Modern times call for modern financial systems, which is why Germany’s Presidency of the Council of the EU is committed to deepening European and international financial cooperation to bring about fairer and more transparent taxation. In doing so, Europe can bolster its financial stability as economies face additional challenges from the novel coronavirus pandemic.

Modernising European tax policy

Digitalisation has opened up new service sectors but has also created challenges in taxation. Firms are no longer tethered to any specific geographic location, allowing them to shift profits to countries with favourable tax schemes. We want to ensure that taxes are levied in a fair and transparent manner and create a modern tax policy that fosters economic growth whilst preserving member states’ tax revenues.

The Commission has proposed several options to ensure that profits are taxed where they occur, and multilateral discussions are ongoing to develop proposals for an international minimum tax rate for corporations. Germany’s Presidency will seek to implement the OECD’s proposals on the matter at the EU-level when it concludes negotiations this year.

In the meantime, Germany’s Presidency will continue discussions with European partners about the creation of mechanisms that utilise the advantages of digitalised markets while mitigating their risks. Such measures include:

  • Continued negotiations on the introduction of an EU-wide financial transaction tax, or a levy on certain financial dealings between member states and third parties outside the EU
  • Working together with member states’ tax authorities to simplify taxation and intensify the fight against tax evasion, money laundering and terrorist financing

A stable, robust and strong economic and monetary union

Solid public finances for member states are central to the stability, resiliency and growth of the eurozone. As such, Germany’s Presidency will prioritise further financial integration measures to help the EU weather this current crisis and create a sustainable financial framework for the future. Those measures include:

  • The continued review of the Stability and Growth Pact to ensure sustainable public finances and provide room to manoeuvre in future crisis situations
  • Emphasise in policy discussions the need for bolstering economic growth without increasing inequalities

Advancing the Banking and Capital Markets Unions

To remain competitive on the international playing field and secure financing for innovative European firms, EU member states must deepen their financial integration. As such, Germany’s Presidency advocates for:

  • Deepening the Capital Markets Union to increase financing options within Europe and reduce reliance on bank lending
  • Further developing the European Banking Union to tackle financial risks in the banking sector

Creating a digital and sustainable Financial Markets Union

The digitalisation of the financial services sector has opened numerous possibilities for new business models, products and services. It has also created new risks in ever-changing markets, facilitating the need for regulatory adjustments.

As such, Germany’s Presidency will work towards:

  • Creating a Digital Financial Markets Union to connect existing European financial hubs, reduce barriers to cross-border financial transactions and bolster Europe’s global competitiveness
  • Supporting the Commission on the rollout of its planned Digital Finance Strategy, which will propose a regulatory framework for new fintech players, and its proposals for regulating crypto assets within the Single Market
  • Strengthening aspects of sustainable finance in policymaking for financial market actors