Political groups negotiate EP top jobs and chairmanships ahead of constitutive session
Political groups are negotiating how positions of responsibility within the European Parliament will be distributed among political groups ahead of the constitutive session of the European Parliament, which will be held from Tuesday 16 July to Friday 19 July in Strasbourg. On Tuesday, MEPs will first elect their President. Christian Democrat Roberta Metsola from Malta is standing as a candidate for a second two-and-a-half-year term and is likely to be re-elected as the function being awarded to the EPP group was part of the agreement reached at the end of June in the EU Council. On Tuesday and Wednesday 17 July, MEPs will then elect the European Parliament’s Bureau, which is composed of the President, 14 Vice-Presidents and 5 quaestors. Posts are distributed among political groups using the d’Hondt system, which is the starting point for negotiations. It is expected that the political groups that form a pro-European majority will decide to throw a so-called “cordon sanitaire” around the Patriots group, thus preventing it from receiving a European Parliament vice-presidency. The vote on the President-designate of the European Commission, Ursula von der Leyen, is scheduled for Thursday 18 July at 13:00, following a speech and debate in the hemicycle. To be elected, Ms von der Leyen will need 361 votes out of 720 MEPs. Last week, she held talks with the S&D, Renew Europe and Greens/EFA groups to present her political priorities for the 2024-2029 legislative cycle and ensure their support. This week, MEPs will also settle on the numerical composition of parliamentary committees and sub-committees while the inaugural meetings of the parliamentary committees will take place in Brussels the following week. The ECON and FISC constitutive meetings are scheduled to take place on Wednesday 23 July. The chairmanships of the ECON committee would reportedly go to S&D while the FISC subcommittee would go to the Left.
Two new far-right groups in the European Parliament
Representatives of thirteen national far-right and sovereignist right-wing political groupings reportedly formed the “Patriots for Europe” group in Brussels on Monday 8 July. With 84 elected members, including 30 for the French Rassemblement National and 11 for the Hungarian Fidesz, this brand-new group replaces the radical right ECR group in third place in the European Parliament, which now has 78 MEPs after the departure of 6 Spanish Vox MEPs. The new group, chaired by French MEP Jordan Bardella, will focus mainly on the fight against the transfer of new powers to the EU and against illegal immigration. On Wednesday 10 July, a second far-right group called “Europe of Sovereign Nations” also reportedly announced its creation. Founded around the German AfD party, which was expelled from the previous Identity and Democracy (ID) group, the new group includes 25 MEPs from eight EU countries. The Co-Presidents are Germany’s René Aust and Poland’s Stanisław Tyszka. Europe of Sovereign Nations becomes the third political force on the far right in the European Parliament.
European Commission proposes an electronic VAT exemption certificate for certain export transactions
The European Commission published on Monday 8 July a proposal for a Directive introducing an electronic VAT exemption certificate for certain transactions treated as exports under the VAT Directive, replacing the current paper form to be signed by hand. Member States will be required to use an electronic certificate to confirm that a transaction qualifies for an exemption under article 151 (1) of the VAT Directive (e.g. supply of goods or services under diplomatic and consular arrangements; supply of goods or services to recognised international bodies; supply of goods or services to another Member State intended for the armed forces, …). According to the proposal, no distinction will be made between domestic and cross-border transactions when applying the electronic exemption certificate. The electronic exemption certificate will also be applied if the exemption is granted by means of a refund of the VAT in accordance with Article 151(2) of the VAT Directive. The European Commission will establish technical details for the electronic certificate through implementing acts. Once adopted, Member States will have to implement the new rules by 30 June 2026. However, Member States will be allowed to continue to use the paper version of the exemption certificate for a transitional period until 30 June 2030.
Last EU Finance Ministers’ meeting before the summer break
EU Finance Ministers will meet one last time before the summer break on Tuesday 16 July in Brussels. The Hungarian Presidency of the Council of the EU will present its priorities and work programme in the field of economic and financial affairs. Ministers will take stock of the implementation of the Recovery and Resilience Facility (RRF) and will be informed of the state of play of the economic and financial impact of Russia’s aggression against Ukraine. In the context of the European Semester, the Council will be invited to approve the country-specific recommendations as well as conclusions on the 2024 in-depth reviews under the macroeconomic imbalance procedure. Finally, the Ecofin Council will seek to approve the EU terms of reference in view of the G20 Finance Ministers and Central Bank Governors meeting of 25-26 July. It should also approve without discussion the position of the European Union and its Member States for the second substantive session of the Ad Hoc Committee to draft terms of reference for a UN Framework Convention on international tax cooperation, which will take place in New York from 29 July to 16 August.
