The political and economic realities of European countries steadily grow increasingly intertwined. As a result, the growing influence of European regulation on the policies and the framework conditions of companies in European member states is felt by all stakeholders – currently and particularly when dealing with the consequences of the war in Ukraine, energy supply, and also inflation.
Today marks one year since the Europe.Table editorial team began analyzing the political processes of the EU and giving decision-makers in politics, business, and society important signals for their actions daily. While initially focused on the transformations in the areas of digitization and the Green Deal, Till Hoppe‘s team has since been observing more and more political areas and the policies of the EU’s German neighbors.
We are proud of our several thousand readers and, on our first anniversary, we would like to take the opportunity to thank you for your trust. We remain committed to our goal to provide you with a sound basis for your decisions and to make you aware of any changes affecting your area of responsibility early on.
Now on to what you can expect in today’s briefing: Budget Commissioner Johannes Hahn urges haste regarding future EU own resources. Even though the EU Parliament is very committed, the heads of state and government of the member states still have some way to go,” says Hahn in an interview with Hans-Peter Siebenhaar.
An excess profits tax for energy companies is currently the subject of lively debate in Germany, including within the traffic light coalition where parties disagree. Spain’s government, on the other hand, has recently presented a draft law that provides for special taxes for banks and energy companies. Isabel Cuesta Camacho reports on the plans from Madrid.
In Mirja Mader‘s profile, you can read how Burkhard Ober came to Brussels in 2006 as Head of European Affairs at Allianz. Today, he is a consultant at Hume Brophy, where he advises on financial market regulation.
In the discussion on future own resources, the EU Commission criticizes the continued reluctance of member states. “We haven’t really gotten off the ground yet. Even though the EU Parliament is very committed, there is still room for improvement among the heads of state and government of the member countries,” EU Budget Commissioner Johannes Hahn told Europe.Table. “The European Council needs to understand that we need to start the talks now.”
The Commission had presented its proposals for a new own resources system shortly before Christmas last year. Specifically, this proposal envisages three future sources of money for the EU budget : Revenue from emissions trading, revenue from the proposed Carbon Border Adjustment Mechanism (CBAM), and a share from the global minimum tax agreed within the OECD.
Last October, 130 member countries of the OECD agreed to reform the international tax system in the fight against profit shifting and tax avoidance. According to Commission estimates, this could create revenue of €2.5 to €4 billion per year for the EU coffers.
But the enthusiasm in the council for the proposals Hahn presented was limited. “The situation is complex,” says the 64-year-old Austrian. That’s because the proposed EU revenue sources would affect member states to varying degrees, he said. “We have to seek a fair balance to ensure broad acceptance,” said the Budget Commissioner, who has been a member of the Commission in Brussels since 2010.
To date, the main sources of revenue for the EU budget have been direct contributions from member states, customs duties and the share of VAT collected by member states. In 2021, a fourth source of funding for the EU budget was added in the form of the plastic tax.
From the point of view of the longest-serving EU Commissioner, time is pressing for the revision: “At the end of next year, we will come up with a second proposal for own resources. Then we will have an overall package so that we can really financially handle the €16 billion in repayments each year.” By repayments, we mean the EU bonds that have been issued.
Faced with the huge borrowing program associated with the COVID recovery fund “Next Generation EU”, the EU is under pressure to find a reliable and permanent solution for own resources. “We need an agreement on the EU’s new revenue sources by 2023 or 2024 so that we can also technically prepare for the collection of the new levies for 2026 and 2027. That’s where our reliability on the capital market is very important,” Hahn said emphatically.
However, the willingness of member countries to provide the Commission with substantial sources of revenue is not expected to grow due to the threat of recession in Europe. Hahn, therefore, hopes that the recession will be contained, despite inflation triggered by high energy prices. He is betting on a medium-term recovery of the European economy. “We still have four or five years. By then, the economic situation will hopefully have eased again,” he said, alluding to the Russian war of aggression on Ukraine.
