Category Archives: Enterprise

Proposals for the Cohesion Policy 2014-2020

The Commission has published its proposals which will frame cohesion policy for 2014-2020. The first part of the proposal sets out common rules governing the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development (EAFRD), and the European Maritime and Fisheries Fund (EMFF). The second part sets out common rules governing the three main funds delivering the objectives of cohesion policy: the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund (CF).

When adopted, the legislation package will establish a common strategic framework for the ERDF, ESF, CF, the EAFRD and EMFF. A Partnership Contract will be agreed between the Commission and each EU Member State, bringing together all the country’s commitments to delivering European objectives and targets. Before funds are paid out, authorities will have to demonstrate that satisfactory strategic, regulatory and institutional frameworks are in place to ensure the funds are used effectively. The release of additional funds will be dependent on performance. Deficiencies in macroeconomic policy (excessive budget deficits, etc.) will lead to suspension of the cohesion financing. Procedures will be simplified and computerised where possible. Eligibility rules for EU funding instruments will be harmonised.

 

 

Commission Proposes Increase of EU Funds Co-Financing for Six Countires

The European Commission has proposed to increase the co-financing rates for the EU funds for six EU countries that have been affected by the crisis.

Under the proposal, six countries would be asked to contribute less to projects that they currently co-finance with the European Union. The supplementary EU co financing is designated for Greece, Ireland, Portugal, Romania, Latvia and Hungary.

The measure does not represent new or additional funding but it allows an earlier reimbursement of funds already committed under EU cohesion policy, rural development and fisheries. The EU contribution would be increased to a maximum of 95% if requested by a Member State concerned. This should be accompanied by a prioritisation of projects focusing on growth and employment, such as retraining workers, setting up business clusters or investing in transport infrastructure. In this way level of execution can be increased, absorption augmented and extra money injected into the economy faster.

It concerns Member States that have been most affected by the crisis and have received financial support under a programme from the Balance of Payments mechanism for countries not in the Euro area (Romania, Latvia and Hungary) or from the European Financial Stabilisation Mechanism for countries in the Euro area (Greece, Ireland and Portugal). Bulgaria is not included in this scheme.

 

 

Commission Proposal for the New Multiannual Financial Framework 2014-2020

The Commission has put forward its proposal for the new Multiannual Financial Framework of the European Union for the period 2014-2020. The Multiannual Financial Framework is the main budgeting document of the EU for the seven-year period, and little can be changed once it is adopted. The proposal has to be approved by the Member States and the Parliament.

The main innovations:

1. Expenses

  • A new fund for financing infrastructure, the Connecting Europe Facility that includes a preliminary list of transport, energy and ICT projects;
  • Stronger link of cohesion financing with the Europe 2020 objectives;
  • New category of ‘transition regions';
  • New conditionality provisions;
  • Partnership contracts with each Member State to ensure mutual reinforcement of national and EU funding;
  • An integrated programme of €15.2 billion for education, training and youth, with a clear focus on developing skills and mobility;
  • A common EU strategy called “Horizon 2020″ for investment in research and innovation worth 80 billion €;
  • 30% of direct support to farmers will be conditional on “greening” their businesses;
  • €4.1 billion for the fight against crime and terrorism and €3.4 billion for migration and asylum policies.

2. Revenues

  • New own resources for financing the budget- a financial transaction tax (Tobin tax) and a new modernized VAT;
  • Simplification of the existing correction mechanisms.

You can also read the critical assessment of the proposal by Charlemagne. Real Time Brussels looks at the fierce political battles that will likely emerge in the process of adoption of the Multiannual Financial Framework.

 

New Directive on the Mergers of Public Limited Liability Companies

Directive 2011/35/EU concerning mergers of public limited liability companies has been published in the Official Journal. The directives sets rules for merger by acquisition, merger by formation of a new company, and other operations treated as mergers. The main objective of the directive is that the shareholders of merging companies be kept adequately informed.

Commission Proposal for a Common Consolidated Corporate Tax Base

UPDATE: There is a good analysis by four economists in VOX on the impact of the proposed reform. They conclude that it is unlikely that the introduction of the Consolidated Corporate Tax Base would bring significant benefits to the EU in aggregate in terms of employment, GDP or efficiency.

The plans for a common consolidated corporate tax base are not new. However, the Commission has now stepped forward to formally propose the text of a new directive that should introduce a common corporate tax base in the EU. This is one of the measures recently identified in the Pact for the Euro.

The proposal will allow companies that have business activities in different Member States to consolidate their financial results, and to offset the profits in one country against the losses in another, and pay taxes on the net amount only. This is supposed to decrease compliance costs especially for SMEs. However, a recent report by Earnest&Young shows that there will be an average increase of 13% in compliance costs. The report also showed that the impact of the CCCTB apportionment factors was to move taxable profit into Member States with higher tax rates, thus increasing the total tax burden. Some Member States are also opposed to the idea. Unanimity is needed in the Council for adopting such legislation.

The Pact for the Euro: a Summary

The heads of state and government of the еurozone Member States have adopted a new competitiveness pact, called “A Pact for the Euro”. The pact comes as a form of guarantee for Germany in order to increase the funds of the European Stability Mechanism (ESM). You can read more about my concerns about the legality of such a pact here. An early assessment of the Pact for the Euro is available here.

