by Thomas Moller-Nielsen
European Council President Charles Michel said the EU leaders’ competitiveness summit was tough, but significant decisions were still taken, as calls for harmonising corporate tax rules and centralising the supervision of financial sector firms were scrapped from the Council’s final conclusions.
After the special council meeting came to a close on Thursday (18 April), Michel said that “substantial” decisions were taken after a “profound” discussion, highlighting three particular areas in which agreements were reached – greater harmonisation of insolvency frameworks, the “targeted convergence” of business conditions across the bloc, and the “strengthening” of EU-level financial market supervision.
However, proposals to harmonise corporate tax law, “including to foster equity investment,” did not make it to the final text – in contrast to an April 9 version of the council’s conclusions seen by Euractiv.
An EU diplomat told Euractiv that many member states, including Estonia and Ireland, pushed hard to remove the word “tax” from the Council’s final text.
“We are against [tax harmonisation],” said Estonian Prime Minister Kaja Kallas. “We as a small country, of course, don’t have many competitive advantages – and having a very competitive tax system is what we have, so please don’t take it away from us,” she said.
Irish Prime Minister Simon Harris was even more forthright. “The harmonisation of corporate tax law must be off the table,” he said.
Within EU leaders’ priority recommendations for shoring up the Capital Markets Union, another conspicuous sticking point was the proposal to move towards centralised supervision of the largest financial markets player, placing them under the direct oversight of the bloc’s European Securities and Markets Authority (ESMA).
The Council’s conclusions in fact shifted from “allowing [ESMA] to effectively supervise the most systemic relevant cross border capital and financial market actors” to “improving the convergence and efficiency of the supervision of capital markets across the EU” in the final text.
While the initial draft conclusions edged closer to Letta’s own proposals of moving the most cross-border entities – as well as the most mature markets – under ESMA’s direct oversight, the final text refers to the assessment of the option to the Commission.
“[The Council] invites the Commission to assess and work on the conditions for enabling [ESMA] to effectively supervise the most systemic relevant cross-border capital and financial market actors,” Thursday’s conclusions read, “taking into account the interests of all member states.”
The EU diplomat told Euractiv that “a lot” of countries – including “but not just” smaller member states – expressed major reservations about EU-level financial market supervision during the summit, in line with previous discussions that saw widespread dislike for granting ESMA more powers.
Tellingly, the Council’s conclusions only call for “improving the convergence and efficiency of the supervision of capital markets across the EU.”
Before the summit, Harris explicitly noted his scepticism about an EU-level financial supervisory framework.
“We need to really tease through in a very careful and considered way issues around supervisory functions, and I’m yet to be convinced around the need for an overly intense emphasis on the centralisation of those functions,” Harris said.
The EU diplomat said Luxembourg was also particularly resistant to enforcing such measures.
*fifrst published in: Euractiv.com
By: N. Peter Kramer
