7.X.2003
C/03/274
Luxembourg, 7 October 2003
12677/03 (Presse 274)
2530th Council meeting
- Economic and financial affairs -
Luxembourg, 7 October 2003
Minister for Economic Affairs and Financeof the Italian Republic
CONTENTS[1]
PARTICIPANTS...... 4
ITEMS DEBATED
Action for Growth - Interim Report...... 5
Strengthening the social dimension of the Lisbon strategy in the field of social protection...... 6
Financial Services - Investment Services Directive - public deliberation...... 6
TAXATION APPLICABLE TO PARENT COMPANIES AND SUBSIDIARIES...... 7
Taxation - VAT - Reduced rates...... 7
Any other business...... 8
–FOLLOW-UP TO G7 MEETING...... 8
–INTERGOVERNMENTAL CONFERENCE (IGC)...... 8
ITEMS APPROVED WITHOUT DEBATE
ECOFIN
–Monetary Convention with Vatican...... I
BUDGET
–Mobilisation of the European Union Solidarity Fund...... I
taxation
–Supply of gas and electricity*...... I
–Administrative cooperation in the field of VAT*...... II
external relations
–Relations with Croatia...... II
FISHERIES
–Tariff quotas for fishery products...... II
PARTICIPANTS
The Governments of the Member States and the European Commission were represented as follows:
Belgium:Mr Didier REYNDERS / Minister for Finance
Denmark:
Mr Thor PEDERSEN / Minister for Finance
Germany:
Mr Hans EICHEL / Federal Minister for Finance
Greece:
Mr Nikos CHRISTODOULAKIS / Minister for Economic Affairs and Finance
Spain:
Mr Rodrigo DE RATO Y FIGAREDO / Second Deputy Prime Minister and Minister for Economic Affairs
France:
Mr Francis MER / Minister for Economic Affairs, Finance and Industry
Ireland:
Mr Charlie McCREEVY / Minister for Finance
Italy:
Mr Giulio TREMONTI / Minister for the Economy and Finance
Luxembourg:
Mr Jean-Claude JUNCKER / Prime Minister, Ministre d'Etat, Minister for Finance
Mr Henri GRETHEN / Minister for Economic Affairs, Minister for Transport
Netherlands:
Mr Gerrit ZALM / Minister for Finance
Austria:
Mr Karl-Heinz GRASSER / Federal Minister for Finance
Portugal:
Ms Manuela FERREIRA LEITE / Ministra de Estado, Minister for Finance
Finland:
Mr Antti KALLIOMÄKI / Deputy Prime Minister, Minister for Finance
Sweden:
Mr Bosse RINGHOLM / Minister for Finance
United Kingdom:
Mr Paul BOATENG / Chief Secretary to the Treasury
* * *
Commission:
Mr Frits BOLKESTEIN / Member
Mr Pedro SOLBES / Member
* * *
Other participants:
Mr Philippe MAYSTADT / President of the European Investment Bank
Mr Caio KOCH–WESER / Chairman of the Economic and Financial Committee
Mr Jan Willem OOSTERWIJK / Chairman of the Economic Policy Committee
The Governments of the Acceding States were represented as follows:
Czech Republic:Mr Zdenek HRUBY / Deputy Minister for Finance
Estonia:
Mr Aare JÄRVAN / Secretary General of the Ministry of Finance
Cyprus:
Mr Marcos KYPRIANOU / Minister for Finance
Latvia:
Mr Valdis DOMBROVSKIS / Minister for Finance
Lithuania:
Ms Dalia GRYBAUSKAITE / Minister for Finance
Hungary:
Mr Álmos KOVÁCS / Ambassador for Hungary to the EU
Malta:
Mr John DALLI / Minister for Finance and Economic Affairs
Poland:
Mr Andrzej RACZKO / Minister for Finance
Slovakia:
Mr Miroslav ADAMIS / Ambassador of Slovakia to the EU
Slovenia:
Mr Sibil SVILAN / State Secretary for Finance
ITEMS DEBATED
Action for Growth - Interim Report
The Council adopted an interim report on the European Action for Growth as its main contribution to the Brussels European Council (16-17 October), on the basis of the assessment made by the Economic and Financial Committee (EFC).
The Council’s debate, aiming at providing the European Council with a positive message, focused on the following:
-the Action for Growth was to be seen as part of the process of structural change in the context of the Lisbon strategy; it was in no way contrary to the commitments contained in the Broad Economic Policy Guidelines and the Stability and Growth Pact;
-the emphasis was on the supply side(capital deepening, improvement in competitiveness, efficient infrastructures) and long-term growth potential rather than overall demand in the short term, though the latter might be positively affected if the growth initiative were to boost confidence;
-the call for additional public financing from Member States, increasing the capital of the EIB, and compatibility with the Financial Perspectives;
-the role of private money - in particular how to maximise private capital participation through Public-Private Partnership structures (PPPs) and securitisation;
-the emphasis on Trans-European network infrastructure (TENs) and transport projects but also the value of R&D, investment in human capital, innovation, and
-the need to establish a “quick-start programme” which would include projects with high potential impacts on the enlarged EU.
