Subcommittee on Tax Matters Ordinary meeting EU Tax Symposium 2026
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FISC European Parliament
Speaker 2
I am very, very fortunate to have help of a brilliant panel, and I'll just briefly introduce our panelists. Left to me is Mr. Florian Wimper. He's the head of European and International Affairs and the German Insurance Association. He leads GDV's advocacy and public affairs here and engages with the policymakers on a number of issues, including now Florian, also taxation. He holds a master's degree in economics from the University of Cologne and the Trinity College of Dublin.
To the right of Florian, we have a professor of economics at the University of London. Sorry. To the very right is Daniella Gobot. She has studied central bank shadow money and just transitions, which may be a key issue for this today. She served as an expert, adviser for the European Parliament, the G20 under the Brazil presidency, and the Euro United Nations fourth financing and development agenda.
And she's teaching international finance, macroeconomics, and global economic policy analysis. And so we have Daniella. And next to Daniella, or right in the middle, we have Deborah Revoltella. She's the chief economist of the European Investment Bank and has designed and led the flagship publication on the EIB investment report. She launched and led that process and the implementation of the investment survey covering 12,500 European firms, and that report is a unique asset in our understanding of what the investment dynamics are in Europe.
So she's a member of the investment steering committee of the Vienna Initiative and CompNet, another degree in economics, master economics from the Bucconi University, and a PhD in economics from the University of Ankara. So I'm gonna pass the floor with a couple of questions, and then as per normal, handover. I will not limit the plethora of perspectives we can get from our panel, but I would frame it like this. We have private investors, institutional investors, we have public institutional investors, and we have academia offering depth and insights. So I think, I hope we can cover, if not all questions, then all issues that will bring us to a deeper level of insight on this issue.
And on that happy note and introduction, I'll just throw one question out there. In your view, what are the key elements that need to be in place to ensure the success of the savings and investment union? Redirecting savings towards productive investments, and how can taxation contribute to this success? I'm gonna start with you, Daniella.
Speaker 4
Thank you. Well, good afternoon everybody, and congratulations for still being here. I wanna take a step back and talk about the aims of the savings and investment union and to remind ourselves that the aims are to redirect savings, household savings, but also retirement savings towards productive investment and to create a financing ecosystem organized around capital markets. And this will get us the €800,000,000,000 a year that Mario Draghi told us in his famous competitiveness report that we need in order to meet the existential challenges that Europe is facing. And I wanna set the scene by being slightly controversial, because that's what academics are supposed to do.
And to say that I find two fallacies at the core of these savings and investment union plans. And I think it's important to understand these fallacies in order to have a clearer conversation about how we move forward in terms of success. There is first a savings fallacy that I find here, which is, and we hear this very often, that Europe has a pool of savings trapped in bank deposits. And if we use taxation and nontaxation measures, can redirect them towards the capital markets. We can encourage households to take more risks, to invest more like Americans, I heard a couple of times.
And this will solve the shortage of investable capital that European companies are facing. And I think this is wrong. Just to be very clear, this is wrong. I want to cite the paper from the European Central Bank that shows that nonbank financial institutions or institutional capital is larger in terms of the financial assets that they hold compared to GDP than the US nonbank financial institutions. Around 450% of GDP compared to 380% of GDP in the United States.
Speaker 5
So we do have a large market-based financial system in Europe. We do not have a shortage of investable capital, and creating pan-European savings vehicles via taxation or other measures will only add to this glut of institutional capital that is chasing profitable assets across borders. I think what we have is a shortage of investable projects in Europe, that's a very different question. And this takes me to the second fallacy, the investment fallacy. And it basically says, if we get investment, if we get savings right, we will get investments right.
Speaker 6
But if we look, for example, at open ended equity funds in the Euro Area, a lot more is going into investing in the US equities, in big tech basically, than it is in your European equity. And what I want to suggest here is to solve this fallacy, what we need in Europe is capacity to steer credit into strategic activities, into strategic projects that the European Union needs. And we can solve this steering problem or this credit capacity problem by, for example, adopting the kind of mandatory investment rules that the United Kingdom is adopting for pension funds, but also for other institutional investors, and also by reviving the European Central Bank's ability to do credit policy, which it did a couple of years ago under the decarbonization of monetary policy measures. I wanna stop here to not run out of time, and we can come back.
Speaker 3
Thank you. Deborah, I'm not gonna ask whether you agree, but I am gonna ask back to the original question maybe.
Speaker 9
I'm not sure. You are speaking about the fallacies. I think there is a different way to say the same thing. And I agree with you that the problem of Europe is not the lack of savings. I think Europe has a lot of savings.
Speaker 7
We know that households save 15%. The saving ratio is 15% in Europe versus 5% in the US. Europe has accumulated gross financial assets of 35,000,000,000,000. The point is that they are in deposits and fixed income. And when they go to equity, they go to equity across the ocean.
So that's the problem for me. The fact that there is the capacity to inter intermediate resources is somehow blocked. And when there is a transformation to the equity market, that's hardly going to equity and the risk taking out at the European level. So what we think is that actually Europe has everything to succeed. Actually, Europe is very good at innovation in certain sectors.
We heard before, yes, China is very good. True. US is very good in a very few important sectors, was Stieglitz is saying. Europe still has the capacity to innovate quite a lot. There's a good university.
There's also a good startup ecosystem. The missing link, and that's what we always call, is the scale-up gap. So there is a point in time in the growth of firms where the funds in Europe are not big enough to support the companies. And we think there is a $70,000,000,000 per year scale up finance gap in between. And that's the one that institutionally we are trying to look at.
Speaker 8
We think that there is a bigger role for institutional investors. And I look at my right, pension funds, and insurance. They are normally smaller. Maybe not insurance. Pension funds are smaller than in the US.
They tend to have lower equity investment. And when they have equity investment, it's a lot of either American or a very strong unbiased. So there is something also on institutional investors when they transform and go into equity to have it more cross border at the European level. And that's something we are looking at. Actually, as an institution, we are very active in the civil and investment union.
I try to do our part. We think that, and again, I come to what you were saying. We think like the twenty eighth regime is super important because it's a part of how you change the system in order to make sure that companies have become investable wherever they are and easier for investing. And then we are looking at bottom-up what kind of instruments we can play. And it's actually a bottom-up approach that we are taking.
