Et were two days of postponements, adjournments and non-agreements. At their meeting on Thursday and Friday in Luxembourg, the EU finance ministers missed their goal in several policy areas of coming to decisions at the end of the first half of 2022 and thus at the same time of the French EU Council Presidency. At the end of the Luxembourg meeting on Friday, French Finance Minister Bruno Le Maire admitted that one of the most important French projects for the Council Presidency, to cast the global agreement reached in October 2021 on a minimum corporate tax rate of 15 percent into European law, is still ongoing is not in the towel.
Shortly before the meeting, Poland had given up its opposition to a compromise text, raising expectations that the ministers could reach an agreement. Instead, Hungary stood in the way on Friday. Finance Minister Mihály Varga said his country could not support reform at this stage. “The work is not yet complete. I think we have to keep trying to find a solution.” The 27 EU states must decide unanimously on tax issues, which is why each country has a de facto veto option.
Hungary has occasionally justified its resistance with the argument that the European solution for the minimum tax can only be decided when the EU Commission has also made a proposal for the implementation of the so-called second pillar of the global agreement – a redistribution of taxation rights. The EU authority wants to do this at the end of July. However, most participants in the ministerial meeting agreed that the Hungarian resistance has no objective, but exclusively political reasons.
Le Maire, who had already sought an agreement in March, was upset. He urged his counterparts to continue the work with a view to reaching an agreement at a later date. In front of the media, he did not want to rule out that this would happen in June. However, EU diplomats in Luxembourg speculated that the government in Budapest would only agree in July – and thus already under the Czech presidency. Le Maire demanded that the EU finally put an end to the principle of consensus in tax matters and introduce a qualified majority rule. Regarding the sharp rise in inflation and the recent interest rate hikes, the Frenchman said that it was particularly important that “we continue to invest in the future”.
The ministers also put other issues on the backburner that they want to have clarified or taken forward by June. Despite the higher risk premiums for government bonds in some euro countries, they did not consider it necessary to press ahead with the banking union. In particular, they do not want to push ahead with the considerations of risk weighting of government bonds in bank balance sheets – as well as a common deposit insurance – for the time being. The Eurogroup scrapped a work plan by its boss, Irish Finance Minister Paschal Donohoe. The Irishman wanted to ensure that negotiations continued on the banking union’s most controversial issues. These should now be tackled again in 2024 at the earliest. The election of a successor to Klaus Regling, head of the Euro Crisis Fund ESM, who is leaving office in October, also failed because there is still no consensus candidate in sight for the post.