The ECOFIN Council, will discuss this issue again on the basis of the final report to be submitted by the Commission in November, at its meeting on 25 November, with a view to the European Council meeting on 12-13 December.
It should be noted that the Thessaloniki European Council “took note of the Commission’s intention to launch an initiative in cooperation with the European Investment Bank to support growth and integration by increasing overall investment and private sector involvement in TENs and major R&D projects and in this context invited the Italian Presidency to pursue this further."
On 15 July the ECOFIN Council invited the Commission in cooperation with the EIB to conduct "an assessment and make proposals for a programme to support growth and integration by improving and/or increasing overall investment and private sector involvement in TENs and major R&D projects". The Council mandated the EFC to prepare an assessment of this analysis.
On 10 October the Commission proposed a roadmap for action and a series of recommendations to the October European Council. The EIB presented a report on 30 September and the EFC agreed on its assessment on 3 October.
Strengthening the social dimension of the Lisbon strategy in the field of social protection
The Council endorsed the Economic Policy Committee's (EPC) opinion on the Commission communication of 27 May 2003 on strengthening the social dimension of the Lisbon strategy: streamlining open co-ordination in the field of social protection.
Given the importance of longer-term sustainability of public finances, the EPC's opinion underlines the importance of close coordination on pensions and healthcare between the Ecofin Council and the Employment and Social Affairs Council.
In particular, the EPC opinion stresses that:
♦streamlining in the field of social protection should reduce overlap between processes and reduce the number and length of reports, and thus lessen the burden of reporting;
♦the social dimension of the Lisbon strategy might benefit if social factors were better integrated into existing processes;
♦it is important that the Community should continue to support and complement the activities of Member States in the social protection area, with due regard for the principle of subsidiarity and the diversity of national systems.
Financial Services - Investment Services Directive - public deliberation
The Council reached political agreement on a common position with a view to a Directive on financial instruments markets (the Investment Services Directive). The agreement was reached by qualified majority, the United Kingdom, Luxembourg, Swedish, Finnish and Irish delegations voting against.
This draft Directive forms part of a coherent programme of legislative measures to facilitate the emergence of integrated and efficient European capital markets, while imposing proportionate checks and balances to avoid market excess and protect investors and consumers.
The draft Directive seeks to establish a harmonised set of high-level principles for the authorisation, regulation and supervision of investment firms and regulated markets, in order:
1)to enhance the protection of investors and market integrity, and
2)to further the promotion of fair, transparent, efficient and integrated financial markets.
It is proposed to achieve these goals by the development of ground-rules governing the execution of investors' orders in financial instruments on regulated markets, and organised trading systems and by investment firms.
On 19 November 2002 the Commission submitted this proposal for a Directive to the Council. The European Central Bank delivered its opinion on 12 June 2003 and the European Parliament adopted its position at first reading on 25 September 2003.
TAXATION APPLICABLE TO PARENT COMPANIES AND SUBSIDIARIES
The Council examined a proposal for Directive enlarging the scope of Directive 90/435, thus further reducing double taxation of dividend payments and other profit distributions in the case of parent companies and subsidiaries of different Member States. The Presidency and the Commission encouraged the delegations to finalise the discussions in order to solve the outstanding technical and political difficulties.
This proposal is one of the initiatives aimed at achieving a more efficient internal market without tax obstacles in the context of the strategic objective of building a supportive general framework for the EU economy as called for by the 2000 Lisbon European Council.
Accordingly, the Commission proposal aims, inter alia, to:
- update the list of entities annexed to Directive 90/435 in order to cover by name, legal forms of entity not previously included;
-lower the conditions for qualifying as a parent company and as a subsidiary company (i.e., minimum holding threshold lowered from 25% to 10%);
-dealing explicitly with the situation where distributed profits are received by a permanent establishment in respect of shares effectively connected with it.
Taxation - VAT - Reduced rates
The Council held a policy debate on the potential for reaching agreement on the proposal for a Directive on VAT-reduced rates (doc. 11817/03).
The Presidency invited the Commission and the Member States to take into account comments made during the debate and to show the flexibility necessary to reach agreement on the proposed Directive.
It will be remembered that ECOFIN Ministers held an initial exchange of views on this difficult topic at their informal meeting in Stresa in September 2003.
