Non-legislative Act: On the 20th of March 2024, the European Commission published a Communication on Building the future with nature: Boosting Biotechnology and Biomanufacturing in the EU (press release).

Problem: The principal issue lies in the escalating societal and environmental challenges confronting the EU, such as climate mitigation and adaptation, sustainable use of natural resources, restoration of ecosystems, food security, and human health. Biotechnology and biomanufacturing hold substantial potential for addressing these concerns, enhancing the competitiveness and modernisation of the EU's economy, and bolstering its strategic autonomy and resilience. However, the EU's biotechnology sector faces hurdles, including regulatory complexities and a lack of sufficient financing opportunities, which impede its growth and ability to contribute effectively to the European Green Deal objectives and the European Health Union.

Objective: The Communication aims to navigate these challenges by proposing a suite of actions designed to stimulate the biotechnology and biomanufacturing sectors. It seeks to create a conducive environment for these sectors to flourish by simplifying regulatory pathways, enhancing access to finance, leveraging research and innovation, and fostering international cooperation. Moreover, it emphasises the need for a coordinated approach to biotechnology policies across regulatory, industrial, economic, and social dimensions. Correspondingly, the document outlines strategic actions to accelerate market access for biotech innovations, streamline regulations, and encourage private and public investment, thereby reinforcing the EU's competitiveness, sustainability, and resilience.

Subject Matter: A key aspect of the proposed measures involves simplifying the regulatory framework to facilitate quicker market access for biotechnological innovations. The Communication acknowledges the critical need for a supportive regulatory environment that can adapt to the rapid advancements in biotechnology. Moreover, it highlights the necessity of streamlining permitting and authorisation procedures, particularly for biorefineries and biotech health products, to reduce the time and complexity involved in bringing innovations to market. Furthermore, the Communication emphasises the importance of leveraging research and boosting innovation within the biotech sector. It suggests a more integrated approach to technology transfer, highlighting the role of technology centres in accelerating the commercialisation of biotech research. The Communication also outlines measures to stimulate market demand for bio-based products. It proposes assessing the feasibility of introducing bio-based content requirements for specific product categories and public procurement, which could potentially drive the demand and market uptake of bio-manufactured products. Additionally, it discusses the role of labelling and certification in providing consumers with transparent information regarding the bio-based content and sustainability of products. The Communication proposes actions to encourage private investment and highlights the role of the European Investment Bank and the Strategic Technologies for Europe Platform in supporting biotech innovations. It also acknowledges the potential of tax credits to incentivise investment in biotechnology research and development. Moreover, the document recognises the need for addressing skills gaps within the biotech sector. It suggests the formation of large-scale skills partnerships and the development of high-level skills and competences required by the biotech industry, facilitated by collaborations between industry, education, and training providers.

Non-legislative Act: On the 20th of March 2024, the European Commission published a Communication on Labour and skills shortages in the EU: an action plan (press release ).

Problem: An escalating labour and skills shortages across all member states is a trend that has been intensifying for almost a decade. Despite temporary disruptions by the COVID-19 pandemic, the economic recovery, shifts in skills demand, demographic changes, and the consequences of geopolitical shifts have led to a steep increase in these shortages. This situation is exacerbated by the EU’s ambition towards open strategic autonomy, with 42 occupations identified as EU-wide shortage occupations. The shortages present both economic and social challenges, risking the EU's capacity for innovation, attractiveness for investments, weakening its competitiveness, and potentially exacerbating inequalities and societal cohesion issues.

Objective: To address these labour and skills shortages the Commission outlines a comprehensive action plan. This plan is built upon existing initiatives and aims to operationalise concrete steps, particularly at the sectoral level, for member states and social partners to tackle the identified challenges. Moreover, it seeks to prepare the groundwork for future actions or initiatives. Through targeted measures aimed at activating underrepresented groups in the labour market, supporting skills training and education, improving working conditions, enhancing fair intra-EU mobility, and attracting talent from outside the EU, the Communication sets out to bolster the EU’s resilience, competitiveness, and strategic autonomy.

Subject Matter: A central aspect of the Commission's strategy involves the activation of underrepresented groups within the labour market. Recognising the untapped potential among women, older workers, and those with low skills or educational attainment, the plan advocates for policies tailored to each group's specific barriers to employment. For instance, the Communication cites initiatives aimed at increasing childcare provision to facilitate women's entry into the workforce and reforming retirement and pension systems to encourage older workers to remain active in the labour market. Moreover, it underscores the significance of skills training and education, urging member states to implement the European Skills Agenda and support adult learning to ensure at least 60 per cent of adults partake in training annually by 2030. Improving working conditions emerges as another pivotal theme, by highlighting the link between job quality and labour shortages. It suggests that enhancing wages, health and safety standards, and work-life balance could make certain sectors more attractive to potential employees. The Communication also advocates for fair intra-EU mobility, suggesting that smoothing the path for workers and learners to move across borders could alleviate regional disparities in labour supply and demand. To this end, it encourages cooperation with the European Labour Authority and the implementation of the European Social Security Pass to simplify social security coordination for mobile EU citizens. Furthermore, attracting talent from outside the EU is identified as a critical measure for addressing labour shortages, particularly in sectors where demand far exceeds the supply of local workers. The Commission proposes the establishment of the EU Talent Pool, a novel initiative designed to streamline the process for non-EU nationals to seek employment within the Union, thereby facilitating the recruitment of international talent into shortage occupations.

Non-legislative Act: On the 27th of February 2024, the European Commission published a Communication on Advanced Materials for Industrial Leadership (press release).

Problem: There is fragmentation and underinvestment within the EU's ecosystem for advanced materials, which are pivotal for industrial leadership and competitiveness. Despite the EU's notable achievements in materials science, the lack of a coordinated strategy and sufficient private investment has resulted in fragmented research and innovation efforts that fail to fully capitalise on advanced materials' potential. Moreover, the EU faces a critical challenge in accelerating the development, scale-up, and industrial uptake of advanced materials, essential for the twin green and digital transition and for achieving EU resilience and open strategic autonomy. Additionally, there is a significant gap in skills and a lack of harmonised standards, further impeding the rapid advancement and deployment of advanced materials.

Objective: The challenges are addressed by establishing a robust and inclusive ecosystem for advanced materials in Europe, ensuring leadership in research while fast-tracking innovations to the single market. It proposes to enhance coordination among EU, national, and regional priorities on research and innovation for advanced materials, significantly boost private investments, and support innovators and small and medium-sized enterprises in developing materials with superior performance. Furthermore, it seeks to catalyse the larger-scale and more rapid deployment of advanced materials, acting as market catalysts for the twin transition and enhancing EU resilience and economic security.

Subject Matter: A key aspect of the proposed measures is the emphasis on fostering a coordinated approach to research and innovation across the EU, aiming to streamline and magnify efforts in advanced materials research. The Communication proposes the establishment of common objectives and priorities for research and innovation investments, urging member states and industry stakeholders to collaborate more closely. This approach is expected to reduce the fragmentation currently seen in the ecosystem, ensuring that investments are strategically aligned with the EU's broader objectives for economic security and the twin transition. Furthermore, the Communication highlights the critical need to increase both public and private investments in advanced materials. It identifies a gap in investment, especially when compared to global competitors, and suggests exploring innovative funding mechanisms that can bring together public and private resources. The introduction of a co-programmed public-private partnership named ‘Innovative Materials for EU’ under Horizon Europe is a notable initiative, aimed at unlocking significant private capital to match EU funding, thereby accelerating the deployment of advanced materials. Another significant proposal is the creation of a European digital infrastructure for advanced materials research and innovation, termed the ‘materials commons’. This digital infrastructure aims to leverage artificial intelligence and other digital tools to speed up the discovery and development of new materials, facilitating a more efficient transition from research to market-ready innovations. The Communication also stresses the importance of bridging the gap between innovative research and industrial application. It calls for better access to testing and experimentation facilities for startups and SMEs, enabling them to validate and optimise new technologies before commercialisation. Moreover, it recognises the need for harmonised standards to build investor and consumer trust in new solutions and to support the digital transition. In addressing the skills gap, the Communication underlines the necessity of developing a skilled workforce capable of supporting the innovation and production of advanced materials. It advocates for the integration of new curricula and vocational training programmes to upskill current and future workers in this rapidly evolving field.

Proposal: On the 24th of January 2024, the European Commission published a Proposal for a Directive amending Directive 2009/38/EC as regards the establishment and functioning of European Works Councils and the effective enforcement of transnational information and consultation rights (press release).

Problem: The existing framework for the information and consultation of employees at transnational levels faces challenges such as low rates of new European Works Councils (EWCs) creation, ineffective consultations, obstacles to EWCs accessing courts, and a lack of effective remedies and sanctions in various member states. Consequently, the former Directive does not uniformly apply to all community-scale undertakings, leading to inconsistent levels of employee protection.