Speaker 7
Just one second. As an institution, we are quite strong on venture capital and venture debt. We are 30% of a venture debt market, 24% of venture capital as an indirect player. We think in the scale-up phase, we have to do more. We have experience.
Speaker 8
And now what we are trying to do in these larger funds, we are trying to really work with you. And, hopefully, we are coming up with a number of proposals that work together to try to see how we can bring those insurance and pensions funds. Some have excellent capacity to invest by themselves in scaling up. They are very good. But usually they have home buyers.
And we are trying to see if there is something pan-European that we can do with that. And I see that you want me to stop. And so I leave it.
Speaker 2
I don't wanna rush things, but you were actually pointing to Florian. And, Florian, I promise you I wouldn't throw you under the bus, but you're almost bank because, according to two other panelists, we have enough savings. We have good innovation, a good startup ecosystem. So the baseline problem must be allocation, and that kind of points to, well, your guys or my guys. Right?
So but I'll ask you for a comment on that after I've asked you for the preliminary question, the key element that you think needs to be ensured to succeed on a savings investment union.
Speaker 10
I think we can combine the two just immediately. I think. I don't think I'm thrown under the bus here. I'm more guided to the station, to be honest. We had a brief exchange before. I also don't feel that I'm very controversially attacked or pet in the picture.
Speaker 11
I think if we look at the SIU, it's a very wide framework. You touched also upon the twenty-eighth regime, we scale up funds and so on and so forth. I think what I would like to do in the course of this panel today is a bit like looking at our core business, at our USP, so basically transforming savings into investments, into retirement payments. If you look at industry association representative, as Martin highlighted at the beginning, if you look at the German industry that I represent today, so roughly €102,000,000,000 in payouts and retirement savings in 2024, substantial number. Sounds a lot, but Draghi is always bringing the higher numbers.
Speaker 10
Then I think if we look at the savings and if they are there, likely, yes. Are they at the right places to make them work and be productive? And I think that was your initial question, Martin. I think the fair answer is not really. And there, I would like to pick up the second point, which Danila mentioned and where Deborah comes in with all her mighty power from the EIB: is do we have investable projects?
And there, I think, is the clear struggle. I think getting this investment from bank deposit into long term reliable investments, into the right projects to develop European infrastructure, to develop European economy. I think that's the big challenge. And that's why it's also right to say, like, the savings and investments union is a vehicle to success, and it's much more than just the capital markets union, which we discussed ten years before because we need to get the savings in. So from savings to investments, and that's where I think we come in.
We call when we discuss it, we speak about the transmission belt. So basically meaning we or our members sell products, collect funds, and distribute them through safe assets long-term. We basically can look at three different cohorts if we look into savings, because from the outset, there's a set: the younger the person that is saving, the less money available. So we can look at job starters. So, say, like, starting to save, that's continuous cash flow for, let's say, 40 to 80 years with 40 years of saving, 40 years of decumulation for a retirement product.
Then we have a middle ground where people come with a bit of money and have a start-up investment. And then we speak about, let's say, 40 to 6 years. And then we have, let's say, what usually comes a single premium into insurance, where we have higher investments at one stake. And then getting back to tax, can tax play a role? Yes.
Speaker 11
Because it can direct where people put their money, and I'm over for already three seconds. So I close by selling, like, removing cross border obstacles probably also helps us in taxation, but I'll leave it there and get back to that on the next questions, I suppose.
Speaker 2
Thanks a lot, Fabienne. So if the underlying problem, this is a follow-up question. So if the underlying problem is not whether there's money enough, but it's the absence of the right projects. And fair enough. If we take the fallacy of tax won't move savings.
But then I think the question is, what are the right projects? And secondly, isn't there tax incentives that could help those bright projects emerge and get financing? And so I'm coming back to you, Daniela, maybe on that point. So.
Speaker 4
Well, I think, yes. I think Deborah mentioned bottom up approaches in identifying the right investable projects. And what worries me studying European industrial policy for a while now is that these bottom up approaches always translate into providing more carrots for companies who are promising investable projects or carrots for investors who are going to go to these companies and help them finance. And I would like to see more, I would like Deborah to maybe contemplate the possibility of top-down approaches, which I think are very important as well in creating a set of carrots and sticks that ensure that we can identify the right projects and that we see companies who are identifying with European taxpayer support that they are aligned with European strategic objectives. And it's not very clear to me at the moment when we talk about the question of investability, to what extent this is addressed or to what extent the AIB or other European institutions are considering the question of investability not simply as amassing more capital.
We've done that for a while, I think, in the European Clean Deal, in several others. I'm wondering whether it's time for us to think in terms of articulating industrial policy with credit policy. That's why I mentioned the credit policy before. There are China has done a very successful articulation of industrial and credit policy. And if we don't want to go the American way, and I have very many reflections on why choosing an American investment model for our European savers can create all sorts of possible downsides.
Speaker 6
I think, for example, would we want to expose our European households to investments in illiquid, opaque private credit markets that are now, we see in the United States gating withdrawals? That's one worry I have. The other worry that I have is the extent to which there are lobbies in the European Union which are trying to put together the savings and investment ambitions with a further privatization of our pension systems. If you read the Deutsche Börse report on what would make the SIU work, they are saying we have to reduce our PAYGO systems. We have to go to funded pensions.
We have to go from defined benefit to defined contribution pensions. I worry that if we are starting to save like Americans for retirement, we might have to live like Americans. And I've lived in The US for a while. I don't want to be in a private equity-owned hospital. And I'll finish with that.
Thank you.
Speaker 2
Thank you for that. I'm just pointing out that even if you disagree with Daniela, it doesn't mean that you are pro an American model. It just might be that, you know, some of the nuances that you can add to that. And it's super easy being the moderator of this because you're basically asking questions of each other. So I don't, I'm just passing the floor to you, Deborah.
Speaker 7
I think when I was speaking about the bottom up approach, it's more speaking about an institution that has a very strong relevance and presence in the venture capital and venture debt market. And we see what is needed to scale up and to enter into the market at the higher level of the market, the scale-up phase where there is more need for investment. So that was the movement that I was thinking in terms of bottom up approach. When you talk, you speak about industrial policy. I think that is a different concept.