The guiding rules of the Pact for the Euro:

  • It will be complementary to the existing instruments of economic governance in the EU;
  • It will concentrate on actions where the competence lies with the Member States. In the chosen policy areas common objectives will be agreed upon at the Heads of State or Government level;
  • Each year, concrete national commitments will be undertaken by each Head of State or Government;
  • The implementation of commitments and progress towards the common policy objectives will be monitored politically by the Heads of State or Government of the Euro area and participating countries on a yearly basis.

The goals of the Pact for the Euro:

  • Fostering competitiveness;
  • Fostering employment;
  • Contributing further to the sustainability of public finances;
  • Reinforcing financial stability.

The main policy instruments:

  • Monitoring and adjusting unit labour costs (ULC);
  • Removing unjustified restrictions on professional services and the retail sector;
  • Improving education systems and promote R&D, innovation and infrastructure;
  • Removing red tape and improving the regulatory framework (e.g. bankruptcy laws, commercial code);
  • Labour market reforms to promote “flexicurity”;
  • Tax reforms, such as lowering taxes on labour;
  • Aligning the pension system to the national demographic situation;
  • Putting in place national legislation for banking resolution;
  • Developing a common corporate tax base.

 

 

The Directive on Late Payment in Commercial Transactions is Published

Directive 2011/7/EU on combating late payment in commercial transactions has been published in the Official Journal. As a general rule, the deadline for both public and private sectors to pay a bill for goods or services will now be 30 days. For business-to-business payments the general deadline is 30 days unless otherwise stated in the contract. The general deadline for public-to-business payments is 30 days.

Two Important Strategies for the Sustainable Development of the European Union

The European Commission has published in the recent days two communications that touch on important aspects of the sustainable economic development of the EU.

The first is a communication on renewable energy and the progress towards the 2020 targets. The communication presents an overview of the renewable energy industry in Europe, its prospects to 2020 and addresses the outstanding challenges for the development of the sector. The Commission points out that renewable energy constituting 62% of 2009 energy generation investments in the EU. Member States projections show that renewable energy will grow at a faster pace in the years up to 2020 than in the past. Combined Member States expect to more than double their total renewable energy consumption from 103 Mtoe in 2005 to 217 Mtoe in 2020. If all the production forecasts are fulfilled, the overall share of renewable energy in the EU will exceed the 20% target in 2020. The Commission suggests that whilst annual capital investment in renewable energy today averages €35bn, this would need to rapidly double to €70bn to ensure the EU achieves its goals.

The second is a communication on the commodity markets and raw materials. This communication was delayed due to the French request to include measures to improve the transparency of financial and commodity markets. The document makes an overview of developments on physical markets of oil, gas, electricity, agricultural commodities and raw materials. The Commission outlines the growing interdependency of financial and commodity markets and then outlines policy measures for the separate physical markets. The communication then outlines the Raw Materials Initiative and describes the 14 critical raw materials – those who have a particularly high risk of supply shortage and are particularly important for the value chain.

 

 

EU Flagship Initiative on Resource Efficiency Launched

The European Commission has launched a very important flagship initiative on resource efficiency under the Europe 2020 Strategy. The Commission believes that increasing resource efficiency will be key to securing growth and jobs for Europe. It will bring major economic opportunities, improve productivity, drive down costs and boost competitiveness.

The most important medium-term policy measures are:

• An energy efficiency plan with a time horizon of 2020 which will identify measures to achieve energy savings of 20% across all sectors, and which will be followed by legislation to ensure energy efficiency and savings;

• Proposals to reform the Common Agricultural Policy, the Common Fisheries Policy, Cohesion Policy, energy infrastructure and trans-European networks for transport in the context of the next EU budget to align these areas with the requirements of a resource-efficient, low-carbon economy;

• A new EU biodiversity strategy for 2020 to halt further loss to and restore biodiversity and ecosystem services in the light of pressures on ecosystems;

• Measures to tackle the challenges in commodity markets and on raw materials which will, amongst others, periodically assess critical raw materials and define a trade policy to ensure sustainable supplies of raw materials from global markets. These measures will promote extraction, recycling, research, innovation and substitution inside the EU;

• A strategy to make the EU a ‘circular economy’, based on a recycling society with the aim of reducing waste generation and using waste as a resource;

• Early action on adaptation to climate change to minimise threats to ecosystems and human health, support economic development and help adjust our infrastructures to cope with unavoidable climate change;

• A water policy that makes water saving measures and increasing water efficiency a priority, in order to ensure that water is available in sufficient quantities, is of appropriate quality, is used sustainably and with minimum resource input, and is ultimately returned to the environment with acceptable quality.

Customs: New Security Data Electronic Declaration from 2011

From 1 January 2011, traders are obliged to make an electronic declaration to Customs with security data on goods before they leave or enter the European Union. The type of security data requested from the traders varies according to the means of transport and the reliability of traders involved in the operation (see Annex 30a of Regulation (EEC) No 2454/93). It can include, for example, a description of the goods, information on the consignor or exporter, the route of the goods, and any potential hazards. The time limits for submitting advance security data also vary according to the means of transport: from 24 hours in advance of loading for maritime cargo to 1 hour before arrival for road traffic or even less for certain air transport.