Objective: The Directive aims to enhance the effectiveness of the information and consultation framework for employees at the transnational level by addressing the identified shortcomings. It seeks to extend the scope of the Directive to cover all relevant community-scale undertakings, thus eliminating unjustified differences in employee rights. Moreover, the Directive aims to ensure that EWCs are set up more efficiently, are gender-balanced, and operate with clearer processes for consultation and resource allocation. Correspondingly, it strives to provide effective remedies and dissuasive sanctions to improve compliance and enforcement across member states.

Subject Matter: The Directive introduces several key measures to address existing inefficiencies and enhance the overall framework. One significant measure is the clarification of the concept of transnational matters, which now includes situations where measures taken by management in one member state could have consequences for workers in another. This change is intended to reduce legal uncertainties and disputes, ensuring that transnational issues are properly addressed by EWCs. Moreover, the Directive specifies that EWCs must receive a reasoned response from central management before any decision affecting workers is finalised. This requirement ensures a genuine dialogue between management and employees' representatives, enhancing the consultation process. The Directive also mandates that expenses related to the negotiations and operations of Special Negotiating Bodies (SNBs) and EWCs, including reasonable legal costs, must be borne by the central management. This provision aims to remove financial barriers that might prevent effective employee representation. Furthermore, the Directive emphasises the importance of gender balance within EWCs. It introduces specific objectives for achieving gender-balanced representation, requiring that at least 40 per cent of the seats on the EWC or its select committee be allocated to members of either gender. This measure promotes equality and ensures diverse representation within these bodies. The Directive also enhances the protection of employees' representatives against retaliatory measures or dismissal, ensuring they can perform their duties without fear of repercussions. Another critical measure is the removal of exemptions that previously excluded certain undertakings from the scope of the Directive. All community-scale undertakings are now subject to the Directive's requirements, providing a uniform level of protection and rights for employees across the Union. This change addresses the previous regulatory fragmentation and ensures that all employees have access to the same information and consultation rights. Additionally, the Directive mandates that EWCs meet at least twice a year instead of once, as previously required. This increase in the frequency of meetings aims to improve the ongoing dialogue and ensure timely discussions on significant transnational matters.

Non-legislative Act: On the 20th of June 2023, the European Commission published a Communication on the Mid-term revision of the Multiannual Financial Framework 2021 – 2027 (press release).

Problem: The Union has faced a series of unprecedented and unexpected challenges since 2020, including the COVID-19 pandemic, Russia's war of aggression against Ukraine, an ensuing energy crisis, and a related spike in inflation and interest rates. Additionally, migration has increased post-pandemic, straining member states' reception and integration capacities. Moreover, the Union is grappling with increasing geopolitical instability, crises and natural disasters. These challenges have pushed the resources of the EU budget to the brink of exhaustion.

Objective: The Communication outlines the adjustments to the Multiannual Financial Framework 2021 – 2027, in order to address these challenges. The revision aims to meet the legal duties of EU institutions, equip the EU budget with flexibility and ensure the sustainability of the payments ceiling.

Subject Matter: Firstly, the Communication proposes an increase in the ceiling of Administrative Expenditure by 1.9 billion euro. This adjustment is necessary to meet the Institutions’ legal duties and handle the additional responsibilities assigned to the Commission. This measure is a direct response to the additional tasks given to EU institutions since the start of the MFF, coupled with high inflation, which are putting the EU administration under strain. Secondly, the Communication emphasises the need for additional financial support to manage migration effectively and maintain partnerships with third countries. The Communication proposes additional financial support to address the root causes of migration, improve border management, and maintain effective migration partnerships with third countries. Furthermore, the Communication highlights the need for significant investment to foster long-term competitiveness and to accelerate Europe's twin transition. This includes smart public and private investment in strategic sectors, while preserving a level playing field in the single market and thereby cohesion. This is particularly important in the context of current strategic dependencies, demographic changes, and the need to ensure affordable access to energy. Moreover, the Communication proposes an increase in the Flexibility Instrument by 3 billion euro to respond to unforeseen needs that may arise. Given the exhaustion of the 2021 – 2027 margins and the volatile environment, the Flexibility Instrument is the only possibility to support any type of additional needs or crises irrespective of their nature. Lastly, to ensure the sustainability of the payments ceiling, the Communication proposes an increase in the MFF payments ceiling. Subsequently, the payments ceiling for 2026 should be increased by 7.7 billion euro and for 2027 by 2.8 billion euro, equal to 50 per cent of the proposal to increase the ceiling for commitments in 2018 prices. All of the outlined measures shall be implemented through several legal acts that are published alongside the Communication, including a proposal laying down the MFF for the years 2021 to 2027, a proposal establishing the Ukraine Facility, and a proposal establishing the Strategic Technologies for Europe Platform (STEP). The Commission calls on the European Parliament and Council to ensure that this package is in force on 1 January 2024, given the urgent budgetary constraints, which will already materialise in 2024.

Legislative procedure completed: On the 1st of February 2024, the revision of the Multiannual Financial Framework's ceilings was adopted (press release). The historic agreement, covering 80 per cent of requested funding, allows the EU to implement shared priorities, including crucial support for Ukraine, measures addressing migration and external challenges, and strengthening sovereignty and competitiveness. The financing involves a combination of new funds and reallocations within the EU budget to minimize impacts on national budgets while focusing on pressing priorities.

Proposal: On the 20th of June 2023, the European Commission published a Proposal for a Regulation amending Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027 (press release).

Problem: The Union has faced a series of unprecedented and unexpected challenges since 2020, including the COVID-19 pandemic, Russia's war of aggression against Ukraine, an ensuing energy crisis, and a related spike in inflation and interest rates. These challenges, which were unforeseen at the time of the agreement on the Multiannual Financial Framework (MFF), have nearly exhausted the limited budgetary flexibilities embedded in the MFF, thereby hindering the EU budget's capacity to address even the most urgent challenges.

Objective: The Regulation aims to address these problems by revising the MFF and provide the Union with the necessary policy responses to emerging challenges and to meet legal obligations which cannot be accommodated within existing ceilings nor by exhausted flexibility. Therefore, the annual amounts of existing instruments as well as the expenditure ceilings for the years 2024 to 2027 shall be increased, in addition to the introduction of new instruments.

Subject Matter: Firstly, the Proposal aims to enhance the Union budget's capacity to respond to crises and unforeseen developments. It suggests increasing the annual amount of the Solidarity and Emergency Aid Reserve (SEAR), a thematic special instrument which helps tackle emergencies in member states and non-EU countries. Additionally, the Regulation provides for an increase of the Flexibility Instrument to ensure that the EU budget can respond to unforeseen needs that may arise. Furthermore, the Regulation introduces new special instruments, namely the 'EURI Instrument' and 'Ukraine Reserve'. The EURI Instrument shall be used to cover the funding costs of NextGenerationEU borrowing for non-repayable and repayable support through financial instruments. To this end, the mobilisation of the EURI Instrument should take place when the costs of NextGenerationEU borrowing in a given year are in excess of the amounts planned in December 2020. On the other hand, the Ukraine Reserve is introduced to provide for the expenditure for non-repayable support and provisioning of budgetary guarantees for Ukraine under the proposed 'Ukraine Facility', to facilitate the required flexibility to match Ukraine’s evolving needs. Thereby, the mobilisation of the Ukraine Reserve should take place annually in the framework of the annual budgetary procedure, considering the best needs estimates given war developments, Ukraine's macro-financial performance, absorption capacity, and debt sustainability. In total, the revised MFF requires an increase of the expenditure ceilings for the years 2024 to 2027. The total increase in commitment appropriations ranges from 4,683 million euro in 2024 to 5,855 million euro in 2027. The proposal also requires an increase of the ceiling of the MFF in payment appropriations in 2026 and 2027.

Legislative procedure completed: On the 10th of February 2024, the Proposal for a Regulation on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97 was formally adopted (press release). The European Commission plans to send each member state whose public debt or deficit exceeds the reference values an individual technical target path for multi-annual net expenditure. This path is intended to ensure that the debt level falls and the deficit falls below the reference value. The Council allows for longer adjustment paths if member states commit to favourable reforms and investments. Safeguards on debt sustainability and deficit resilience as well as the monitoring of net expenditure paths are intended to ensure the effectiveness of this framework.

Proposal: On the 22nd of April 2023, the European Commission published a Proposal for a Regulation on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97 (press release).

Problem: In the context of the Commission's most recent review of the EU economic governance framework, some shortcomings were highlighted. On the one hand, it proves to be increasingly complex, on the other hand, the debt of heavily indebted countries needs to be reduced more effectively. Furthermore, instruments and procedures of the framework need to be updated and modernised.