So we were thinking very much of what can happen in the investment union for this transformation of finance. When you talk about industrial policy, you pick a sector, you pick activities, and you try to support them. On our side, we have a, I think that, and I think more or less, it's a, you know, for sure, it's a review of the commission. This is also our view. Targeted is very important.
So it's important to be very, very targeted in terms of instruments that are put in place. With economic security, we enter new territories. So you may have more areas of action. But I think it is important is this targeted and European. The fact of having a European approach to industrial policy if they are done, this is, I think, quite important.
Speaker 11
Yeah. I wanna pick you up, actually, Martin, because it's like Americanization of pensions. I think there's a little ground left in between the pay-as-you-go system and the Americanization of pensions. If we wanna stick to that, likely I would steal that for the future, to be honest. The objective shouldn't be to crowd out the social pension.
I think that doesn't work for most of our cultural approaches. Right? We do believe in mutualization. We do believe in social fairness and social contracts. We're speaking about the next euro, if you will.
And what we also know for sure is demography doesn't play into our hands in most jurisdictions within the EU. So we have an increasing pressure. Productivity increase doesn't live up to aging, so we need to do more. And so there is, I think the important part is how do we do more. And there is, I think, the tax incentivization of a certain investment might be less of the opportune way than the tax incentivization of saving into something which invests.
And if you look, sorry. For going a step deeper into insurance here, if you look into our insurers invest, there's the majority of investments done through what we call the general account. That's mutual investments over long term horizon with certain safe assets, which are more cash flow focused than actually single revenue that we touched upon EIB based infrastructure projects. If we get this right, we'll free up capacity to invest in more scale up. We will free up invest to alternative investments, alternative assets.
And there is, I think, where we need to place a lot more of attention to. So how do we transform savings into retirement income rather than short-term capital gain? Because that will ultimately take pressure out of private and public budgets, automatically help to actually stabilize societal saving. So that's where we find the hooks. And if you allow me to one very specific nontax related policy area, we have a pan European pension project product proposal on the table where the mistake is already in the outset by providing that 95% of whatever this pension product can invest in is known into non complex MiFID assets, which basically mean no alternative asset, no infrastructure projects, and not what we are trying for to create the infrastructure for a competitive Europe, which we need in the next ten, fifteen, twenty, thirty years.
And I think that's where we need to look into is how do we incentivize with the tax incentive, which we need to convince people to go into these areas, into getting the investments where we need them, rather than looking at the Americanization of buying MSCI World ETF and waiting for good to happen. And then finally saying home BS, yes, but it's a currency. BS. Right? So it's 1,900,000,000,000 are invested each year by insurance companies from Germany, 2 to 300,000,000,000, sorry, billion each year new investments, and 70% of that stay within the Eurozone.
Speaker 2
Sorry. All good. Thank you very much. I mean, we started off provocatively, and then we almost get to a landing place. So to shake the hornet's nest again, we are opening the floor for questions for you because I noted that on the question on whether tax incentives would drive or would be the right way of driving retail savings into investments, almost half of those who voted said no.
So I'm opening the floor. Thank you very much for the questions. I'm opening for them now. Seat number 243 from Portugal, member of the Portugal Parliament, mister Mathos. The floor is yours.
Speaker 14
Thank you very much, mister chair, and thanks as well for this discussion. And we've talked about how the savings in an investment union can be important for growth, but my main concern is how it can be useful for the little guy. Because you see, banks, they're earning a lot of free money by having their deposits at the ECB. You see that banks and capital markets firms are charging high fees, and they're paying very low interest or very low income on our savings. Economic rents are absolutely everywhere.
And then you're telling us that we have to subsidize through tax benefits private pensions. For some reason, there's, you know, all of these profits in the capital markets, but you can't seem to make private pensions profitable enough. You can't make them attractive enough for the little guy to make sense for them to invest their money in that. When there's not enough money for public pensions, there's not enough money for elderly care and for climate protection? Honestly, you know, I want the saving investment union to work, but you need to make it make sense for the little guy, and it needs to make more sense than investing in public services and in the public goods. Thanks a lot.
Speaker 10
Tough questions. Thank you very much for that first, and I try to address it as well as possible. I think you have a very fair point in saying, like, how do we actually use tax money efficiently? It's public budget. I think there is a certain element of how to incentivize long-term savings.
I think that's a very fair one. You can probably see it. Into long term savings, I think that's a very important part for everybody, not only the little man as you call them or the average person or low income classes. And we need to see where we emphasize tax, where we emphasize the need. I agree with you that there's a very, very sensitive question on where tax incentives need to be made to ensure that those who need to accumulate money on top of shrinking public pension pots are benefiting.
The second part, which is important because you asked for it, how to, regarding the infrastructure project, I'm very happy to have the EIB sitting next to me as well, is we need to see where the money is needed. We find that capital allocation is not always the most efficient if it comes through purely public channels. We have just presented a study together with the Institute of Economics in Köln, so the German Institute of Economics, where we look into how public-private partnerships can deliver on the creation of infrastructure. It's not surprising that due diligence and so on at the forest get an extra control function. So we see the merit there.
But I agree with you. It needs to be very sensitively designed. It can't be a rain shower. It can't be everywhere and for everyone. But there, I play it back to politics, actually.
It's to a certain extent the allocation of these tax incentives is a public debate where we hope for the benevolent decision makers in where we have them public service. I hope that answered your question. Although I was happy to be picked up on the way out.
Speaker 2
All right. Thank you. I saw that someone chipped in and wanted to, but we do have a number of questions. So I am going to open the floor for the next questions, and then going to group these questions into rounds of answers. The first one is seat number 508.
Speaker 16
Thank you very much. Tanya Sognier from Medef, French Business Association. I would like to ask a very simple question. The question of the panel is how can taxation boost the savings and investment union? I would like to ask another question, very simple.
How can you build a credible and realistic SIU when you still have withholding taxes within the EU? This is a persistent problem, an issue. And if you want to promote growth, if you want to support the development of EU champions, of EU companies, how can you do that with withholding taxes still in the way? I would like to mention that the situation is getting worse in this area, also on intragroup flows, but that's another question. So other conclusion question, could you put this in a tax omnibus?
