It’s New Year’s eve 2017. The countdown starts: 10, 9, 8… Glass of champagne in hand people all over Europe celebrate the entry into the new year. For staff at Bulgaria’s Permanent Representation in Brussels and at national ministries this countdown was particularly special as it counted down the seconds to the Presidency of the Council they have been preparing for for the last months and year(s).
For their very first EU Presidency, the Balkan State will have quite some files on its plate regarding financial services and taxation.
To start with there are the risk reduction measures modifying the legislations on banks’ recovery and resolution, the single resolution mechanism as well the two prudential requirement texts (CRR and CRD). This work stream is their declared priority. Indeed, politically some Member States link progress here to any progress on completing the Banking Union via a European Deposit Insurance Scheme that will keep the Bulgarian Presidency busy as well at technical level.
On the financial markets side, quite some time will be dedicated to several work streams on the Capital Markets Union side. Examples here are legislative proposals on clearing obligations and derivative reporting, a European framework for recovery and resolution of CCPs as well as the very political file of requirements towards third country CCPs (e.g. future City of London). On a typical CMU file like the pan-European pension product, the Bulgarians have already declared they intend to make “maximum progress”. The Presidency will also work on the prudential regime for investment firms as well as on the EU covered bonds framework and the action plan on sustainable finance both due to be presented by the Commission in March.
The review of the framework of the European Supervisory Authorities and the suggested significant power transfers to the EU level promises to be a very political dossier. Here work will get into full swing in the next six months.
In the taxation area there will be two major legislative proposals that will keep the ECOFIN busy in the next year. One is the proposed 6th version of the Directive on Administrative cooperation (intermediaries). Here the Presidency aims at reaching an agreement on a common text. The second tax dossier will be the Commission’s proposal on a common corporate tax base. A third major tax file that nevertheless escapes the Presidency’s control is the financial transaction tax that 10 Member States endeavor to hammer out in the special EU procedure of enhanced cooperation.
Last but not least the second phase of the Brexit negotiations will be kicked off during the Bulgarian semester. These negotiations will include the transition period as well as general lines on how continental financial service providers will in the future interact with the City of London. For some firms not an unimportant issue…
Antoine Kremer, ABBL & ALFI Head of European Affairs