The state of play may be described as follows:
- some delegations cannot accept any extension of Annex H;
- other delegations insist on maintaining their derogations and exceptions;
- most delegations also consider that these derogations are linked to domestic problems of considerable political significance and do not pose any problem for the functioning of the internal market.
Directive 99/85/EC introduced the ability to temporarily test a number of reduced rates of VAT applied to labour-intensive services (contained in Annex K). The experiment will expire at the end of this year. Taking into account the imminent deadline, and in keeping with VAT strategy goals, the Commission has submitted this proposal for a general review of reduced rates.
The aim of the proposal is to rationalise the system of reduced VAT rates by grouping together all the cases where Member States are authorised to levy rates other than the standard rate in a single list (Annex H, which contains optional reduced rates for all Member States on a permanent basis).
In other words, Annex H would become the sole regulatory framework permitting exceptions to the application of the standard VAT rate with the result that:
- the reduced rate (not lower than 5%) would be applied to categories contained in the new Annex H only;
- the zero and super-reduced rates currently applied by Member States will be maintained only for goods and services listed in Annex H;
- the parking rate (a preferential tax rate designed to allow Member States a gradual transition from the reduced rate towards the standard rate applied to goods not listed in Annex H) would be abolished.
Furthermore, some of the existing territorial derogations would be rationalised to allow Member States to apply in particular areas - i.e., areas typified by geographical remoteness - rates lower than those ordinarily applied to goods and services used therein.
other business
–FOLLOW-UP TO G7 MEETING
The President briefed the Council on the results of the G7 meeting held in Dubai on 20-21 September 2003.
–INTERGOVERNMENTAL CONFERENCE (IGC)
At the request of the United Kingdom delegation, the Council was briefed on the state of play of the IGC Conference regarding economic and financial issues.
12677/03 (Presse 274)1
EN
7.X.2003
ITEMS APPROVED WITHOUT DEBATE
ECOFIN
Monetary Convention with Vatican
(Doc. 12376/03)
The Council adopted a Decision amending the Monetary Convention between the Italian Republic, on behalf of the European Community, and the Vatican.
BUDGET
Mobilisation of the European Union Solidarity Fund
(Doc. 11706/03 - Doc. 12177/03)
The Council adopted two Decisions on the mobilisation of the European Union Solidarity Fund for Spain and Italy, and for Portugal.
The aim of the first Decision is to mobilise a total of EUR 56,250 million to allocate EUR 8,626 million (Prestige oil spill) to Spain and EUR47,624million to Italy (earthquake in the regions of Molise and Apulia and the eruption of Mount Etna).
The other Decision aims to mobilise EUR 48,539 for allocation to Portugal (fires).
The Council asked the Presidency to prepare the budget documents to be sent to the European Parliament.
taxation
Supply of gas and electricity*
(Doc. 11314/03)
In order to avoid double or non-taxation, the Directive harmonises the rules governing the place of supply of transmission and transportation services. Access to and use of distribution systems and the provision of other services directly linked to these services will therefore be added to the list of specific instances set out in Article 9(2)(e) of Directive 77/388/EEC.
The import of gas through the natural gas distribution system, or of electricity, will be exempted in order to avoid double taxation.
These changes in the rules governing the place of supply of gas through the natural gas distribution system, or of electricity, will be combined with a compulsory reverse charge when the customer is a person identified for VAT purposes.
Administrative cooperation in the field of VAT*
(Doc. 6522/03 + Add 1 and 6930/03 + Add1)
The Council unanimously adopted a Regulation on administrative cooperation in the field of VAT and a Directive on mutual assistance in the field of direct and indirect taxation.
external relations
Relations with Croatia
(Doc. 9269/03)
The Council adopted a Decision approving the Agreement with Croatia concerning the ecopoints system to be applied to Croatian road haulage transiting through Austria.
FISHERIES
Tariff quotas for fishery products
(Doc. 12841/03)
The Council adopted a Regulation amending Regulation EC/2803/2000 as regards the opening and increase of autonomous Community tariff quotas for certain fishery products from 1 January to 31December 2003. In particular this legislative text provides for the following tariff quotas:
(a)the quota amount of the tariff quota 09.2785 is fixed at 20 000 tonnes;
(b)the quota amount of the tariff quota 09.2786 is fixed at 1 500 tonnes, and
(c)the quota amount of the tariff quota 09.2794 is fixed at 7 000 tonnes.
______
12677/03 (Presse 274)1
EN
[1]▪Where declarations, conclusions or resolutions have been formally adopted by the Council, this is indicated in the heading for the item concerned and the text is placed between quotation marks.
▪The documents whose references are given in the text are available on the Council's Internet site
▪Acts adopted with statements for the Council minutes which may be released to the public are indicated by an asterisk; these statements are available on the above mentioned Council Internet site or may be obtained from the Press Office.