Speaker 17
Could that be a measure that could be promoted at the EU level? Thanks a lot.
Speaker 2
Thank you. I'm gonna group this question with a number of others. So next speaker is, mister Corriere, seat number 404 from Ifama.
Speaker 18
Can you hear me? Yeah. Thank you, Martin. So, Antonio Cruella from Epharma, European Fund and Asset Management Association. The, my question is I go with my DEF.
Speaker 19
And withholding taxes is really big problem. We know that some things that are being done is, you mentioned it at the beginning, Martin, on Fostair is a great initiative. It's something that reveals the pragmatism and realism where the commission can propose, and member states can agree. So focusing on double taxation, whatever can we do in addition to faster. Thank you.
Speaker 25
Good afternoon to all. Bernard Van Meulen for EU Public Affairs. Thank you, Mr. Chair. I would like, if you allow me, to focus on the second part of the adding, which is our taxation can boost investment, and to take the opportunity to connect this panel with the beginning of the day, which is about simplification and fairness. So my question is the following.
Speaker 20
How can climate ETS levy be simplified and guarantee fairness to support investment? I take the opportunity to highlight that there are critical sectors like aviation and shipping where hampered 3% of the ETS revenue. So, the revenue from taxation is used to reinvestment in decarbonization projects in shipping and aviation. Thank you.
Speaker 21
Thank you very much for the possibility given to me to set this question. But because we're drawing to the end of this event, I'd like to refer to something specifically. I heard all the speakers, fantastic speakers. However, what I realized is that they mainly made statements. I want to make a proposal, a specific proposal, because I heard that you're looking for 120,000,000,000.
Speaker 22
We have this with a specific proposal. What is this proposal? For 41 years, I've been studying the VAT. The VAT gap is above 100,000,000,000, and the solution is extremely simple. What we should do is, first and foremost, look at isolating the carousel system.
Why? Because in this case, as the European prosecutor Missus Koveczy said, there is more money that comes from fraud, from drugs, from arms trafficking, and from other types of trafficking. So with my proposal, if we manage to draw from VAT all this money, we don't need to levy any more taxes. This money is enough. Recently, in a publication from Italy, 500,000,000 were collected from this carousel system, were actually lost in the carousel system.
Speaker 23
So in many cases, we have collected the taxes and then we lose the taxes. I know that I've went beyond my time, but I would ask you to understand. And if speakers want to listen to this proposal, let them applaud me now. If they want to listen to this proposal, no. They don't want to listen to the proposal.
Speaker 26
Or do they want to listen to the proposal? If you allow me for half a minute, please, 30 seconds. Allow me.
We've had another minute, actually.
Speaker 2
Thank you. You've had a minute, and then you had an additional minute. I know I'm not granting you a third minute. I would like to hear the answers from the panel. Is that okay?
Thank you. Right. Thank you very much. I think, thank you very much. I think we had, I think, a number of questions that revolve around frictions in the system.
Right? So withholding tax and whether the level of ambition from faster, and whether it actually works, and whether more can be done. Also, think on the point on simplification, not just on tax, but on other burdens of the industries like the ETS. Right? Whether alleviations or simplification in itself on other things, all other things than tax, will make the companies more investable, maybe going back to the point on projects finding.
And then the last point made here was that there is, in the very setup of our systems, including the VAT system, there are significant holes that if we just close that I'm sorry if I'm paraphrasing, but if we close those holes, then in itself, that would be a source of financing. That may be less a question than a statement, but I'm sure it forces some reactions anyway. On the points on friction, I don't know, Danielle. Would you care to start?
I Sorry. Say
something on.
Speaker 7
The simplification and fragmentation, actually, of the system. We actually, you were mentioned at the beginning of this survey that we do every year on a European firm. We are actually getting two messages from firms. If you ask what is, let's say, you can call it the cost of a bureaucracy, is the salary bill paid for those employees that the firm tells us they only work due to bureaucracy to deal with the bureaucratic part. For SME, this accounted for 2% of the revenue.
The energy bill for SME is 4%. So it's not a little. It's a lot of cost of bureaucracy on a European firm. Another element, and actually when we talk about saving an investment union, I always think the single market is also extremely important. And always in the survey, we ask a firm, if you export to another European country, do you experience frictions?
Normally, in our perfect single market, there should be 0% of firms. 60% tell us that they have a problem. So the integration of the single market is still something we should really work on. And we see that, actually, when we wanted to see business opportunity and investment activities, the private sector responded to business opportunity. And single market simplification brings better business environment and business opportunity.
And that's what we wanted to see. So I think the agenda that somehow sometimes is taken like, yeah, the simplification agenda is just omnibus or whatever. I think it's a super important one. And the single market agenda is the one that needs to be really on the table, not only of the Commission. The gold plating is at the national level.
Speaker 2
Thanks. And I somewhere in there, there's also the answer that indeed simplification also on each of the schemes. And there was a very direct question on withholding tax. I don't think anyone on this panel can answer it as it is a task for the commission. But I think, Florian, we can agree that there are issues on the friction in the European Union.
Speaker 10
I don't wanna steal Daniel's thunder, but very briefly then, in this regard, yes. I think it's not very surprising that Efama, the European asset managers, ourselves have kind of similar interests. Thanks also for the question from Medev. I think one of the very straightforward ways to address the issue of fast withholding tax through faster better would be to bring it in earlier, right? We're looking to 2030, 2028 would fit us quite well.
That would at least help us a little bit. And then I think if you look into further gains, I think in the financial services industry, had looked into what we call the hidden VAT. Right? So we have insurance premium tax, for example, in Germany, or other taxes. So the VAT issue in financial services is difficult.
It's hard to be addressed, but we have steps in between. Thinking about, for example, creating cross border VAT groups, making avoiding the VAT for intergroup would be one step in this direction, but I won't want to say, steal time from Daniella.
Speaker 2
So great. Because I've actually saved Daniella for last. Also, maybe, on the point on VAT brought forward given that you have done research in shadow money. So is there in the discrepancies of our European system? Are there sort of, like, holes including in our VAT system that can be put to better use than tax incentives?