Objective: In general, the package aims to address these shortcomings. In line with the Commission’s guidelines for reforming the EU's economic governance framework of November 2022, the effectiveness and transparency of the framework shall be increased. The three proposals of the package aim to give member states more national responsibilities, reduce debt levels and promote sustainable growth. Specifically, this proposal sets out detailed rules for national medium-term fiscal-structural plans.

Subject Matter: The Regulation provides for several provisions. First, the fiscal framework shall be included in the surveillance cycle of the European Semester. To this end, member states shall be obliged to comply with the Council's fiscal guidelines. Secondly, the Regulation empowers the Commission to issue a technical trajectory of net expenditure for member states with a government debt above 60 per cent of GDP or a government deficit above 3 per cent of GDP. Thirdly, defines details of the procedures for medium-term structural fiscal plans. This regards the technical dialogue between the Commission and the respective member state. Moreover, this concerns the specific content and requirements of the fiscal plans. Meanwhile, states of the Eurozone which are subject to a macroeconomic adjustment programme, are exempt from submitting fiscal plans. Fourth, the Regulation sets out the procedure for monitoring the fiscal plans. To this end, member states are required to submit annual progress reports. Lastly, the Regulation also sets out specific courses of action if there is a significant risk of deviation from the net expenditure path.

Legislative procedure completed: On the 10th of February 2024, the Proposal for a Regulation amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure was formally adopted (press release). The Council and the Commission have agreed that a debt-based excessive deficit procedure will be initiated if the government debt-to-GDP ratio exceeds the reference value or if the overall deficit is not close to balance. Compliance is assessed on the basis of various factors, including the debt level, the deviation, progress on reforms and investments and possible increases in government defence spending. In the event of non-compliance, a fine of up to 0.05 per cent of GDP can be accumulated every six months until effective measures are implemented.

Proposal: On the 26th of April 2023, the European Commission published a Proposal for a Regulation amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure (press release).

Problem: In the context of the Commission's most recent review of the EU economic governance framework, some shortcomings were highlighted. On the one hand, it proves to be increasingly complex, on the other hand, the debt of heavily indebted countries needs to be reduced more effectively. Furthermore, instruments and procedures of the framework need to be updated and modernised.

Objective: In general, the package aims to address these shortcomings. In line with the Commission’s guidelines for reforming the EU's economic governance framework of November 2022, the effectiveness and transparency of the framework shall be increased. The three proposals of the package aim to give member states more national responsibilities, reduce debt levels and promote sustainable growth. Specifically, this proposal aims to modernise the debt reduction procedure of the Stability and Growth Pact (by focusing on sovereign debt sustainability and differentiating more between individual countries.

Subject Matter: The main focus of the Regulation consists of changing the reference value for government debt. Accordingly, the extent of the challenges posed by a member state's debt will be determined as the decisive factor for initiating an excessive deficit procedure (EDP). Instead of the so-called "1/20 rule", i.e. state debt exceeding 60 per cent of GDP, the focus shall be on compliance with the net expenditure path set by the Council. The latter states that net expenditure must be brought or kept below 3 per cent of GDP and that the debt level must be brought onto a plausibly declining path. In cases where the general government deficit exceeds the 3 per cent of GDP reference value, a minimum annual adjustment of at least 0.5 per cent of GDP shall be made. In the event of a severe economic downturn, changes to the correction deadlines can be made by the Council. The changes of the Regulation are intended to enable necessary investments in the green and digital transformation by indebted states. In addition, the EDP shall be adapted to accommodate exceptional circumstances, such as the massive contraction of debts during the COVID-19 pandemic.

Non-legislative Act: On the 20th of June 2023, the European Commission published Communication on an adjusted package for the next generation of own resources (press release).

Problem: The central problem is the need to introduce new own resources for the EU budget, ensuring that the expenditure related to the repayment of the European Union Recovery Instrument does not unduly reduce programme expenditure or investment instruments under the Multiannual Financial Framework (MFF). Additionally, it aims to mitigate increases in the Gross National Income (GNI)-based own resource for Member States, necessitating new revenue streams to cover the expected expenditure related to the repayment.

Objective: The Commission seeks to introduce and adjust a basket of new own resources for the EU budget. Initially, in December 2021, the Commission proposed three new sources of revenue. However, due to limited progress in legislative discussions, the Commission now proposes to adjust this first basket of new own resources in light of the Fit For 55 agreement and recent developments, including the addition of a new statistical-based own resource. This aims to provide member states with the necessary elements to progress on their negotiations within the agreed roadmap and calls on the Council to accelerate these negotiations.

Subject Matter: The Communication presents a comprehensive strategy for the introduction of new own resources for the European Union budget. The document outlines several key measures and adjustments to existing proposals, focusing on three main areas: Firstly, The Commission proposes significant modifications to the own resources derived from the ETS and CBAM. One of the key changes is the postponement of the introduction of the own resource from the new ETS, which will be established in 2027, to 2028. This delay is in response to the agreement reached on the revised ETS Directive. For the existing ETS, the own resource can already be introduced. Furthermore, member states applying national carbon taxes may opt to exempt relevant emissions from the new ETS, with a corresponding cancellation of allowances. This adjustment is proposed to be included in the valuation mechanism, allowing the valuation of allowances that are not auctioned. Secondly, since July 2021, there has been a significant increase in carbon prices. The carbon price in the existing ETS has risen to EUR 80, considerably higher than the initial assumption of EUR 55 per tonne of CO2 for the period 2026-2030. This increase has led to a doubling of member states’ annual revenue from auctioning allowances. In response to these developments, the Commission proposes a higher call rate for the ETS-based own resource. It is proposed that 30% of all revenues generated by EU emissions trading will accrue to the EU budget, with total revenues from the ETS own resource expected to reach around 19 billion euros per year from 2028 onwards. Thirdly, in addition to the adjustments to the ETS and CBAM own resources, the Commission proposes a new statistical own resource based on company profits. This resource is not a tax on companies but a national contribution calculated using statistics from national accounts under the European system of accounts (ESA). The calculation is based on a harmonised indicator – the gross operating surplus – which approximates company profits. The expected revenues from this source are estimated to be around 16 billion euros per year on average. Lastly, the Commission emphasises the need for member states to accelerate negotiations on these new own resources. The adjusted Proposal is expected to deliver annual revenues of up to 36 billion euros on average over the 2028-2030 period. The inclusion of the Proposal for a temporary statistical-based own resource on company profits is intended to provide member states with all necessary elements to proceed towards a quick agreement. The adjusted package, expected to deliver annual revenues of up to 36 billion euros on average over the 2028-2030 period, is seen as crucial for ensuring the EU's financial stability and supporting its strategic objectives.

Proposal: On the 20th of June 2023, the European Commission published a Amended Proposal for a Regulation amending Regulation (EU, Euratom) 2021/768 of 30 April 2021 as regards implementing measures for new own resources of the European Union (press release).

Problem: There is a need for the introduction of new sources of revenue for the EU budget, as proposed by the Commission in December 2021. These new revenue sources include contributions from the Emission Trading System (ETS), the Carbon Border Adjustment Mechanism (CBAM), and an own resource based on a share of residual profits from multinationals, reallocated to EU Member States under the OECD/G20 agreement ("Pillar One"). Furthermore, more than a year later, the Commission added a new own resource based on statistical company profits, and the co-legislators adopted the CBAM Regulation, vesting the Commission with additional control and inspection powers.

Objective: The Commission amends its own resource Proposal and the Council Regulation amending Regulation (EU Euratom) 2021/768 to include implementing measures for these new own resources of the European Union. It aims to lay down the necessary control and inspection powers for the Commission to implement these new resources effectively. The document also seeks to adjust the IMSOR to accommodate the centralised governance introduced by the CBAM Regulation and ensure that the Commission has proportionate control and supervision powers for the correct implementation of the new resource based on statistical company profits.

Subject Matter: A significant part of the Proposal involves the calculation of member states' contributions based on statistical company profits. These profits are established under the European System of Accounts 2010 (ESA 2010) in application of Regulation (EU) No 549/2013. To ensure accuracy and comparability in the data used by National Statistical Institutes to compile these aggregates, the Commission, specifically Eurostat, is tasked with verifying the data sources and the methodologies used for compiling the data. This verification process includes an enlargement of the scope of existing Gross National Income (GNI) verifications, requiring the Commission to be empowered within the regulation to perform these necessary verifications. Additionally, the Proposal reviews the need for control powers in relation to the Carbon Border Adjustment Mechanism (CBAM) own resource. According to Articles 15 and 19 of the CBAM Regulation, the Commission is expected to carry out risk-based controls and review the content of CBAM declarations. The Commission is authorized to conduct risk-based controls on the data and transactions recorded in the CBAM registry. This step is crucial to ensure that there are no irregularities in the various stages of handling CBAM certificates, including their purchase, holding, surrender, re-purchase, and cancellation.
Given the controls already embedded in the sectorial legislation, the Proposal concludes that no additional on-the-spot checks and inspections are necessary for the CBAM own resource. This decision is made in line with the principle of establishing an efficient and effective framework for these new control mechanisms. As a result, the Proposal is amended to reflect these considerations. In essence, the document represents a pivotal step in the EU's efforts to modernize and streamline its financial systems, particularly in terms of integrating new revenue sources into the EU budget.

