Main results of the Council (excerpt):
The Council approved changes to the rules regarding VAT on services, so as to ensure that most types of services are taxed in the member state of consumption, and service providers can fulfil their EU-wide VAT obligations in a single member state, thus reducing compliance costs.
It adopted a key issues paper on economic and financial affairs, as well as conclusions on the efficiency of economic instruments in reaching energy and climate change targets. Both documents will be submitted to the spring meeting of the European Council, to be held in Brussels on 13 and 14 March.
The Council held an exchange of views, on the basis of a communication from the Commission, on progress with the EU’s “better regulation” initiative.
The Council adopted a directive recasting the capital duty directive.
Contributing to the Spring European Council conclusions, the Council adopted the following conclusions (excerpt):
1. Continued economic growth but risks to the downside
While real GDP for the EU in 2007 increased by 2.9%, it is expected that economic growth in 2008 will moderate, but should remain near potential. Ongoing financial turmoil, the slowdown in the US and continued high oil and commodity prices have sharpened downside risks and external imbalances are emerging in some Member States.
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4. Improving the efficiency and stability of financial markets
Improved efficiency and stability of the EU financial system are needed to ensure sustainable economic growth. The recent financial market turbulence highlights the importance of effective supervision as well as appropriate regulatory and financial stability arrangements and their implementation, which is crucial for supporting investors' confidence. The Council therefore stresses the need to:
• improve the efficiency of EU arrangements for financial stability in line with the agreed roadmaps, including by enhancing co-operation between authorities in different Member States. Also, the underlying causes of the recent market turbulence should be identified with a view to preventing the possibility of its recurrence in the future. It is important to improve risk management, in particular regarding liquidity issues, market transparency, and valuation standards of complex financial instruments and vehicles, examine the role of credit rating agencies, consider possible improvements to Deposit Guarantee Schemes in the EU, and enhance the co-operation with international partners;
• improve the prudential and supervisory framework for financial institutions and markets by clarifying the role of level 3 supervisory Committees, and enhancing the supervisory cooperation and the efficiency of the supervision of large financial groups. This includes making swift progress in developing risk-oriented capital requirements frameworks for insurers and re-insurers (adoption of Solvency II Directive), taking into account established business models where appropriate, and further improving the prudential framework for credit institutions (enhancement of the Capital Requirements Directive);
• further integrate financial infrastructure across the EU, by making progress on clearing and settlement, including the full implementation of the Code of Conduct, and introducing further measures where necessary to ensure consistency in the requirements for prudential safety and soundness of the post-trading sector, and progress on the removal of the barriers identified in the Giovannini Report; as well as implementing the Payment Services Directive, which aims to harmonise the framework for payment service providers and should also provide the legal underpinning for a Single-Euro-Payment-Area (SEPA);
• Co-operate at international level to enhance the efficiency and stability of international financial markets, enhancing convergence towards sound prudential frameworks and transparency standards;
• remove barriers to the further development of European risk capital markets, and improve the access for SMEs to micro-credit and mezzanine finance including through the European Investment Bank Group (EIB and EIF).
On the efficiency of economic instruments to reach energy and climate change targets, the Council adopted a Conclusion stating (excerpt):
• REITERATES that the EU Emissions Trading Scheme (EU-ETS) is the centrepiece of the EU’s long-term efforts to reduce greenhouse gas emissions and meet its international climate change commitments and CALLS FOR further work on market related issues linked to the ongoing development of the EU-ETS such as the conditions under which different emission trading schemes may be effectively and efficiently linked, expansion to include other sectors, market monitoring, regulatory supervision and the provision of information.
• CONSIDERS that within the EU-ETS, auctioning appears to be, in principle, the most efficient allocation method. The Council RECOGNISES the need to take into account competitiveness considerations and to manage the risk of carbon leakage to countries with lower environmental standards outside the EU. Any necessary measures will be considered to this end. Existing evidence suggests that risks will be concentrated in energy sectors and energy-intensive sectors of the EU economy, which vary across Member States.
• STRESSES the importance of clear and credible long-term signals for investors and the need for overall policy frameworks to be designed to support and generate private-sector investment in energy infrastructure and safe and new clean technologies. The Council EMPHASISES the importance of ensuring that policy proposals for 2020 and beyond provide the private sector with a clear view of the level of carbon constraint, including the conditions under which those constraints may be liable to change in the future.
The Council adopted a directive recasting the capital duty directive
The objective of this directive concerning "indirect taxes on the raising of capital" is to contribute to legal certainty by enhancing clarity, rationality and simplification of legislation in this field. The directive also reflects certain developments arising out of well-established case law of the EU Court of Justice.
The directive provides the opportunity for member states which currently apply capital duty to continue to subject to capital duty all or part of the transactions concerned. The directive provides however that once a member state has chosen not to levy capital duty, it is no longer possible for that member state to reintroduce such duty.
Since 1985, capital duty has been abolished by many member states, while seven member states continue to levy it. The Commission is requested to report every three years on the operation of the directive with a view to abolishing capital duty.
ECOFIN main results
ECOFIN Contribution to the Spring European Council conclusions
Council Conclusions on the efficiency of economic instruments to reach energy and climate change targets
Commission Communication on second strategic review of Better Regulation in the European Union
COUNCIL DIRECTIVE concerning indirect taxes on the raising of capital
Corrigendum
Meeting agenda
Background information
© Graham Bishop
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