Press Releases Remarks by Executive Vice-President Dombrovskis at the ECOFIN Press conference

Remarks by Executive Vice-President Dombrovskis at the ECOFIN Press conference

Thank you Vincent. Good afternoon, everyone.

I will start with taxation. We have taken a significant step in our fair taxation agenda with today’s general approach on new rules to make withholding tax procedures more efficient and secure. This will have a positive impact on investors, financial intermediaries – like banks – and national tax administrations.

Today, these procedures vary widely across Member States and are often lengthy, resource-intensive and costly.

This applies especially to investors reclaiming excess tax paid in another EU country.

Apart from the frustration caused, it discourages cross-border investment within and into the EU.

The new rules will make sure that cross-border investors are not taxed excessively on dividends and interest payments. They also contain anti-avoidance provisions to help reduce the loss of fiscal revenue from abuse of withholding tax rules and procedures.

This decision is an important building block of the Capital Markets Union. Reducing complexity and costs will allow investors to invest more easily and securely in other Member States.

Second, work will continue to update the EU’s VAT rules to new digital realities, such as the rapid growth of e-commerce and platform work.

Digital technologies like e-invoicing are a powerful tool to raise VAT revenues while helping our businesses to grow. They can help to fight tax fraud too.

Member States lose many billions of euros every year to tax fraud, evasion and avoidance.

In addition, VAT rules vary widely across the EU and place a considerable burden on businesses. Thanks to the Belgian Presidency for their ongoing efforts and we hope to get this over the line during the Belgian presidency.

Moving to the Recovery and Resilience Facility where Council approved the modified national plans submitted by Spain and Italy.

A quick update on where we stand so far on the RRF.

Total disbursements now amount to more than €232 billion to 25 Member States, including pre-financing.

The Commission expects to receive 21 more payment requests by the end of the year and we will process them accordingly.

If all goes to  plan, in 2024 the RRF will have disbursed more than €100 billion and more than €300 billion since the start of the Facility.

Lastly, in light of the Ecofin conclusions following the RRF’s mid-term evaluation, we will soon propose a few practical improvements to reduce the administrative burden linked to RRF implementation. This while preserving  the Facility’s high levels of transparency and accountability.

Turning to the economy.

Without pre-empting the spring forecast that the Commission will present tomorrow, it is clear that the EU economy – and particularly the labour market – continue to show resilience.

Preliminary Eurostat estimates show that in the first quarter of 2024, economic activity in the EU and euro area expanded by 0.3% compared to the previous quarter.

This is the strongest rate since the third quarter of 2022.

Inflation is also on track towards target. Euro area annual inflation is expected to stand at 2.4% in April 2024, stable compared with March and down from 2.6% in February.

With business sentiment improving and labour markets still strong, the conditions are in place for economic activity to pick up pace in the course of this year.

This goes with the usual caveat about continuing risks and uncertainty, not least from current geopolitical circumstances.

Last but not least, Ukraine. As the minister already said, today the Council approved the Ukraine Plan.

It focuses on reforms to tackle barriers to growth, investments in key sectors, and measures to promote Ukraine’s convergence with EU rules and standards as part of its accession path.

The Plan will be the main tool for implementing the Ukraine Facility. The next step will be to pay out pre-financing of €1.9 billion right after the loan agreement is signed. Two more regular payments are expected in September and November.

This comes on the back of yesterday’s agreement to extend our trade support measures to Ukraine by one more year. And last week, EU ambassadors reached political agreement on the Commission’s proposals for using windfall profits from frozen Russian state assets.

Our priority now is to formalise this agreement as soon as possible so that these funds can support Ukraine without undue delay – on top of payments to come from the Ukraine Facility.

On sanctions. Last week, the Commission adopted its proposal for a 14th sanctions package.

This focuses on further weakening Russia’s military industrial complex and adding more measures to tackle circumvention. It is vital to keep up the pressure on Russia by strictly enforcing sanctions in cooperation with our international partners. We now hope for fast agreement by Member States on the latest sanction package.

As we discussed with Ukraine’s Finance Minister Marchenko today, we will continue to tackle sanctions circumvention – and we continue to raise this issue also with our global interlocutors.

Another main development is the very welcome $61 billion US aid package for Ukraine. It will provide more support for Ukraine when the country needs it most. Which means the financing gap for this year is basically covered.

Ukraine and its international partners will now need to focus on the financial support that will be needed for 2025.

I will conclude here. Thank you.

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