The three new sources of funds proposed by the Commission are expected to inject up to €17 billion a year into Brussels’ coffers. In the budget from 2026 to 2030, the funds are urgently needed to repay the billions borrowed via bonds.
Meanwhile, economists are skeptical of the Commission’s proposed new own resources. “Despite the theoretical suitability of some new own resources, it should be borne in mind that own resources based on gross national income – which currently finances more than 70 percent of the EU budget – are overwhelmingly considered to be the most appropriate source of revenue for the EU budget,” a study by the Cologne-based Institut der deutschen Wirtschaft (German Economic Institute) concludes. “They can be seen as a comprehensive measure of the economic performance of member states.”
For Chancellor Olaf Scholz (SPD), it is not an issue at the moment, but German Economic Affairs Minister Robert Habeck (Greens) would like it: a tax on exorbitant profits made by energy traders as a result of the Russian campaign against Ukraine and the turbulence on the energy markets. Just yesterday, a government spokesman ruled it out for the moment, referring to the coalition agreement. In Spain, by contrast, the left-wing governing alliance recently passed a very similar tax for energy suppliers and banks.
The two parties in the governing coalition, PSOE and Unidas Podemos, presented a bill last week that would impose special taxes on banks and energy companies. The government’s goal is to raise €7 billion over two years to finance measures against inflation, which has exploded in the wake of Russia’s war of aggression on Ukraine.
The draft provides for a 4.8 percent tax on interest and net commissions for financial institutions with revenues exceeding €800 million over the next two years. The energy sector will be taxed at a rate of 1.2 percent on the annual net sales of companies with annual sales of more than €1 billion.
The argument often put forward against taxing windfall profits is that they are difficult to measure. Spain wants to calculate windfall profits by using the sales of the immediately preceding years as a reference. In the case of corporate income tax, the new levy is not deductible.
The affected companies sharply criticize the measure and say they will closely scrutinize the bill. To prevent companies from passing on the new tax burden to customers, a penalty of 150 percent on any amounts passed on will be introduced. The National Commission for Markets and Competition (CNMC) and the Bank of Spain are responsible for implementing the measure and will have to design a new supervisory model.
The two new levies will affect a total of 19 companies. In the banking sector, there will be a total of nine institutions; large foreign banks such as ING and Deutsche Bank will be left out. The most affected are CaixaBank, Santander, and BBVA, which could pay two-thirds of the tax in line with their net income in the current year. On average, the affected banks will have to pay around 7.4 percent of their profits for the new tax.
In the energy sector, ten companies are affected: Endesa, Iberdrola, Naturgy, EDP, Acciona, Repsol, Cepsa, BP, Galp, and the Canary Islands fuel distributor and marketer Disa. Most of these companies have sales abroad. In Germany, for example, Endesa is active in energy trading, Iberdrola develops solar plants and offers long-term power purchase agreements (PPAs) for offshore wind farms. However, the tax is only levied on revenues in Spain.
The spokeswoman for the opposition party Partido Popular, Cuca Gamarra, accused President Pedro Sánchez of populism and misleading by adopting the economic policies of his left-wing coalition partner Unidos Podemos. Banking associations argue that the new bank tax is an obstacle to economic recovery and job creation. Moreover, it would not be a way to fight inflation.
A distortion of competition was lamented by the CEO of CaixaBank, Gonzalo Gortázar. In a newspaper interview, he objected in particular to the restriction to large banks: “We compete throughout Spain, sometimes with local companies that have a very strong presence but do not reach the 800 million threshold. Nor will this be the case with foreign banks that have mostly branches and do not meet this requirement.”
Italy also wants to impose a special tax on banks but plans to impose a tax on extraordinary profits rather than on high turnover. The Gestha tax union believes that the government in Madrid has taken a different route in order to speed up the parliamentary procedure and protect itself from possible legal disputes. Tax experts do not consider the Spanish government’s tax plans to be without problems.
Burkhard Ober recalls that he was met with astonished looks when he decided to move to Brussels in 2006. At that time, he was Head of European Affairs at Allianz. Today, he uses his many years of experience as a freelance consultant at Hume Brophy.