Speaker 4
Right. Thank you for getting the toughest questions in some ways. But I want just to reflect on the range of questions we received, and I think this is the great genius of the savings and investment union that it can harbor and it can invite lots of different questions that come from very different political perspectives, one that requires for simplification. And I think we have to remember simplification doesn't have to mean the regulation. And I think sometimes it can mean that.
But the ultimate aim for me of the SIU is to generate transformative investment. And I'm not very sure and I think whether tax policy is the right thing to do to generate transformative investment as opposed to industrial policy. I'm sorry to say this, but my when the Draghi report is often invoked because of the need to do industrial policy in the European Union, and whether we can use the SIU in order to do both industrial policy and credit policy in that perspective, it remains to be seen, I suppose. Thank you.
Speaker 2
Thank you, Daniela. I'm sure you can sense that the moment you sit on the stage, get a little bit carried away enthusiasm. And now the staff have told me, I think, in 8 different ways that I need to conclude. I think it's really difficult to wrap this up. I think the comment that you made, Daniela, about the plethora and the width of questions that you have include even if you try to anchor discussions on SIU around taxation is quite telling.
And then also for the task ahead of the commission and everyone else in getting the SIU right is quite a daunting task. I think the daunting task ahead is the only conclusion I'm gonna make here. I hope that we have offered some answers to the questions along the way. I hope you'll join me in applauding the panelists for this discussion, and then thank you on that happy note.
Speaker 1
Thank you. Thank you for the wonderful job. Thank you, because as you said, you were last, not least. You had a very interesting and, I must say, a very active and lively debate, not only on stage but also in the audience. So thank you for participating until the very end and handing us all of your questions.
I think they've answered most. If not, they will still be available. And I just wanted to add that if you're in lack of projects, infrastructure projects you want to invest in, I'm sure that everyone living in Brussels, who's coming regularly to Brussels, can give you top of mind five infrastructure projects that definitely need money, and lots of money quite soon. So talk to us, and we'll give you a list of projects you can invest in. Ladies and gentlemen, as you've seen, they reinstalled the lectern.
That means that we are finished with the panels for today. You're done with the voting. So the only remaining thing that is left for us is, of course, to have some conclusions. And whom better to invite to the stage for these conclusions than the commissioner himself? So ladies and gentlemen, please welcome the commissioner, Wopke Hoekstra, who's going to join us on stage to give his concluding remarks.
Commissioner, the floor is yours. Thank you.
Speaker 28
This is quite an impressive lecture, even for my ridiculous heights, I must say. Honorable members, ladies and gentlemen, a very good afternoon to everyone here in the audience, but also everyone online. It is fantastic to be here with you, to be here with all of you, and to wrap up this year's EU tax symposium. I've been hearing great things about the last two days. High caliber speakers, and I had the pleasure of running into professor Stiglitz literally in the elevator.
Speaker 27
Lively and thought-provoking debates, valuable, and I hope new connections. All in all, I would say a great two days for EU tax. So a big thanks to Pasquale Tridico for helping to make this symposium into a great success. Tireless efforts, I wanted to salute that as well as the chairman of the Fisk subcommittee. You're doing an amazing job there.
I'm gonna not say anything more because technically, you're checking on my work rather than the other way around. But it's testimony, I think, to, you know, the spirit of delivery how you are approaching this. So I really wanted to salute that. Ladies and gentlemen, also a very special thanks to Erasmus Thomas for the amazing work he has done. Dear Grasmus, this symposium is very much your creation, and you have a knack for bringing the right people together.
Speaker 29
And ladies and gentlemen, it has paid off in truly a big way. And beyond this event, I wanted to thank you and wholeheartedly thank all of you in Taksud for doing such a great job. You and your team are incredibly proactive on all the tax files, as well as on CBEM, and that has made a huge difference, not just to me and the team, but frankly speaking to the European Union, and that is tremendously important. So once again, thank you personally, but also thank everyone behind this event for making this such a success. Ladies and gentlemen, at this event last year, I spoke about my goals and vision as a commissioner responsible for taxation.
Speaker 27
And I've then articulated that my aim was, and it still is, to drive EU tax initiatives that finance a stronger, cleaner, more competitive, more stable European Union. Policies that boost competitiveness, that boost a clean transition, that encourage efficient and effective taxation, and that promote fairness and promote transparency. And at the time, a year ago, we were on the cusp of a fundamental rupture of an old, accustomed system and the beginning of something new and something unknown. And if you were then to fast forward to today, it is clear that, unfortunately, the rupture has deepened. Rifts which were starting to emerge have grown wider.
The geopolitics that was already complex a year ago has become even more complex. So that maybe says a bit about what we have ahead of us. Global alliances that were once stable have been reshaped. And the most recent events in the Middle East are just the latest fuel on the fire. Now, given these headwinds, our vision remains more relevant than ever.
Europe needs to stand stronger in the domain of climate, in the domain of competition, and in the domain of independence. And if you have that all in mind, I would like to revisit the journey we have embarked on a year ago. What is it that we have achieved? Our challenges clearly lie ahead. And maybe most importantly, how can we work together to further drive progress and impact?
Our first major achievement last year was on C band simplification. And when we kicked off the process, we had an initial timeline. And it looks like we couldn't get this done before 2027 or somewhere well into 2027. But the reality was also that, of course, for businesses, that is not an acceptable answer. We needed to have a better solution.
And thanks to the amazing work, again, in Taksut, but also in the council, in the European Parliament. We were able to simplify CBEM in record time before the definitive period started. So, ladies and gentlemen, it can be done. And what was then the recipe for success? In my view, it was a combination of three things.
First, we had the right content. We were able to accept 90% of companies, just keep in mind how big that is, 90% of companies from unnecessary bureaucracy, while at the same time, upholding 99% of the emissions within the scope. Secondly, there was appreciation in the real world for our objective. There was a pool. It was not something we were trying to force onto a hesitant world.
No, it was something that was very much anticipated and appreciated. And third, we have organized ourselves to be able to deliver this quickly. And again, all parts of the European machinery have played a role there. And it has been with your support that we achieved something truly remarkable in the domain of taxation, going, by the way, to the heart of our climate, competitiveness and independence goals. Ladies and gentlemen, other successful files that we concluded are there as well.
