EU news focus

What has Europe done for you? 3-9 February 2014

EU News Focus

In this week’s edition, you will particularly read about how the EU institutions act to develop the rights of music creators and consumers, to protect European producers against unfair competition, to fight tax fraud and corruption, and to strengthen cooperation to tackle unemployment. 

European Parliament

In favour of tougher updated trade defence instruments

MEPs voted to update the current defence rules that are in force since 1995. As the world has dramatically changed, it is necessary to modernise these rules to adapt them to new challenges.

MEPs voted several amendments to the proposal. In particular, they said that the EU should increase anti-dumping tariffs applied to subsidised/dumped imports from third countries. Tariffs should be even more raised in sectors where the EU producers are mostly SMEs. There would however be lower sanctions against least-developed countries pursuing “legitimate development goals.”

Furthermore, higher tariffs should also apply in case of social or environmental dumping. This would be the case if the exporting third country “does not have a sufficient level of social and environmental standards” compared to the standards set in international conventions.

In addition, MEPs rejected the Commission’s idea that EU importers and exporting third countries should be notified two weeks before the imposition of provisional anti-dumping tariffs, claiming that it “could encourage stockpiling of dumped goods and politicize the trade relationship.”

Finally, SMEs should have an easier access to EU trade defence tools. In particular, initiating anti-dumping and anti-subsidy investigations is often too costly and complex for them. MEPs suggest establishing a “SME help desk” to provide guidance throughout the procedure and potentially to support the gathering of evidence of an economic damage justifying an investigation.

New rules on music copyright to develop online music services

At present, licensed providers of digital music services act mostly on domestic markets and face difficulties to offer their services across the whole EU. The proposal voted this week by the EP aims at setting pan-European licensing rules, thus facilitating the establishment of a “single digital music market.” In addition, its promoters highlight that it will “effectively protect the interests of European creators and make it possible for end users to have access to copyright-protected content throughout Europe.” The freedom of Internet shall thus be combined with copyright protection. Furthermore, the proposal should have a significant economic impact, as “the value of the EU recorded music market amounted to approximately €4.1 billion in 2012.”

The new directive still needs to be formally adopted by the Council before being implemented in domestic legislation within 2 years of its adoption. Under these rules, “online music service providers in the EU [would] be able to obtain licenses from collective management organisations representing authors’ rights across borders,” facilitating the offering of cross-border music streaming services. Collective management societies are organisations that manage the copyrights and moral rights of multiple creators. There are currently more than 250 of such organisations active in the EU (including PPL and PRS in the UK or SACEM in France).

The rights of artists would, however, be adequately protected. So, “collective management organisations will be required to ensure that artists receive appropriate remuneration for the use of their rights in good time” (i.e., maximum 9 months after the end of the financial year). Moreover, holders of rights will be able to influence the management of their rights and to choose the collective management organisation of their choice. Rules on transparency, reporting obligations and governance shall ensure the proper management by collective management organisations.

Finally, the directive aims at preserving “cultural diversity” by ensuring that creators of music in the whole EU have access to licences covering more than one country”. Therefore, “collective management organisations that do not themselves issue copyright licences for more than one country will be able to request another organisation to represent their repertoire” (in certain cases, that other organisation will be obliged to accept). The management of a represented repertoire should be the same as the management of an organisation’s own repertoire (portfolio of rights).

More details on this issue are available in this Q&A by the European Commission.

If you want to read more about the European Parliament’s activity each week, click here.

European Commission

Tackling VAT fraud thanks to stronger cooperation with non-EU countries

Tax fraud has a very high cost for Europe’s economies. Alone the VAT fraud costs tens of billions of euros each year. In difficult economic times, it becomes more than ever necessary to address this challenge. So, the Commission decided to ask the Member States to grant it a mandate to open negotiations with Norway and Russia on an increased administrative cooperation in matters of VAT. If successful, the resulting agreements would establish mutual assistance in the recovery of VAT that is sometimes (fraudulently or inadvertently) not recovered by operators from third countries. According to the Commission, the telecoms and the e-commerce sectors are particularly vulnerable to VAT fraud. Within the EU, the cooperation is already very developed with instruments such as Eurofisc and shared access to databases. Cooperation agreements with non-EU countries would extend the use of these anti-fraud instruments to these countries. At present, Norway and Russia are ready to start official negotiations. Preliminary talks have also been held with Canada, Turkey and China.

The first EU anti-corruption report

As already discussed in a separate article on our blog, the European Commission published its first ever EU anti-corruption report. This report outlines the cost of corruption for Member States (around €120 billion a year) and, based on the internationally accepted definition of corruption, studies the situation in each of the 28 Member States, highlighting which forms of corruption specifically affect each country, which measures have been successfully applied to tackle this challenge, and which measures should be reformed to strengthen the anti-corruption instruments. The Commission says that a lot has been undertaken to address corruption, but some Member States need to make more efforts, in particular in effectively implementing anti-corruption rules. Corruption does not only have a significant economic cost: it also “undermines citizens’ confidence in democratic institutions and the rule of law” said Cecilia Malmström, the EU Commissioner for Home Affairs. Among the recommendations of the Commission, it is worth mentioning: improving preventive policies and rules on conflicts of interests, developing comprehensive statistics on corruption crimes, improving the effectiveness of the implementation of anti-corruption legislation, tackling political corruption risks (rules on the financing of political parties and on political accountability) and focusing on certain sectors which are particularly at risk (e.g., construction and health care, in particular at local/regional level). Public procurement and state-owned enterprises are also targeted.

If you want to know more about the Commission’s action, click here.

Council / European Council

Enhanced cooperation between public employment services

The COREPER (committee of permanent representatives) approved a provisional compromise with the European Parliament regarding an increased cooperation between national public employment services. This would help in tackling the unemployment crisis by widening the range of job opportunities available to jobseekers. In addition, the formalised network would be able to share best practices between its members. The compromise is expected to be approved by the EP during the plenary session in April and will then be formally approved by the Council.

More information about the Council’s work can be found here; for the European Council, click here).

Court of Justice of the European Union

Taxation shall not be discriminatory on the basis of the registered office of companies (case C-385/12, Hervis Sport)

In a preliminary ruling (i.e., answering a question referred by a domestic Court), the Court of Justice declared that “taxation which disadvantages undertakings linked, within a group, to companies established in another Member State constitutes indirect discrimination on the basis of the registered office of the companies.” This is yet another example of the constant case law stating that taxation shall not discriminate between undertakings on the basis of the location of their registered office. Otherwise, it violates freedom of establishment.

The Hungarian fiscal legislation at stake established that “taxable legal persons constituting, within a group, linked undertakings must aggregate their turnover before applying a steeply progressive rate and dividing the resulting amount of tax among them in proportion to their actual turnover.” The Court of Justice held that this measure differentiated between taxable persons “on the basis of whether they belong to a group.” There was no direct discrimination, but this legislation created a disadvantage for undertakings which are part of a group. Indeed, firstly, the tax was calculated on the basis of the group’s consolidated turnover, and secondly, the tax rate were “steeply progressive”, so that the taxable person part of a group may well end up paying a higher tax than a taxable person which was not part of a group and which had the same revenues. Consequently, “the application of that steeply progressive scale to a consolidated tax base consisting of turnover is liable to disadvantage undertakings linked, within a group, to companies established in another Member State.”

If you are interested in learning about more European Court’s judgments, click here.

Pierre-Antoine KLETHI

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