Proposal: On the 12th of September 2023, the European Commission published a Proposal for a Council Directive on a Framework for Income Taxation (BEFIT) (press release).

Problem: Even after 30 years with an internal market, there are no common rules that allow a calculation of taxable income of businesses operation in the European Union. Accordingly, businesses have to adhere to 27 national tax systems, which poses difficulties and costs for companies to engage across the Union. Due to the complexity and discrepancies, the different tax systems increase tax uncertainty and compliance costs, creating an uneven field for businesses operating in more than one member state. Hence, cross-border investments are discouraged. Additionally, the arm’s length principle used to value transactions between associated enterprises in transfer pricing results in long disputes, higher costs and relies on comparable transactions to be available. This affects especially the accuracy for transactions related to intangible assets like patents, trademarks, or goodwill. member states’ tax base is instable, and businesses risk arbitrary valuation.

Objective: The design of “Business in Europa: Framework for Income Taxation”, short BEFIT, builds on analyses and negotiations of earlier proposals which it will replace. Moreover, it builds on the achievements of the OECD/G20 Inclusive Framework Two Pillar Approach and the international tax agreement on a global minimum level of taxation. The new framework aims to simplify the internal market’s tax environment, replacing the 27 different determinations of taxable bases, developing a common corporate tax framework supporting the internal market. A level playing field will be created that enhances legal as well as tax certainty while reducing compliance costs and encouraging businesses to operate cross-border, especially for SMEs.

Subject Matter: Fist, BEFIT aims to reduce compliance costs by providing a simplified set of tax rules, which takes businesses less resources to comply with. Secondly, cross-border expansion (especially from SMEs) is encouraged. The proposal will further reduce distortions that influence the internal market by providing fair competition for companies, establishing a uniform set of corporate tax rules. Finally, BEFIT aims to reduce the risk of double and/or over-taxation, as well as tax disputes. The European Commission will develop and operate a collaborative tool, which will facilitate the operation and communication of BEFIT teams. The new rules will be mandatory for groups operating in the EU with an annual combined revenue of at least 750 million euros, and where the ultimate parent entity holds at least 75 per cent of the ownership rights or of the rights giving entitlement to profitThe DG TAXUD will monitor and measure the developments of BEFIT regarding the effectiveness and efficiency. Member states on the other hand will create the appropriate domestic infrastructure to enable to communication. The proposal offers several BEFIT Versions. The “Comprehensive”, the “Light” and the “Composite” one, which is an in-between version that combines mandatory harmonisation and gradual application. They differ in their scope, tax base computation, tax base allocation, transfer pricing risk assessment and administration. The “Composite” version is the preferred policy package, as it proves effective in achieving specific objectives of the initiative while demonstrating efficiency, as it is limited in its mandatory scope, including only those groups who can benefit from common rules the most and can afford the transition.

Proposal: On the 19th of June 2023, the European Commission published a Proposal for a Council Directive on Faster and Safer Relief of Excess Withholding Taxes (press release).

Problem: Generally, investors in the EU are required to pay tax twice on income they receive from holding securities: withholding tax (WHT) and income tax. To avoid this double taxation, many member states have agreed to share taxing rights through double tax treaties (DTTs). However, WHT procedures have proven to be burdensome, costly, and lengthy and diverging across member states, which discourages cross-border investments within the EU. Moreover, WHT procedures are still prone to risk of tax fraud and abuse, namely through so-called Cum/Cum and Cum/Ex cases.

Objective: In light of these challenges, the Directive is aimed at establishing a common framework for the relief of WHT on cross-border income within the EU. The Proposal intends to facilitate the process of claiming WHT relief more efficiently, and prevent abusive and fraudulent tax practices, particularly those related to Cum/Ex and Cum/Cum schemes.

Subject Matter: The first key area of measures is the introduction of an electronic tax residency certificate (eTRC) that will serve as proof of tax residence for individuals or entities claiming WHT relief. The eTRC shall be issued by the tax authorities of member states and will have a minimum validity period of one year. Member states are encouraged to adopt a fully automated system for issuing eTRCs within one day, with provisions for exceptional circumstances. The eTRC shall be secured using electronic seals in accordance with relevant regulations. Secondly, to access WHT relief procedures, financial intermediaries need to be certified as Certified Financial Intermediaries (CFIs). Large institutions and Central Securities Depositories providing withholding tax agent services should be required to register, while other entities, including those based in third countries, may register voluntarily in national registers established by member states. Non-compliant CFIs may face penalties or removal from the registers. Furthermore, the Directive emphasizes the importance of common reporting to combat tax fraud and abuse. To this end, CFIs registered in national registers shall be obligated to report relevant information to the tax authorities, enabling them to verify WHT rates and detect potential abuse. The reporting obligations should apply regardless of the CFI's country of residence. CFIs are expected to report information related to the securities payment chain, allowing tax administrations to identify the final investor and assess their eligibility for reduced WHT rates. The reporting timeline is set at 25 days from the record date, with provisions for settlement instructions. As another key area, the Proposal addresses Cum/Ex and Cum/Cum schemes. Thereby, additional reporting requirements related to holding periods of underlying securities and financial arrangements linked to securities are introduced. The reporting obligations exclude very low amounts of dividends but allow member states to apply appropriate consequences for identified abuse. Moreover, in cases where relief at source or quick refund systems do not apply, a standard refund procedure is available, allowing taxpayers or their representatives to directly request a refund from tax authorities. Lastly, the proposal includes general provisions related to implementing acts, evaluation and monitoring, data protection rules, transposition into national law, and the expected timeline for implementation. Once adopted, member states are thus required to transpose the Directive into their national law by 31 December 2026, and it is expected to come into effect two years after the adoption of the implementing acts, likely by 1 January 2027.

Proposal: On the 28th of June 2023, the European Commission published a Proposal for a Regulation on a framework for Financial Data Access and amending Regulations (EU) No 1093/2010, (EU) No 1094/2010, (EU) No 1095/2010 and (EU) 2022/255 (press release).

Problem: Within the Union, there is a lack of a unified framework to manage digital operational resilience in the financial sector. This gap has led to inconsistencies and potential vulnerabilities in the sector, which could pose significant risks to financial stability, market integrity, and the protection of consumers and investors.

Objective: To address this problem, the Proposal aims to establish a comprehensive legal framework to enhance the digital operational resilience of the financial sector. This shall be achieved by setting out specific requirements for financial entities, empowering competent authorities, encouraging collaboration among authorities, and providing for specific legal procedures.

Subject Matter: Firstly, the Regulation sets out specific requirements for financial entities to have robust digital resilience capabilities. For instance, it mandates the implementation of testing and incident reporting mechanisms. Furthermore, competent authorities shall be empowered to investigate potential breaches of the Regulation and impose administrative penalties. These measures are designed to be proportionate and comply with Union and national law, including applicable procedural safeguards and the principles of the Charter of Fundamental Rights of the European Union. Secondly, the Regulation encourages collaboration among authorities for effective enforcement. It allows competent authorities to exercise their powers in several ways: directly, in collaboration with other authorities, by delegating powers to other authorities or bodies, or by having recourse to the competent judicial authorities of a member state. In addition to these measures, the Regulation also provides for settlement agreements and expedited enforcement procedures. To this end, member states may lay down rules enabling their competent authorities to close an investigation concerning an alleged breach of this Regulation, following a settlement agreement, or through an expedited enforcement procedure. This is aimed at achieving a swift adoption of a decision imposing an administrative sanction or administrative measure. Moreover, the Regulation emphasises the importance of professional secrecy. All persons who work or who have worked for the competent authorities, as well as experts acting on behalf of the competent authorities, are bound by the obligation of professional secrecy. This obligation extends to the information exchanged between competent authorities. Furthermore, the Regulation also provides for the right of appeal. Decisions taken by the competent authorities pursuant to this Regulation may be contested before the courts. This right of appeal also applies in respect of a failure to act. Finally, the Regulation mandates the publication of decisions of competent authorities. All decisions imposing an administrative penalty or administrative measure on legal and natural persons, for breaches of this Regulation, and where applicable, all settlement agreements, are to be published on the website of the competent authorities.