Think, for example, about VAT or VAT in the digital age. Here, the goal was simple: make life easier for our businesses, fight fraud more effectively and more efficiently. And companies will only need one VAT number to operate in the single market. And that might sound trivial until you are yourself in that company. Tax administrations will be receiving real-time data to make things more efficient.
And if you then look at the impact of all of this, that truly is significant. We're talking about saving taxpayers €15,000,000,000 to €20,000,000,000 every year. More broadly, boosting member states' finances, especially by reducing the tax gap, must remain a priority. We simply cannot afford to lose money on the table. We're cash-constrained.
We need more money for the expenses that we have ahead of us. Increasing taxes is always a difficult decision. Putting a larger bill to the next generation also comes with huge consequences. So making sure we get the money that we're entitled to is actually fair game, and something that we should have more of. And therefore, also great to see the first edition of the Mind the Gap report released recently, assessing the tax gaps and efficiency of tax collection all over the European Union.
And then, of course, there was work on pillar two. I'm not gonna do as if it were easy. All options were coming with significant drawbacks, significant consequences. But overall, in my view, we can be satisfied with how things have turned out. We managed to keep the family together.
We got a deal over the line with the agreement on the side-by-side package back in January. And I know you've already had an extensive discussion today about what is gonna happen next, so I won't go into too much detail. But the agreement, in my view, does have significant benefits. It allows us to preserve tax peace, maintain a more stable global tax system, might feel intangible, but it has real value, and ensure legal certainty for businesses, which is phenomenally important. And by adopting DAC 9, we ensure that pillar two would be implemented smoothly even before things were being concluded.
Another area where we did well was in putting forward new ways to fund the EU's long-term budget. The whole conversation, politically complicated, but still, on own resources. Think about CBEM revenues. Think about a new customs handling fee. Think about tobacco excise duty as an own resource.
And finally, of course, hugely important, we delivered on the clean industrial deal by recommending that member states come forward with tax incentives that actually drive forward much more quickly clean investment, because that is what the European Union so desperately needs, again, for climate, for competitiveness, and for independence. Now, of course, there were certainly bumps in the road. It is unfortunate, and I'm gonna be frank with you, that we didn't progress yet on the energy taxation directive despite the hard work done by the Danish presidency and many others. But all in all, and with all of your help, the glass is truly half full in a way that is difficult, by definition. So a good start, good progress, but much more to be done.
Let me highlight four key points here. First, on the modernization of the tobacco taxation directive. Our new proposal taxes more products like e-cigarettes that were previously simply not in scope. And that makes sense if you think about this from a public health perspective, because these new nicotine products are highly addictive, especially for teenagers and kids who are getting hooked from a very young age. And on top of that, we're looking into increasing your tax rates on tobacco, because frankly speaking, the EU rates we have today have become pretty much meaningless.
They were not indexed, and they're so low, they need to be updated. In combination with that, if you're looking at how much money we leave on the table because of cross-border traffic, counterfeit goods, tax evasion, we're talking about a number of EUR 13,000,000,000 a year. Again, money, tax collectors are entitled to get in. Also, simplification, another priority. Key, absolutely key to building a more competitive union, and let's be honest about it.
We as politicians, at a national level, but certainly also at the European level, too often have made life too complicated. Certification is not about lowering the bar. Rather, it is about tackling a problem we unfortunately know too well. Excessive red tape that is causing a real headache for businesses, by the way, also for tax authorities, driving up administration and compliance costs. And it simply makes us less attractive to invest in.
It's difficult innovation, and it limits our ability to create new jobs. And that is something we simply cannot afford in this timeframe. And that is why we will come forward with a significant simplification package in the direct tax area. It will include a taxation omnibus. And the aim here is to reduce unnecessary reporting and compliance burden, streamline tax rules, and get rid of outdated rules and overlaps.
This package, ladies and gentlemen, will also include the DAC, and we're looking into how to lighten the load for taxpayers and for the tax authorities as we should. We'll also assess how important policy objectives that are still valid but haven't progressed in the council can actually be integrated here into future proposals. Next, we'll also work on simplifying Pillar two as part of the OECD process. To be clear, to be crystal clear, we stand behind the objectives on minimum effective taxation. At the same time, we do need to ensure it works in practice, and that everyone truly plays by the same rules.
We will also explore avenues to move forward on pillar one and remain confident, or maybe I should say cautiously confident, that a swift and constructive global solution can actually be reached, as it should. And we are ready to engage with the global community and look forward to entering discussions with a truly open mindset. Everything we do, ladies and gentlemen, everything we do is about making our union more competitive. And it includes tomorrow's proposal on the twenty-eighth regime for innovative companies. Here, the idea is to give these companies a single set of rules to invest and to do business across a single market.
It also has a tax angle to it that will allow us to draw in and retain talent. Some might say it's not enough. Others might say it is too much. But we need to be pragmatic and realistic, and move the needle here. This is the beginning of our efforts to boost our competitiveness.
And in that same vein, later this year, we will be proposing new VAT rules to make our travel sector more competitive again and to make it simpler. And this will especially benefit travel agents and passenger transport operators. Ladies and gentlemen, I already touched upon CBEM, but CBEM here is the third priority. It's a hugely important add-on to our ETS system. Again, it is important for the combination of climate, competitiveness, and independence.
And I know there have been calls for suspension in specific sectors. But let's please not fall into the trap. That would simply be the wrong solution. What we need to do is stay the course on CBEM, make sure it works for our companies. Last December, we put forward two landmark proposals to strengthen CBEM and establish a temporary decarbonization fund. And the aim here is to have this agreed before year's end.
The first proposal extends CBEM to production further down the supply chain, in a targeted way and in close collaboration with companies. It will cover only metal-intensive products, and we're keeping the compliance rules simple, again, as we should. And it will apply to everyday goods like car doors, washing machines, kitchens, and garden equipment. And in order to prevent fraudulent practices, we're also introducing new anti-circumvention measures that will include additional reporting requirements in certain cases, so that country values are applied where we don't get enough evidence. And as for the temporary support mechanism, it uses money from national CBAM revenues to address the remaining risks of carbon leakage.
