the new US President, Portuguese Presidency programme, social and employment in the COVID-19 crisis.
• 18 January: Video conference of the Eurogroup. On the agenda: Macroeconomic imbalances in the euro area, national recovery and resilience plans, relations with the US.
• 18 January: Informal video conference of European affairs ministers. On the agenda: Work programme of the Portuguese presidency, Conference on the Future of Europe, COVID-19 coordination.
• 19 January: Informal video conference of economics and finance ministers. On the agenda: Non-performing loans (NPLs) action plan, implementation of the Recovery and Resilience Facility (RRF), Presidency work programme.
• 20 January: Informal video conference of the members of the EU-Cuba Joint Council. On the agenda: Implementation of the EU-Cuba Political Dialogue and Cooperation Agreement (PDCA), regional and global issues.
• 21 January: Video conference of the European Council. On the agenda: Coordination on the response to the COVID-19 pandemic, including the large-scale roll-out of vaccines.

Karl Isaksson, Managing Partner Brussels, Kreab

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Kreab • Tel: +32 2 737 6900 • karl.isaksson@kreab.com • www.kreab.com/brussels • Twitter: @KreabEU.