Insights | EU Insight, 26 March, 2018

EU Insight, 26 March, 2018

EU LEADERS IN BRUSSELS FOR SPRING COUNCIL SUMMIT

The 28 heads of state and government convened in Brussels this week to discuss economic affairs, particularly trade. The European Council reaffirmed its commitment to an open and rule-based multilateral trading system with the World Trade Organisation (WTO) at its core. In addition, they have strongly condemned the recent Salisbury attack and the use of chemical weapons under any circumstances, blaming Russia as a highly likely suspect. On Brexit, the European Council met in an EU27 format to approve the transition deal and to adopt additional guidelines. Finally, the 19 euro area members discussed the long-term development of the economic and monetary union.

COMMISSION PROPOSES MEASURES ON DIGITAL TAXATION

The European Commission released two legislative proposals aimed at creating “permanent and lasting solutions to ensure a fair share of tax revenues from online activities”. One proposal details plans for a “turnover tax” levied at a rate of 3 per cent on large companies that derive significant economic value from EU jurisdictions without (previously) generating a tax liability. This however is only designed to be an interim solution. The second, more comprehensive proposal aims at quantifying exactly how significant a company’s online presence has to be before it triggers a tax liability in a given Member State.

EU TO RECEIVE TEMPORARY EXEMPTION FROM US TARIFFS

According to a proclamation released by the US President Donald Trump, the European Union has been exempted from the US import tariffs on steel and aluminum that take effect today. The exemption is temporary and will expire on 1 May pending discussion on trade issues of common concern. The EU was granted the exemption alongside other countries, including Australia, Argentina, South Korea and Brazil. The US has previously vowed to exclude Canada and Mexico from the plan that mainly targets China. Today’s European Council will address the exemption but only after an official Trump’s statement is released.

COUNTER-MEASURES ON NON-COOPERATIVE TAX JURISDICTIONS

In a busy week for the European Commission in the field of taxation, we also saw the release of measures designed to strengthen the Commission’s list of non-cooperative third country jurisdictions from a tax perspective (or “blacklist”). For those countries that face inclusion on this list there is naturally the risk of reputational damage, but the Commission has now gone further. The guidelines released aim at guaranteeing in particular that EU external development and investment funds cannot be channeled or transited through entities in countries on the EU’s common list.

SECOND ANNIVERSARY OF THE BRUSSELS TERROR ATTACKS

On the second anniversary of the Brussels terrorist attack which killed 32 people and one year on from the Westminster Bridge attack in London, Commissioner King called for more investment in de-radicalisation. He argued for more money to be invested in disengagement and rehabilitation programmes for European citizens who are radicalised at home. He admitted that combating radicalisation would be complex and time-consuming, but was necessary to stop future attacks from happening.

COMING UP NEXT WEEK

26 March: EU-Turkey leaders’ meeting (Varna, Bulgaria). On the agenda: Donald Tusk, Jean-Claude Juncker and the Bulgarian Prime Minister Boyko Borissov will meet with the President of Turkey Recep Tayyip Erdoğan to assess matters of mutual interest and recent developments in Turkey, and move the EU-Turkey relationship forward.

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