That specific part will stay in place for two years, refunding allowances paid in 2026 and 2027. Ladies and gentlemen, fourth and final priority, circularity. There is simply huge potential for circularity in general, but certainly also to use taxes and levies to help make Europe a world leader in the circular economy. Again, this goes right to the heart of the conversation on climate competitiveness and independence. We're talking about recycled plastics.
We're talking about textiles. We're talking about batteries. Take textiles just as an example. With the rise of fast fashion, there are billions of products. Just think about that.
Billions of products traveling by plane, also often impossible to recycle, landing in packages in all our homes. It's unsustainable. It's quite often wasteful, quite often costly. Secularity, on the other hand, maximizes our limited resources. What it would do is reduce dependencies.
It would reduce waste. It would reduce production costs and emissions. And ultimately, of course, it helps us build a more sustainable industrial model that is good for both the economy and the planet. So ladies and gentlemen, dear friends, it is time to wrap up. Tax, as we all know intimately well, affects all of us across every part of society.
Citizens notice it on their paychecks, on their bills, including clearly on energy. Businesses do the same and decide whether to invest and scale up, or hold back, or even relocate. And that is why the conversation on tax and the one you had in the last two days is so important. It is actually connecting the dots between the EU's efforts on simplification, on innovation, and on competitiveness. It is a tool for social fairness and a field for high-stake international cooperation.
Is success guaranteed? Clearly, it isn't. It never is. Not in a single area of politics or in life or life in general. But if it were easy, none of you would be here.
So thank you for coming. Thank you for supporting us and giving us feedback and food for thoughts on our EU tax policy. I tremendously value the cooperation and interaction. I want to thank you very much for your participation, and I'm very much looking forward to jointly building a more competitive and more resilient European Union. I thank you very much.
Thank you.
Speaker 1
Thank you, commissioner Hoekstra, for these very nice, I would say, but also very interesting conclusion remarks. As you've said, there's a lot of work to be done. The task ahead is difficult, but I'm quite sure that with the wonderful co-chairs and the services that you have, and with the great alliance that amongst you all you have, you will achieve the best of results in the shortest period possible of time. And then ladies and gentlemen, finally, and for the last time for this symposium, some will say, oh, really? One more time.
Others will say, oh, too bad, it's the last time. But anyhow, it is the last and final call for them as well. I would like to invite one by one the two co-chairs to the stage as well, to thank you and give their final remarks. And we will start with Pasquale Tridico to give his closing words for today. Pasquale, the floor is once again yours.
Speaker 30
Thank you very much. I will be very short, because we had a very long day. But let me start, first of all, with the necessary thank you that I have to say. First of all, to the secretariat, starting from Benoit from the parliament here, the secretariat of the subcommittee FISC, which helped us from the very beginning and the very end, and all the staff that with Benoit work. Alexander, Diogo, Anastasia, all the rest.
I'm really sorry if I don't name all of you. But, actually, behind the work to have here more than 1,000 people from many different member states and countries, well, there is a lot of work. Even about only answering 1,000 people mail, so this is a lot of work. Moreover, there is an organization. There is a lot of work that has been done from a scientific point of view to put a consistent way, panelists, speaker, member of the parliament together.
I say thank you to my friend and colleague, Grasimos Thomas, which has been an extra very challenging and improving exercise from last year to this year. This year has been I really enjoyed from different point of view. Scientific organization point of view has been very exciting. And we will improve as well next year, by the way. So we are improving in terms of attendance.
Yeah, we had more than 900 people attending. This year, we have more than 1,000. And next year, probably, we will increase it more. Benoit, you are worried. I have to say thank you as well to my staff, to my office, to my policy adviser, because, again, behind my work, which is a huge work, there is a huge work from their side.
And, again, this is really a collective exercise which makes everybody happy then. Let me say a few final remarks in the content again because I cannot avoid speaking as well in the content. Today, it was a very interesting day from the very beginning. Our first panel highlighted that the European Union stands at a crossroad, and it's not a rhetorical way that we stand at a crossroad. Actually, we see the change that are happening.
And you see as well in the words of the speaker, in the words of the commissioner, there is the digitalization of the economy, which represent really a huge structural change. And the tax system today is not suitable to face this new structure of the economy with the current way. So people claim that, actually, we weigh, we wait, and we expect a proposal from the commission on the digital service tax. Because for us, it's not a matter of if we introduce some digital service tax. It's a matter of how we do it.
And we know we learned as well from our speaker here that there is such a need. There is a as even from the challenging speaking between Aguion and Stiglitz, you could see two different visions, but on most of the things, they agreed. And they agreed that monopolistic companies in artificial intelligence creation are problematic, not only because they prevent other firms from entering the market, but as well because they are problematic for democracy, for the social equation. The discussion in the second panel reinforced that while the global minimum tax represents a major achievement, the real test now lies in the implementation. We really care about the global minimum tax which was reached within the OECD, and we want that everybody stick to this rule.
15%, moreover, is not a high tax rate that big companies are called to respect. Recent development in the relation with the United States also call on Europe to reflect on how we engage with our partner. And now our role in the process towards an international tax convention at The United Nations can be brought ahead. In this context, the subcommittee has agreed to undertake a mission to the next convention of United Nation. In the afternoon, we had a wonderful talk with Agion and with Stiglitz.
You have seen how exciting and how thoughtful were the they insight. We had, of course, two different views. Stieglitz is advocating an ultra high net worth individual tax because they recognize that inequality has been so huge in the last year, and polarization is threatening the equation of the society. Moreover, from a scientific point of view, there is a need for that because at the top 1% of the income distribution, there is a regressivity in the income distribution. You have heard as well, Guillaume, which did not disagree in total, in principle, with that.
He says that it's a matter of timing, and there is as well the fact that Europe need to care about competitiveness, about innovation. And we know that the most innovative firms, in particular, in the frontier of technological progress, are today in The United States. However, the two things, let's not exclude each other. I want to make a point here. Most of you probably are Europeans, and we really care about our European social model.
We managed to reach the best compromise possible given our different sensitivities on this issue, bringing about lower inequality, social cohesion with development, sustainable development. These two things for us, for all of us, are not avoidable. So for us, are things which we need to bring ahead. So our model and in fact, this is reflected as well in the title of this tax symposium, inequality and growth in a global economy, which need to be together, meaning that we need to cope with inequality, putting down inequality, and fostering growth. Growth, it is fostered as well through public investment.