Proposal: On the 28th of June 2023, the European Commission published a Proposal for a Regulation on payment services in the internal market and amending Regulation (EU) No 1093/2010 (press release).

Problem: In recent years, there have been significant changes in the retail payment services market, largely related to the increasing use of cards and digital means of payment, the decreasing use of cash, and the growing presence of new players and services. Furthermore, the Covid-19 pandemic has amplified the importance of secure and efficient payments. While previous EU legislation has already addressed the barriers to new types of payment services, its objectives in certain areas have not been fully met, necessitating improvements to the current regulatory framework.

Objective: The legislative package aims to enhance the functioning of the Union’s legal framework for retail payments in the EU. Therefore, the Regulation sets out amendments to the current legal framework, as laid down by the first and second Payment Services Directive (PSD1 and PSD2). This Proposal is therefore complementary to the Proposal for a Directive on payment services and e-money services, which amends other areas of the PSD1 and PSD2 framework.

Subject Matter: The Regulation aims to address several key areas. Firstly, it establishes robust enforcement rules for 'open banking', ensuring that national competent authorities proactively and rigorously ensure the respect of the Union 'open banking' regulated framework. This includes the particulars of the relevant supervisory authorities and the register of authorisation of the payment service provider. Secondly, it introduces measures to increase the security of credit transfers, which is fundamental for increasing the confidence of payment service users. This includes a description of the main characteristics of the payment service to be provided, a specification of the information or unique identifier that has to be provided by the payment service user for a payment order to be properly placed or executed, and the form of and procedure for placing a payment order or giving permission to execute a payment transaction and withdrawal of such permission. Furthermore, the Regulation sets up procedures for payment service users and other interested parties to submit complaints regarding alleged infringements of the Regulation's provisions. It also mandates member states to provide for effective, proportionate, and dissuasive administrative sanctions and measures in relation to infringements of provisions from this Regulation. Moreover, the Regulation addresses charges, interest, and exchange rates. It outlines all charges payable by the payment service user to the payment service provider, including those connected to the manner in and frequency with which information under this Regulation is provided or made available. It also details all charges for domestic, automated teller machines (ATMs) withdrawals payable by payment service users to their payment service provider at an ATM. The Regulation also includes provisions for the right of appeal. The decisions taken by the competent authorities pursuant to this Regulation shall be contestable before the courts. This applies also in respect of failure to act. Lastly, the Regulation mandates the publication of administrative sanctions and administrative measures. Competent authorities are required to publish on their website all decisions imposing an administrative sanction or administrative measure on legal and natural persons, for breaches of this Regulation, and where applicable, all settlement agreements.

Proposal: On the 28th of June 2023, the European Commission published a Proposal for a Regulation on the establishment of the digital euro (press release).

Problem: Increasing digitalisation of the European economy and the subsequent shift in payment habits towards private digital means threatens the balance between central bank money and private digital means of payment. Thus, this trend potentially undermines trust in commercial bank money and the euro itself. Moreover, the emergence of third-country central bank digital currencies and private firm-issued stablecoins could challenge the role of the euro in payments.

Objective: The document addresses these trends by proposing the establishment of a retail Central Bank Digital Currency (CBDC) – the digital euro. This digital euro would serve as a public digital means of payment, complementing cash and adapting the official forms of the currency to technological developments. Furthermore, it aims to support a stronger, more competitive, efficient, and innovative European retail payments market and digital finance sector. The digital euro would facilitate the development of pan-European and interoperable retail payment solutions, enhancing the resilience of the European retail payments market.

Subject Matter: The Regulation seeks to establish a framework for the digital euro, defining its nature, the roles of various stakeholders, and the compliance and reporting requirements associated with its use. Firstly, the Regulation introduces fundamental definitions of multiple concepts connected to the digital euro. Hence, the digital euro shall be made available to natural and legal persons for the purpose of retail payments. Moreover, the Regulation sets out that the issuance of the digital euro should lie with the European Central Bank. Secondly, the Regulation stipulates that member states shall designate one or more competent authorities to ensure compliance with the Regulation. In particular, these authorities shall be tasked with implementing rules on penalties applicable to infringements the provisions on the distribution and use of the digital euro as well as on fees of digital euro payment services, ensuring that these rules are effective, proportionate, and dissuasive. Thirdly, the Regulation sets out the granted legal tender status which entails the mandatory acceptance of the digital euro by payees. However, the Proposal does provide for several exceptions for microenterprises or natural persons acting on purely personal activity. Fourthly, existing EU laws shall apply to digital euro payment transactions. For instance, The Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and the Regulation on information accompanying transfers of funds shall apply to digital euro payment transactions. Fifthly, the Regulation also addresses the access and use of the digital euro outside the euro area, which shall be made possible for member states or third countries who commit to a number of conditions and enter an arrangement with the European Central Bank. Sixthly, some technical features of the digital euro are defined, with regards to its accessibility and usability. Lastly, the Regulation mandates the Commission to present to the European Parliament and to the Council a report on the application of this Regulation one year from the first issuance of the digital euro, and every three years thereafter. To this end, the Commission shall also be required to present a report on the developments of retail central bank digital currencies in member states whose currency is not the euro and the impact of this Regulation on the internal market.

Proposal: On the 28th of June 2023, the European Commission published a Proposal for a Regulation on the provision of digital euro services by payment services providers incorporated in Member States whose currency is not the euro and amending Regulation (EU) 2021/1230 of the European Parliament and the Council (press release).

Problem: The introduction of the digital euro requires a harmonised approach to the provision of digital euro services by payment service providers incorporated in member states whose currency is not the euro. Without such a Regulation, there could be fragmentation within the internal market, potentially leading to inconsistencies in the provision of these services.

Objective: To avoid this fragmentation, the Regulation proposes provisions that will apply to these payment service providers, ensuring that digital euro services are adequately supervised by competent authorities of the member states whose currency is not the euro. Furthermore, the Regulation aims to maintain a high level of competition across payment service providers, irrespective of where they have been licensed, thereby fostering innovation in payments, finance, and commerce. This proposal complements the Regulation establishing the digital euro, which is addressed to member states whose currency is the euro.

Subject Matter: Primarily, the proposal lays down specific obligations that will apply to payment service providers incorporated in member states whose currency is not the euro. Furthermore, the proposal also outlines the supervision and enforcement of these obligations by the member states whose currency is not the euro. Generally, it is emphasised that the digital euro would act as a catalyst for innovation in payments, finance, and commerce in the context of ongoing efforts to reduce the fragmentation of the EU retail payments market. Thus, payment service providers should be able to offer residents of the euro area digital euro payment services together with other payment or banking services. Subsequently, these payment services providers, wherever incorporated in the Union, should be subject to similar regulations and be able to distribute digital euro services so that a high level of competition across payment services providers is ensured. The provisions of these Regulations are consistent with the Digital Finance and Retail Payment Strategies of the Commission.

Proposal: On the 24th of May 2023, the European Commission published a Proposal for a Directive amending Directives (EU) 2009/65/EC, 2009/138/EC, 2011/61/EU, 2014/65/EU and (EU) 2016/97 as regards the Union retail investor protection rules (press release).

Problem: The current inadequacy of the EU's capital markets jeopardize the long-term financial needs of its citizens, who predominantly rely on low-yield savings. Retail investors face significant challenges in accessing clear and comparable information on investment products, impeding their ability to make well-informed investment decisions. Moreover, the level of retail investor participation in EU capital markets varies greatly across member states, influenced by diverse historical and socio-economic conditions. This disparity in participation is primarily due to a lack of trust in capital markets and a need for more transparent, fair, and protective investment conditions.

Objective: The EU retail investment strategy is designed to fortify the legislative framework, ensuring that retail investors are both empowered to make more informed investment decisions and are adequately protected within the single market. This strategy aims to align retail investors' investment decisions more closely with their personal needs and objectives, thereby enhancing their trust and participation in EU capital markets. The overarching goal is to create a more equitable and transparent investment environment across the EU, addressing the existing disparities and fostering a culture where investing in capital markets is both desirable and accompanied by well-defined and acceptable risks.

Subject Matter: The Proposal outlines an EU strategy focused on enhancing the framework for retail investments. This initiative is part of a broader effort to integrate European capital markets and finance economic activities, especially for small and medium-sized enterprises (SMEs). The strategy addresses disparities in retail investor participation across member states and aims to increase transparency and trust in capital markets. Key measures include simplifying access to investment product information and fostering financial literacy. This educational aspect is crucial in changing investment culture and making capital markets more attractive and less intimidating to potential investors. Client categorisation is another focal point, aimed at tailoring investment advice and product offerings to the specific needs and risk profiles of individual investors. This approach is expected to lead to better investment outcomes for retail participants. Furthermore, the regulation of marketing and disclosure rules is a significant aspect of this strategy. The Proposal emphasises the need for modernising and harmonising the retail investment framework across different sectors, considering the increasing digitalisation of financial services.