Burkhard Ober starts out as a bond trader in Paris. He makes a name for himself there within five years. That led to the offer to sell not from France to Germany anymore, but from Germany to Dubai, Kuwait, and the Gulf States. “That led me into the political scene behind the state installations for the first time,” he says, looking back.
In 1996, he joins Dresdner Bank and Asset Management for Central Banks. From there, he goes to Brazil and, in 2003, returns to Frankfurt as an assistant to the Board of Management, where he later chooses a new position. Elizabeth Corley, who heads Allianz‘s asset management activities abroad, wants his help. “And then I was Mrs. Corley’s man in Brussels,” says Ober.
After financial markets and investment banking via asset management and his time as head of an investment bank in Brazil, he moves into the “financial market regulation track”, as he calls it. He then works for Allianz Global Investors until 2013, eventually succeeding Wolfgang Ischinger. “I became Head of Public Policy, so the top government relations person, so to speak,” Ober says.
Then in 2020, he reaches retirement age at Allianz and joins a consulting firm in Brussels: Hume Brophy. Now he works freelance.
His tasks include following the content of financial market regulation and capturing moods. What goes on in Brussels is a bit like a stage play with many different players. It’s about getting to know each other and weighing interests, Ober says. “I think that attunement, you only get that after a long time,” he says. He then uses this knowledge to serve his customers.
He also keeps up to date through various networks. For example, after years of membership, he continues to serve as a guest on the board of the Economic Council Germany. The interdependence of politics and business has an important impact on the way we live, Ober says, “all of which is interesting to experience in the making”.
“I think the curiosity, about this colorful patchwork of Europe – that drove me a lot.” What has remained is a deep understanding of the European cultural area. It also makes one skeptical of nationalistic tendencies, he says. But he sees the “wonderful side” of Europe. History has left behind “incredibly interesting cultures,” he says. Having lived in many different places around the world, he can say one thing: “It’s just a beautiful continent.” Mirja Mader
The political and economic realities of European countries steadily grow increasingly intertwined. As a result, the growing influence of European regulation on the policies and the framework conditions of companies in European member states is felt by all stakeholders – currently and particularly when dealing with the consequences of the war in Ukraine, energy supply, and also inflation.
Today marks one year since the Europe.Table editorial team began analyzing the political processes of the EU and giving decision-makers in politics, business, and society important signals for their actions daily. While initially focused on the transformations in the areas of digitization and the Green Deal, Till Hoppe‘s team has since been observing more and more political areas and the policies of the EU’s German neighbors.
We are proud of our several thousand readers and, on our first anniversary, we would like to take the opportunity to thank you for your trust. We remain committed to our goal to provide you with a sound basis for your decisions and to make you aware of any changes affecting your area of responsibility early on.
Now on to what you can expect in today’s briefing: Budget Commissioner Johannes Hahn urges haste regarding future EU own resources. Even though the EU Parliament is very committed, the heads of state and government of the member states still have some way to go,” says Hahn in an interview with Hans-Peter Siebenhaar.
An excess profits tax for energy companies is currently the subject of lively debate in Germany, including within the traffic light coalition where parties disagree. Spain’s government, on the other hand, has recently presented a draft law that provides for special taxes for banks and energy companies. Isabel Cuesta Camacho reports on the plans from Madrid.
In Mirja Mader‘s profile, you can read how Burkhard Ober came to Brussels in 2006 as Head of European Affairs at Allianz. Today, he is a consultant at Hume Brophy, where he advises on financial market regulation.
In the discussion on future own resources, the EU Commission criticizes the continued reluctance of member states. “We haven’t really gotten off the ground yet. Even though the EU Parliament is very committed, there is still room for improvement among the heads of state and government of the member countries,” EU Budget Commissioner Johannes Hahn told Europe.Table. “The European Council needs to understand that we need to start the talks now.”