Hungarian Presidency working on the idea of a non-binding Transfer Pricing Forum
The Hungarian Presidency of the Council of the EU is reportedly working on the idea of a non-binding Transfer Pricing forum composed solely of Member States and the European Commission, in the framework of discussions on the Commission’s proposal for a Directive on transfer pricing. It appeared that Member States don’t support the proposal in its current form, with some concerns about the risk of creating a transfer pricing double standard and the loss of flexibility that Member States have in negotiating and applying the OECD's transfer pricing guidelines. Several Member States, however, reportedly support the idea of a non-binding forum similar to the Joint Transfer Pricing Forum (JTPF) established in 2002. The JTPF’s mandate expired in 2019 and was not renewed. The objective of Hungary would be to deliver an agreement on the design of a non-binding transfer pricing forum during its Presidency. According to its draft agenda, it plans to ask EU Finance Ministers to exchange views and give political guidance on the proposed Directive on transfer pricing on 5 November.
20 former Heads of State and government call on G20 leaders to back global deal to tax the ultra-rich
Nearly 20 former heads of state and government from G20 and high-income countries called on current G20 leaders to support a new global agreement to tax the ultra-rich in an open letter, coordinated by Club de Madrid and Oxfam and published on Thursday 11 July. The former leaders believe that Brazil’s proposal for a global wealth tax to the G20 highlights “the opportunity to write a new history about taxation for the first time in a generation”, at a time when “billionaires, globally, are paying a tax rate equivalent to less than 0.5% of their wealth”. In their view, ensuring that the ultra-rich pay their fair share would reduce inequality and raise trillions of dollars necessary for investments in industrial policy and a just transition. The signatories include former Swedish Prime Minister Stefan Löfven, former French Prime Minister Dominique de Villepin and former Spanish Prime Minister José Luis Rodríguez Zapatero. The letter comes alongside talks across G20 capitals to back the deal, and ahead of a meeting of G20 Finance Ministers and central bankers in Rio de Janeiro on 25 July. Governments including Brazil, South Africa, France and Spain have already voiced their support to this proposal.
OECD 2024 Corporate Tax Statistics
The 2024 edition of OECD Corporate Tax Statistics, published on Thursday 11 July, showed that average statutory corporate income tax (CIT) rates have remained steady at 21.1% over the past three years. Anticipation of the new Global Minimum Tax may have contributed to the recent stabilisation, the OECD said. More than 35 jurisdictions are currently implementing, or plan to implement, the 15% minimum corporate effective tax rate with effect from 2024, the OECD estimates. This year’s edition of Corporate Tax Statistics also points to a stabilisation of certain tax incentives designed to attract mobile intangible assets and their related income. The publication contains new data on the effective tax rates available to MNEs on their intangible income through tax incentives, such as intellectual property (IP) regimes. This data shows that average effective tax rates including these incentives have stayed relatively constant over the period from 2019 to 2023, compared to a decline of almost 13 percentage points from 2000 to 2019. However, new country-by-country data on the variation of MNEs’ effective tax rates within jurisdictions highlights the presence of low-taxed profit in high-tax jurisdictions, which may reflect the use of tax incentives and other targeted concessions. These low-taxed profits point to the revenue-raising potential of the Global Minimum Tax, even in jurisdictions often considered to be high-tax, according to the report.
OECD consults on its user guide for the GLOBE Information Return XML Schema
As part of its work to facilitate the implementation of the Global Minimum Tax, the OECD opened on Wednesday 10 July a public consultation on an XML schema and a corresponding user guide regarding the standardized GloBE Information Return (GIR). The Global Anti-Base Erosion (GloBE) Model Rules require the annual filing of a GIR that provides information on the tax calculations made by an MNE Group under the GloBE Rules. It is designed to both facilitate domestic GIR filings wherever appropriate, and to be the technical format for exchanging GIR information between tax administrations, the OECD said. Interested stakeholders have until 19 August to send their comments by email to: [email protected].