Proposal: On the 24th of May 2023, the European Commission published a Proposal for a Regulation amending Regulation (EU) No 1286/2014 as regards the modernisation of the key information document (press release).

Problem: In line with the European Commission's objective of creating 'an economy that works for people’, the modernization of the key information document, is part of the Commission's 2023 work programme, which aims to ensure that legal frameworks support investors' participation in capital markets effectively and efficiently. As of January 2023, PRIIPs started to apply to investment funds under the scope of Directive 2009/65/EC on undertakings for collective investment in transferable securities (the UCITS directive), as the previous exemption had ceased to apply. This has further increased the consistency of disclosures across retail investment products.

Objective: The document implements a strategy for retail investments in Europe, as outlined in the European Commission’s Capital Markets Union action plan of September 2020. This strategy aims to enable retail investors to fully leverage the benefits of capital markets, supported by rules that are coherent across all relevant legal instruments. A core goal of the Capital Markets Union is to ensure that consumers can fully benefit from the investment opportunities offered by capital markets.

Subject Matter: The Regulation primarily deals with the modernization of the Key Information Document (KID) for Packaged Retail and Insurance-based Investment Products (PRIIPs). The focus is on enhancing the accessibility and comprehensibility of information for retail investors, particularly within the digital environment. The proposed amendments to the PRIIPs legal framework aim to adapt disclosures to digital formats and evolving investor needs, emphasizing clarity regarding the scope of PRIIPs in relation to specific financial products. A notable addition is the introduction of a section dedicated to sustainability, aligning the document with various EU policies like the European Green Deal and digital strategy. The revisions proposed in the document are designed to augment investor protection and market transparency, offering tools for cost comparison and decision-making. Additionally, the document suggests measures for product oversight and governance, aiming to ensure value for money and cost efficiency in investment products. This has made it easier for investors to understand key features of a full range of investment products and to compare different products including those of different product type (such as insurance-based investment products, investment funds or structured deposits).

Non-legislative Act: On the 25th of January 2023 the European Commission published a Communication on strengthening social dialogue in the European Union: harnessing its full potential for managing fair transitions (press release).

Problem: Social dialogue and collective bargaining are fundamental ways of improving living and working conditions. They are especially relevant in light of the rapid changes to the world in recent years through climate change, digitalisation and demographic trends, and therefore require to be reinforced constantly.

Objective: As one of the key principles of the European Pillar for Social Rights, the Communication sets out a number of measures to further strengthen the EU social dialogue. Thus, in order to improve the support of collective bargaining coverage and building the capacity, encouraging the involvement and safeguarding the autonomy of social partners.

Subject Matter: On a national level, the Commission proposed several measures in a Council Recommendation, i.e. creating an enabling environment for tripartite and bipartite social dialogue, promoting strong employers’ organisations with strengthened capacity, ensuring access to relevant information needed to participate and adapting to the digital age and the transition towards climate neutrality. Furthermore, the Commission shall assess the process of the implementation of the proposed measures by member states in consultation with the relevant social partners on a regular basis. On a union level, the Commission shall organise regular as well as extraordinary tripartite exchanges on relevant topics with the participation of European and national social partners. On a sectoral level, the Commission shall modernise the legal framework for Sectoral Social Dialogue Committees, facilitate synergies between existing committees, promote the inclusion of new segments of economic sectors and adjust the approach for conducting representativeness studies in cooperation with Eurofound. Moreover, the Commission calls on social partners to continue efforts and assess the need for further actions in the respective social dialogues in order to improve the membership and representativeness of trade unions and employers’ organisations. On the topic of social partner agreements, the Commission shall provide European social partners with administrative support and legal advice at their request and during negotiations on social partner agreements whose implementation through Union law is envisaged. To this end, European social partners are called upon to negotiate and conclude more social partner agreements. The Communication also takes scope at strengthening social partners’ involvement in EU policy-making, and shall therefore assign the role of Social Dialogue Coordinator in each Commission service and gather the views of the European cross-industry social partners on policy priorities ahead of the Commission work Programme. This would require the respective social partners to provide more joint outcome positions ahead of the relevant Commission proposals. In addition, the Communication aims to improve the effectiveness of the financial and technical support by setting up a research network for analysing and promoting EU social dialogue. Lastly, the Commission shall promote social dialogue internationally by continuing to call on member states to ratify and implement ILO Conventions as well as by launching a project to support social partners in Sectoral Social Dialogue Committees in conducting activities on responsible supply chains.

Legislative procedure completed: On the 27th of November 2023, the Proposal for a Council Recommendation on developing social economy framework conditions was adopted. It aims to enhance social inclusion and access to the labor market through the social economy, emphasizing the sector's potential for creating quality jobs, promoting social and environmental objectives, and fostering democratic governance. The document encourages member states to support social economy entities by integrating them into active labor market policies, facilitating access to finance, and leveraging the social economy for sustainable development. It also highlights the importance of international cooperation and public and private support to strengthen the social economy's role in achieving broader socio-economic and environmental goals.

Proposal: On the 13th of June 2023, the European Commission published a Proposal for a Council Recommendation on developing social economy framework conditions (press release).

Problem: To fully tap the significant potential of the social economy in improving access to the labour market and social inclusion, there is a need for adapted legal frameworks, targeted policies, and administrative structures.

Objective: The Recommendation aims to provide guidance to member states on how to promote the social economy across policy fields and legal frameworks. It seeks to improve access to the labour market and social inclusion by supporting the social economy and creating a favourable environment for the sector. The Proposal also aims to stimulate sustainable economic and industrial development, contribute to territorial cohesion, and support social innovation.

Subject Matter: The Recommendation outlines several key points and provisions. Firstly, it recommends that member states shall put in place measures that foster access to the labour market and social inclusion through the social economy. This includes labour market policies to support employees in social enterprises and their reintegration into the labour market, promoting social entrepreneurship, enabling more people with disabilities to join the labour market, and promoting social dialogue and collective bargaining to ensure fair working conditions. Furthermore, it suggests that member states acknowledge and support the contribution of social economy entities to social inclusion and include them in the design and delivery of social and care services, housing, education, and activities for children and young people. It also recommends that member states support training and skills development for the social economy by building skills intelligence related to market needs, facilitating training for employees, and creating national or transnational competence centres on the social economy in cooperation with vocational education and training providers. Moreover, the Proposal suggests that member states should reinforce the role of social economy entities to support social innovation and in key sectors of local development and employment. It also proposes that member states should develop enabling frameworks for the social economy by designing and implementing comprehensive strategies for the sector. Lastly, the document provides recommendations to member states on strategies and policies that recognise, support, and build on the contributions that the social economy makes to help people access the labour market and social inclusion. To this end, an even development of the social economy across the EU shall be developed and on innovative approaches to employment in collaboration with the sector shall be promoted. Specifically, the Proposal suggests putting in place mechanisms for consultation and dialogue between public authorities and organisations representing the social economy.

Proposal: On the 20th of March 2024, the European Commission published a Proposal for a Recommendation on a reinforced Quality Framework for Traineeships (press release).

Problem: Youth unemployment remains a persistent and pressing issue within the European Union, with the youth unemployment rate more than twice as high as the overall unemployment rate. A significant challenge lies in activating young people who are not in employment, education, or training (NEETs), as they face specific barriers that hinder their integration into the labour market. Moreover, the quality of traineeships, which are crucial for gaining practical and professional experience, varies significantly, with many lacking fair and transparent working conditions and adequate learning content. This variability undermines the potential of traineeships to serve as a valuable stepping stone into the workforce, particularly for those in vulnerable situations.

Objective: In order to elevate the quality of traineeships across the EU a reinforced Quality Framework for Traineeships s introduced. It seeks to ensure that traineeships offer substantial learning and training content alongside fair and transparent working conditions, thereby enhancing their value for both trainees and employers. Furthermore, by promoting inclusivity, it aims to extend opportunities for traineeships to all young people, including those in vulnerable situations, thereby supporting their transition from education, unemployment, or inactivity to work. The Proposal also underscores the importance of cross-border traineeships in fostering labour mobility within the EU, enhancing the trainees’ skill sets and employability on a broader scale.

