Administrative cooperation in the field of taxation
The ECOFIN ministers reached a consensus on further improving the Council directive on administrative cooperation in the field of taxation (known as DAC 7). The draft directive is aimed at strengthening administrative cooperation in the field of direct taxation. The proposal will introduce an obligation for digital platforms to record information on users that generate income on digital platforms and to report this information to tax authorities. The tax authorities will then automatically exchange this information with each other, in order to ensure that the platform users’ economic activities are taxed. Optimising administrative cooperation and transparency in the area of taxation will help to systematically fight tax evasion and tax avoidance and actively promote fair taxation. The EU-wide introduction of a reporting obligation for operators of digital platforms will close existing tax loopholes in relation to the growing platform economy, and will strengthen competition between digital and traditional business models.
The ECOFIN ministers also discussed the issue of international taxation. At the G20’s request, the OECD is currently working on a global solution to tackle the tax challenges posed by digitalisation. The OECD’s approach includes two pillars: the reallocation of taxing rights among countries in order to adapt the existing rules to the digitalisation of business models, and the introduction of a global minimum effective tax. In October 2020, the international community agreed on the publication of blueprints for the two pillars. The EU member states agreed on comprehensive Council conclusions in which they reiterated their continued support for the global negotiation process.
Action plan on the capital markets union
The ECOFIN ministers agreed on conclusions on the European Commission’s action plan on the capital markets union. Deepening the capital markets union is one of the priorities of the German Council Presidency. The conclusions set out the Council’s priorities among the measures proposed in the action plan, with the aim of providing the Commission with recommendations for its further work in this area.
Europe’s economic situation: autumn forecast
The European Commission presented its autumn forecast regarding economic trends in Europe. The economic recovery was more dynamic over the course of the summer than had been expected. However, current infection trends have interrupted the recovery. Given the current situation, economic predictions are still accompanied by significant uncertainty. The member states and the EU institutions will continue to closely monitor the economic situation. German Finance Minister Olaf Scholz emphasised that Europeans achieved an agreement on far-reaching support measures this year. These include the Recovery and Resilience Facility, which is intended to support reforms and investments to strengthen member states’ economies. Minister Scholz stated that the German Council Presidency is currently engaged in intensive discussions with the European Parliament on the swift implementation of the Recovery and Resilience Facility.
International debt relief
The Presidency and the European Commission briefed ECOFIN ministers on the extraordinary G20 meeting of finance ministers and central bank governors which took place on 13 November 2020. A debt restructuring framework, known as the Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative, was adopted and published at the meeting. The ECOFIN Council adopted conclusions on this framework which welcome the international efforts on debt relief, especially for African countries. At their meeting on 14 October 2020, the G20 countries already extended the debt moratorium for highly indebted developing countries by six months, until the end of June 2021. By backing these multilateral efforts, the German government is supporting the world’s poorest countries during the Covid-19 crisis.