When the market is, in a way, lazy, public investment can foster, in particular, innovation with careful study and targeted industrial policy. We had a very interesting meeting panel as well on housing and on saving and investment union, which are two things which are evolving the European Union. We will say probably more about that at the next symposium, at the next meeting. I will finish now. I will stop saying the last word again, which is only thank you.
Speaker 31
Thank you to all of you for participating actively in this successful tax symposium. Thank you.
Speaker 1
Thank you. That's it for today. Thank you, Pasquale. Those were the final words. I would just like to add, before you start inviting more people, talk to the city council as well, because you will need a building permit and a budget to enlarge the hemicycle, because if it's full, it's full.
So even the staff will have difficulty putting in more people. But anyhow, it's a good idea to reach more people. They could join online or in the stands if they want. We have some seats left over there. And then finally, ladies and gentlemen, the second co-chair mentioned already in Pasquale's words, Gerasimos, the floor is yours once more.
Speaker 32
Thank you very much. I will not keep you long. I think you're all exhausted after one and a half day of tax debates. A big thank you to my staff, all the good staff, both for the organization and also for the content, and also for the external contractors that helped us yesterday and today to put this together. I think excellent organization.
Speaker 33
Benjamin is here. Elena, Claus, Lotte, Gaetan, in particular. Many people had to write papers, conceive the panels, prepare the concepts, speak to the speakers in advance, together with their colleagues, the Fisk Secretariat, and my staff in tax. And most important, you know, for us in the commission, we have different roles with my cohost. You know, he's the politician.
Speaker 32
We are here to deliver, let's say, proposals sometimes. I think we are looking at this tax symposium in three ways. I think the first and most important is to bring new ideas. We had a lot of new ideas and debates today. The second is to mature some of the ideas.
Some ideas might not be ready for legislation by the commission or proposal, so they have to mature. I think the housing is the one where there's a lot of action in member states, etcetera, but we are not yet ready to make, let's say, a European action at the tax level, some kind of harmonization immediately. But ideas have to mature. And then, you know, I think there are ideas that we have to take our losses. As I like to say, this is not a good time.
We have to stop working on them. This can also happen. Some of these ideas we have to stop. So I think, it is good that we have the participation not only for the sake of the conference, but for the sake of making the tax debate more vivid in the member stage. We publish annual publications.
We publish the Mind the Gap report. It's important to have a quality debate on taxation in the parliament, in the national parliament, elsewhere. And, I think the number of recommendations that the commission makes on taxation in the area of the semester has been increasing, let's say, over the years with more issues coming up. So thank you very much to all for attending. Thanks.
Speaker 33
Thank you to the interpreters for also being almost at the limit of the times. Thank you to all the speakers, the participants, and all those that made this taxing portion a success. Thank you very much. Thank you. And a big thank you to you, you know, who has been keeping the spirits up.
Speaker 1
Thank you, Gerasso. It was a real pleasure working once again with the entire team. They made my job ever so easy because they did a terrific thing. So I would like to add to all those thanks. Thanks, of course, to the members of the European Parliament, the members of national parliaments having traveled all the way to Brussels to join us today.
Thanks to the conference team and the tech people because they've made it even online. No problems. Flawless conference from the very beginning until the end. So they did a wonderful job. Thank you to the ushers because you've been running up and down all day long, trying to get people in, back out.
I'm sure that by the end of the day, you'll have more than 10,000 steps on your watchers' chest verify. I'm quite sure you have 20 or 30,000 easily. Thank you to the catering team because they did a wonderful job giving us all the food and the drinks, and they will do so even more. And finally, as Gerassimo has already said, thank you to all of you up there for the interpretation all day long. You did a wonderful job.
Thank you. Ladies and gentlemen, this rounds it up with one more important thing left, that is to invite all of you to the networking cocktail where you might still ask questions you were not able to ask during the panel sessions or that only came up at a later moment. So we'll see each other not in the venue where it was last year, because you had to travel through the entire building. So do not go in one draw. You just go out and you go down two floors for the one seated upstairs that will be the elevators to the 1st Floor.
But for all of you here, just go two floors down, and the networking cocktail will be there. So I would say enjoy whatever's left of food and drinks. Unlike yesterday in OtoWorld, I'm not handing out flowers today or plants, so please do not take anything home. The chairs belong to the Parliament. The mics belong to the parliament.
The voting system belongs here. It has to remain here. See you all next year for the next round of the tax symposium. Tech technical announcement. Might I ask all organizers to join us on stage?
There's a group picture of all the people that made it possible today, that is going to be taken as well. So the entire team, this is the moment to join us. Thank you. Please come on stage. Everyone, you the usual suspects, the tallest ones in the back.
Please join us. All of you, I'm looking at the photographer. Is that more or less okay? Oh, yeah. Where are they?
We're still waiting. Bryn, join us on stage. Who's missing? Who's missing, Erasmus? I do not see Luisa, Angelica.
Give me the names. I can shout them through the mic. Gaetan. Gayton. Where is he?
Of course. The entire team.
But he's not coming.
Speaker 1
He's not coming. He doesn't want to be in the picture. Come on. Give it a quick run. You can still be on it.
Anyone else you are thinking of? No extra names? Photographers? Are they all good? Should we move some people?
Lina. I'm not sure.
Speaker 1
Feel like traveling working in a supermarket. More waiting people? Yeah. Lina, this is the moment. Oh, yeah.
We can rearrange this show, if they invite you, do not ask are you sure? You just joined. Where is she? Do we see her? Do we see her?
Where's Selena? She's tall and blonde. Is she Dutch? German. German.
Speaker 37
Okay. That will work as well. Or Swedish. No tall and blonde girls anymore? No.
Speaker 1
Yeah. I'm not on the team. You're the team. I'm the team. I'll gently sit on the side.
Wonderful.
Speaker 1
So two cameras to look at. Yeah. Same with an even brighter smile. Thank you all. Thank you.
Thank you to the photographers as well, because you've done a wonderful job. We've seen the results already on social media and in the groups. Thank you. See you all next year. Lina.
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