Subject Matter: At the heart of the proposed measures is the establishment of a solid framework to ensure traineeships across the EU provide meaningful learning and training experiences, fair working conditions, and a clear pathway towards employment. To achieve these ends, the framework proposes several key interventions. For instance, it mandates that all traineeships are based on a written agreement, outlining specific learning objectives, working conditions, mentorship arrangements, tasks to be performed, and details on social protection coverage. This measure aims to bring clarity and transparency to the expectations and responsibilities of both the trainee and the traineeship provider. Moreover, the framework emphasises the importance of fair compensation for trainees, suggesting that pay should reflect the tasks and responsibilities undertaken by the trainee, along with the intensity of the work and the significance of the learning component. This move seeks to ensure that traineeships are not only educational but also economically viable for participants, thereby broadening their appeal and accessibility. The Proposal also addresses the need for trainees to be afforded the same rights and working conditions as regular employees under EU and national law, including health and safety regulations, limits on working hours, and minimum rest periods. Furthermore, it highlights the necessity of assigning both a supervisor, to guide the trainee through their assigned tasks, and a mentor, to offer additional support and advice, enhancing the learning experience and integration of the trainee into the workplace. Recognising the diversity of traineeships across member states and sectors, the framework proposes extending its scope beyond open-market traineeships and those part of active labour market policies to also include traineeships that are mandatory components of formal education and training curricula, as well as those necessary to access specific professions. This comprehensive approach ensures the framework's applicability across a wide array of traineeship formats, enhancing its potential to improve quality and accessibility EU-wide. In addition to these measures, the Proposal advocates for inclusivity, recommending strategies to improve outreach to and the accessibility of traineeships for individuals in vulnerable situations. It calls for the use of inclusive language in traineeship advertisements and the adaptation of traineeship programmes to meet the individual needs of trainees, especially those with disabilities. Finally, the framework underlines the value of cross-border traineeships in promoting labour mobility within the EU. It suggests leveraging the EURES network to facilitate these opportunities, providing practical guidance and information to both trainees and providers on navigating the complexities of cross-border placements.

Proposal: On the 24th of May 2023, the European Commission published a Proposal for a Directive amending Directives (EU) 2009/65/EC, 2009/138/EC, 2011/61/EU, 2014/65/EU and (EU) 2016/97 as regards the Union retail investor protection rules.

Problem: In a general economic context, the EU market for retail investments remains to be low in comparison to international competitors. This is due to a lack of financial literacy in the Union, as well as a number of challenges that diminish the ability of retail investors to take advantage of capital markets. These include difficulties for retail investors to access relevant and comparable product information and a growing exposure to unrealistic marketing information through digital channels.

Objective: Against this background, the legislative package containing this Directive aims to establish a comprehensive framework that safeguards retail investors, ensuring transparency, fair treatment, and sufficient risk disclosure. Thereby, trust and confidence of citizens in the capital markets as well as retail investor participation shall be enhanced. It is in line with the Capital Markets Union action plan that was put forward by the Commission in 2020.

Subject Matter: The Proposal focuses on enhancing investor protection in the realm of financial instruments, investment services, and insurance-based investment products. Therefore, investment firms, insurance undertakings, and intermediaries should assess the suitability or appropriateness of investment products based on accurate and complete information obtained from clients, accompanied by standardized warnings stressing the importance of accuracy. Firstly, the Proposal addresses transparency and disclosure requirements. To this end, retail investors should receive clear and standardized information regarding costs, charges, third-party payments, and the performance of their investments. Annual statements should provide an overview of held products, associated costs, payments received, and performance, with additional elements for insurance-based investment products used for retirement purposes. Furthermore, to eliminate legal uncertainty and reduce costs, disclosure requirements shall be consolidated into a single legal act, streamlining regulations for insurance undertakings and intermediaries. Secondly, the Proposal contains provisions for the regulation of marketing communications and practices. Thus, requirements for fair, clear, and non-misleading communication are necessary, with a focus on balanced risk and benefit presentation and suitability for the intended audience. Financial educational materials should therefore be distinguished from marketing. Thirdly, the identification of particularly risky investment products is seen crucial. To this end, guidelines and technical standards should be developed to aid investment firms, insurance undertakings, and intermediaries in identifying and providing warnings for such products. Fourthly, the Directive addresses financial literacy. Thereby, member states shall promote formal and informal learning measures to enhance the financial literacy of retail clients, customers, and prospective investors. Hence, the material should be tailored to different age groups, education levels, and technological capabilities. Additionally, special attention is given to retail clients and customers who access financial instruments, investment services, and insurance-based investment products for the first time, as well as those utilizing digital tools. Lastly, the Proposal focuses on appropriate professional client classification criteria.To this end, experience, knowledge, expertise, certified training, shall be considered while avoiding discrimination based on residence or wealth.

Proposal: On the 24th of May 2023, the European Commission published a Proposal for a Regulation amending Regulation (EU) No 1286/2014 as regards the modernisation of the key information document.

Problem: In a general economic context, the EU market for retail investments remains to be low in comparison to international competitors. Amongst others, this is due to a lack of financial literacy in the Union. While the Regulation on key information documents for packaged retail and insurance-based investment products (PRIIPs) has improved the accessibility and comparability of information for retail investors, some adaptations are needed in order to facilitate the digital environment.

Objective: Against this background, the legislative package containing this Regulation generally aims to establish a comprehensive framework that safeguards retail investors, ensuring transparency, fair treatment, and sufficient risk disclosure. Specifically, this proposal is intended to improve the key information document for PRIIPs, in order to enhance understanding among retail investors. It is in line with the Capital Markets Union action plan that was put forward by the Commission in 2020.

Subject Matter: Mainly, the Regulation seeks to reduce visual overload and introduce flexibility in the use of electronic formats. Therefore, the key information document, typically three pages long, should be available on the manufacturer's website but should be personalized for investors while ensuring they can download the complete document. Regulatory technical standards shall be developed by the European Securities and Markets Authority (ESMA) and other relevant authorities. These standards shall cover the document's content, including a summarized dashboard with information on type, risk, costs, recommended holding period, and insurance benefits. Furthermore, the document should be kept up to date to provide accurate and timely information to investors. Additionally, the scope of PRIIPs shall be expanded to include securities, pension products, and annuities focused on providing retirement income. Thus, additional information should be required for PRIIPs with sustainability considerations, including details on environmental sustainability and greenhouse gas emissions intensity. Personalization and formatting adaptations should be allowed, and an interactive tool could be used for customization and cost simulation. Lastly, retail investors have the right to receive the key information document in electronic format, with the option for a paper copy if requested. To this end, retail investors should be informed about the document's location on the manufacturer's website.

Non-legislative Act: On the 18th of April 2023, the European Commission published a Communication on the review of the crisis management and deposit insurance framework contributing to completing the Banking Union (press release).

Problem: Since its establishment in 2014, the Banking Union has been a key stability factor for the EU in economic crises. Two pillars of the Banking Union, namely a Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM), are already fully operational. Nonetheless, it has not yet been possible for the European legislators to reach agreement on the third pillar, i.e. a common deposit guarantee scheme. However, the latter is seen as crucial for the completion of the Banking Union and the efficient management of bank failures.

Objective: The legislative package aims to strengthen the common framework for bank crisis management and for deposit insurance (CMDI), in order to improve the Union's handling of bank failures. To this end, the following legal frameworks are to be reformed: The Bank Recovery and Resolution Directive; the Single Resolution Mechanism Regulation; and the Deposit Guarantee Scheme Directive. This Communication presents the underlying objectives of the proposed reforms in a bundled manner.

Subject Matter: The primary purpose of the CMDI framework is to ensure that losses to depositors from a bank failure are absorbed as best as possible. This is intended to maintain depositor confidence and protect taxpayers from bank failures. However, practice has shown that the implementation of the CMDI framework faces obstacles, especially in cases of smaller and medium-sized banks. On the one hand, this is due to the inconsistent handling of the instruments between member states. On the other hand, national resolution authorities have had wide scope for decision-making in dealing with bank failures, which possibly further contributes to market fragmentation. Thus, the proposed reforms to the CMDI framework aim to address the aforementioned limitations. A first key element of the reforms is to extend the given crisis resolution tools uniformly to smaller and medium-sized banks. Second, funds from the Deposit Guarantee Scheme (DGS) shall be used for the financing of crisis management instruments in a more simplified manner. However, this use of funds from the DGS in the resolution of small and medium-sized banks is subject to some restrictions. Namely, the funding should only be possible if it is necessary for maintaining financial stability and protecting taxpayers' money; and if it avoids depositors having to cover losses. Other elements of the proposed reforms aim to make the framework more efficient and predictable. Last, the Communication emphasises the need to increase efforts to finally adopt a common deposit insurance scheme in the Union.

Proposal: On the 18th of April 2023, the European Commission published a Proposal on amending Directive 2014/59/EU as regards early intervention measures, conditions for resolution and financing of resolution action (press release).

Problem: Since its establishment in 2014, the Banking Union has been a key stability factor for the EU in economic crises. Two pillars of the Banking Union, namely a Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM), are already fully operational. Nonetheless, it has not yet been possible for the European legislators to reach agreement on the third pillar, i.e. a common deposit guarantee scheme. However, the latter is seen as crucial for the completion of the Banking Union and the efficient management of bank failures.