The Commission had presented its proposals for a new own resources system shortly before Christmas last year. Specifically, this proposal envisages three future sources of money for the EU budget : Revenue from emissions trading, revenue from the proposed Carbon Border Adjustment Mechanism (CBAM), and a share from the global minimum tax agreed within the OECD.
Last October, 130 member countries of the OECD agreed to reform the international tax system in the fight against profit shifting and tax avoidance. According to Commission estimates, this could create revenue of €2.5 to €4 billion per year for the EU coffers.
But the enthusiasm in the council for the proposals Hahn presented was limited. “The situation is complex,” says the 64-year-old Austrian. That’s because the proposed EU revenue sources would affect member states to varying degrees, he said. “We have to seek a fair balance to ensure broad acceptance,” said the Budget Commissioner, who has been a member of the Commission in Brussels since 2010.
To date, the main sources of revenue for the EU budget have been direct contributions from member states, customs duties and the share of VAT collected by member states. In 2021, a fourth source of funding for the EU budget was added in the form of the plastic tax.
From the point of view of the longest-serving EU Commissioner, time is pressing for the revision: “At the end of next year, we will come up with a second proposal for own resources. Then we will have an overall package so that we can really financially handle the €16 billion in repayments each year.” By repayments, we mean the EU bonds that have been issued.
Faced with the huge borrowing program associated with the COVID recovery fund “Next Generation EU”, the EU is under pressure to find a reliable and permanent solution for own resources. “We need an agreement on the EU’s new revenue sources by 2023 or 2024 so that we can also technically prepare for the collection of the new levies for 2026 and 2027. That’s where our reliability on the capital market is very important,” Hahn said emphatically.
However, the willingness of member countries to provide the Commission with substantial sources of revenue is not expected to grow due to the threat of recession in Europe. Hahn, therefore, hopes that the recession will be contained, despite inflation triggered by high energy prices. He is betting on a medium-term recovery of the European economy. “We still have four or five years. By then, the economic situation will hopefully have eased again,” he said, alluding to the Russian war of aggression on Ukraine.
The three new sources of funds proposed by the Commission are expected to inject up to €17 billion a year into Brussels’ coffers. In the budget from 2026 to 2030, the funds are urgently needed to repay the billions borrowed via bonds.
Meanwhile, economists are skeptical of the Commission’s proposed new own resources. “Despite the theoretical suitability of some new own resources, it should be borne in mind that own resources based on gross national income – which currently finances more than 70 percent of the EU budget – are overwhelmingly considered to be the most appropriate source of revenue for the EU budget,” a study by the Cologne-based Institut der deutschen Wirtschaft (German Economic Institute) concludes. “They can be seen as a comprehensive measure of the economic performance of member states.”
For Chancellor Olaf Scholz (SPD), it is not an issue at the moment, but German Economic Affairs Minister Robert Habeck (Greens) would like it: a tax on exorbitant profits made by energy traders as a result of the Russian campaign against Ukraine and the turbulence on the energy markets. Just yesterday, a government spokesman ruled it out for the moment, referring to the coalition agreement. In Spain, by contrast, the left-wing governing alliance recently passed a very similar tax for energy suppliers and banks.
The two parties in the governing coalition, PSOE and Unidas Podemos, presented a bill last week that would impose special taxes on banks and energy companies. The government’s goal is to raise €7 billion over two years to finance measures against inflation, which has exploded in the wake of Russia’s war of aggression on Ukraine.
The draft provides for a 4.8 percent tax on interest and net commissions for financial institutions with revenues exceeding €800 million over the next two years. The energy sector will be taxed at a rate of 1.2 percent on the annual net sales of companies with annual sales of more than €1 billion.
The argument often put forward against taxing windfall profits is that they are difficult to measure. Spain wants to calculate windfall profits by using the sales of the immediately preceding years as a reference. In the case of corporate income tax, the new levy is not deductible.
The affected companies sharply criticize the measure and say they will closely scrutinize the bill. To prevent companies from passing on the new tax burden to customers, a penalty of 150 percent on any amounts passed on will be introduced. The National Commission for Markets and Competition (CNMC) and the Bank of Spain are responsible for implementing the measure and will have to design a new supervisory model.
The two new levies will affect a total of 19 companies. In the banking sector, there will be a total of nine institutions; large foreign banks such as ING and Deutsche Bank will be left out. The most affected are CaixaBank, Santander, and BBVA, which could pay two-thirds of the tax in line with their net income in the current year. On average, the affected banks will have to pay around 7.4 percent of their profits for the new tax.
In the energy sector, ten companies are affected: Endesa, Iberdrola, Naturgy, EDP, Acciona, Repsol, Cepsa, BP, Galp, and the Canary Islands fuel distributor and marketer Disa. Most of these companies have sales abroad. In Germany, for example, Endesa is active in energy trading, Iberdrola develops solar plants and offers long-term power purchase agreements (PPAs) for offshore wind farms. However, the tax is only levied on revenues in Spain.
The spokeswoman for the opposition party Partido Popular, Cuca Gamarra, accused President Pedro Sánchez of populism and misleading by adopting the economic policies of his left-wing coalition partner Unidos Podemos. Banking associations argue that the new bank tax is an obstacle to economic recovery and job creation. Moreover, it would not be a way to fight inflation.
A distortion of competition was lamented by the CEO of CaixaBank, Gonzalo Gortázar. In a newspaper interview, he objected in particular to the restriction to large banks: “We compete throughout Spain, sometimes with local companies that have a very strong presence but do not reach the 800 million threshold. Nor will this be the case with foreign banks that have mostly branches and do not meet this requirement.”
Italy also wants to impose a special tax on banks but plans to impose a tax on extraordinary profits rather than on high turnover. The Gestha tax union believes that the government in Madrid has taken a different route in order to speed up the parliamentary procedure and protect itself from possible legal disputes. Tax experts do not consider the Spanish government’s tax plans to be without problems.
Burkhard Ober recalls that he was met with astonished looks when he decided to move to Brussels in 2006. At that time, he was Head of European Affairs at Allianz. Today, he uses his many years of experience as a freelance consultant at Hume Brophy.
Burkhard Ober starts out as a bond trader in Paris. He makes a name for himself there within five years. That led to the offer to sell not from France to Germany anymore, but from Germany to Dubai, Kuwait, and the Gulf States. “That led me into the political scene behind the state installations for the first time,” he says, looking back.
In 1996, he joins Dresdner Bank and Asset Management for Central Banks. From there, he goes to Brazil and, in 2003, returns to Frankfurt as an assistant to the Board of Management, where he later chooses a new position. Elizabeth Corley, who heads Allianz‘s asset management activities abroad, wants his help. “And then I was Mrs. Corley’s man in Brussels,” says Ober.
After financial markets and investment banking via asset management and his time as head of an investment bank in Brazil, he moves into the “financial market regulation track”, as he calls it. He then works for Allianz Global Investors until 2013, eventually succeeding Wolfgang Ischinger. “I became Head of Public Policy, so the top government relations person, so to speak,” Ober says.
Then in 2020, he reaches retirement age at Allianz and joins a consulting firm in Brussels: Hume Brophy. Now he works freelance.
His tasks include following the content of financial market regulation and capturing moods. What goes on in Brussels is a bit like a stage play with many different players. It’s about getting to know each other and weighing interests, Ober says. “I think that attunement, you only get that after a long time,” he says. He then uses this knowledge to serve his customers.
He also keeps up to date through various networks. For example, after years of membership, he continues to serve as a guest on the board of the Economic Council Germany. The interdependence of politics and business has an important impact on the way we live, Ober says, “all of which is interesting to experience in the making”.
“I think the curiosity, about this colorful patchwork of Europe – that drove me a lot.” What has remained is a deep understanding of the European cultural area. It also makes one skeptical of nationalistic tendencies, he says. But he sees the “wonderful side” of Europe. History has left behind “incredibly interesting cultures,” he says. Having lived in many different places around the world, he can say one thing: “It’s just a beautiful continent.” Mirja Mader