Objective: The legislative package aims to strengthen the common framework for bank crisis management and for deposit insurance (CMDI), in order to improve the Union's handling of bank failures. Specifically, this Proposal concerns the EU framework for recovery and resolution for institutions and entities. The proposed amendments are intended to improve the effectiveness and efficiency of the framework, promote depositor protection, enhance the resolvability of institutions, and ensure a level playing field across the European Union.

Subject Matter: Firstly, the Proposal emphasizes the importance of harmonising the ranking of deposits and introducing a general depositor preference. This single-tiered approach should grant all deposits a higher priority ranking over ordinary unsecured claims without differentiation between types of deposits. This approach shall boost depositor confidence, prevent bank runs, and improve the resolvability of institutions. Additionally, the Proposal highlights the role of deposit guarantee schemes (DGS) in supporting resolution actions. To this end, DGS shall be used to support transfer transactions involving deposits, even beyond the coverage level provided by the DGS, under certain conditions. The DGS's contribution should cover the shortfall in the value of transferred assets compared to the transferred deposits. Moreover, to prevent disruptions to the economy and protect depositors, certain liabilities, including bail-inable liabilities and deposits, may be excluded from transfers to buyers or bridge institutions in resolution. The DGS may provide support in covering the shortfall between transferred assets and liabilities, subject to limits. However, the contribution of the DGS should not exceed what it would bear in insolvency, and its support should primarily focus on avoiding losses on deposits. Lastly, the European Banking Authority (EBA) shall monitor and report on the design and implementation of resolvability assessments, actions of resolution authorities, and measures adopted by member states to protect retail investors. EBA should also oversee crisis simulation exercises, ensuring coordination and cooperation between competent authorities, resolution authorities, and DGSs. To this end, the importance of high-quality impact assessment for evidence-based legislative proposals is also emphasized, with resolution authorities and other relevant entities providing necessary information to the Commission.

Non-legislative Act: On the 9th of November 2022, the European Commission published a Communication on orientations for a reform of the EU economic governance framework (press release).

Problem: The review of the EU economic governance framework by the EU institutions and all key stakeholders led to the conclusion that the economic challenges of today and tomorrow require reforms of the framework. Discussions in the Council (ECOFIN), the Eurogroup, the Economic and Financial Committee and the Economic Policy Committee have allowed member states to reflect on and express their views on the main objectives of the governance framework, its functioning and the new challenges that need to be addressed. It is time to move from discussions to decisions, effectively addressing the key economic and policy issues that will shape the EU’s economic policy coordination and surveillance over the next decade.

Objective: The aim is to strengthen debt sustainability and promote sustainable and inclusive growth in all member states by introducing prudent fiscal strategies and investments as well as mutually reinforcing reforms. By optimising the framework, the Union will be able to address the current challenges and contribute to making Europe more resilient. The Commission emphasises the strengthening of national ownership, simplification of the framework and a stronger medium-term focus combined with stronger and more coherent enforcement of it. The overarching goal of the reform is to facilitate effective economic policy surveillance while ensuring equal treatment and multilateral policy coordination. The legal framework must be robust to changing economic conditions and uncertainties. To effectively prevent and correct macroeconomic imbalances, emerging risks need to be better identified and reform momentum maintained. At the same time, more emphasis shall be placed on euro area developments and policy implementation.

Subject Matter: In addition to revising the EU fiscal framework and the multi-annual indicative programme, the Commission's guidelines call for the creation of a new EU instrument to enforce reform and investment. This instrument would ensure the enforcement of member states' reform and investment commitments and support a gradual budgetary adjustment. The Commission proposes the establishment of national medium-term fiscal plans that bring together the fiscal, reform, and investment commitments of individual member states within a common EU framework. In addition, member states shall commit to reforms and investments that would help bring debt onto a sustainable path and thus support a longer adjustment period and a more gradual adjustment path. A single operational indicator, guided by debt sustainability, would serve as the basis for defining the fiscal adjustment path and annual budgetary surveillance, greatly simplifying the fiscal framework and increasing its transparency. Additionally, the submission of an annual progress report by the member states will facilitate effective monitoring of the implementation of the medium-term fiscal structural plans, whereas the creation of a new instrument will ensure the implementation of reform and investment commitments. To increase ownership and transparency at the national level, independent financial institutions will play a role in monitoring compliance with national medium-term fiscal structural plans in support of national governments. Most importantly, rapid agreement is needed on the revision of EU fiscal rules and other elements of the economic governance framework.

Proposal: On the 14th of September 2022 the European Commission published a Proposal for a Directive of the European Parliament and of the Council amending Directive 2009/148/EC on the protection of workers from the risks related to exposure to asbestos at work (press release).

Problem: Occupational cancer is the most common cause of work-related deaths in the EU, with a large proportion caused by exposure to carcinogens, particularly asbestos. Although all extraction, manufacturing and processing of asbestos has been banned in the EU since 2005, the EU faces a legacy problem: Many older buildings, as part of the European Green Deal renovation wave strategy, will be renovated, adapted or demolished over the upcoming years, resulting in a significant exposure to asbestos for workers in the construction industry.

Objective: Based on the latest available scientific evidence and recent in-depth evaluations of EU-Directives regarding occupational health and safety, the proposed Directive aims to revise existing Regulation regarding the limiting of exposure to asbestos in the workplace. A revision of the occupational exposure limit value for asbestos shall lead to greater harmonisation of limit values between member states and create fairer conditions for posted, cross-border and mobile workers. In doing so, the Directive shall contribute to the fulfilment of the commitments to reduce workers' exposure to asbestos as set out in the action plan on the European Pillar of Social Rights and the EU strategic framework on health and safety at work for 2021-2027.

Subject Matter: The proposed Directive looks to amend and strengthen the Directive 2009/148/EC on the protection of workers from the risks related to exposure to asbestos at work, which is currently in force. Mainly, the occupational exposure limit value for asbestos will be reduced by a factor of ten (from 0.1 fibres to 0.01 fibres per cm³, calculated as a weighted average over a reference period of 8 hours) based on recent scientific evaluations. The exposure of workers to asbestos shall thus be minimised as far as possible. In addition, more modern and sensitive methods based on electron microscopy shall be preferred for fibre counting, wherever possible. Furthermore, the proposed directive adds measures for the prevention and follow-up of asbestos exposure for workers. To this end, employers carrying out demolition or maintenance work are obliged to determine the quantity of materials likely to contain asbestos as best they can, using all available sources and prior to beginning work. In addition, employers must ensure the continuation of health surveillance of workers after the end of exposure by entering important information into a register. The regulation is to be implemented within two years of its entry into force.

Proposal: On the 7th of December 2022, the European Commission published a Proposal for a Directive on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market (press release).

Problem: Despite the first CMU action plan in 2015, which has made it easier and cheaper for companies, especially SMEs, to access public markets, stakeholders continue to argue that further regulatory action is needed to streamline the listing process and make it more flexible for issuers. One of the main issues preventing founders and families from choosing to go public is the fear of losing control of their business once it is listed. In particular, smaller family businesses, start-ups and companies with long-term projects that require significant upfront costs run the risk of being overly exposed to fluctuations in public markets or the threat of a hostile takeover. In addition, smaller companies are more reliant on diversified financing due to their typically riskier profile, lower visibility to potential investors, inability to go public abroad, and in some cases, the need to scale up. As a result of the fragmentation within the Union with regard to share structures with multiple-vote share structures, EU companies currently have unequal opportunities: Entrepreneurs and companies from member states that prohibit multiple-vote share structures are at a disadvantage with companies from member states that permit such structures.

Objective: As part of the Listing Act package, this proposal aims to make public capital markets more attractive for EU companies and to facilitate access to capital for small and medium-sized enterprises (SMEs). To achieve this, disclosure requirements for primary and secondary markets must be streamlined and clarified, while maintaining an appropriate level of investor protection and market integrity. The low level of investment research for SMEs shall be addressed. As access to public markets is important for smaller and fast-growing companies, the Proposal refers to companies listed on SME growth markets. It seeks to achieve a minimum harmonisation of national legislation on multiple-vote share structures of companies, while allowing member states sufficient flexibility for implementation. There is a possibility to introduce multiple-vote share structures for all companies seeking admission to trading of their shares on an SME growth market. To ensure the protection of minority shareholders and the interests of the company, a list of protective measures is presented.

Subject Matter: With this Proposal, the Commission introduces common rules for multiple-vote share structures in companies that apply for admission of their shares to trading on an SME growth market in one or more member states and whose shares are not yet admitted to trading on a trading venue. Member states must ensure that any decision to introduce a share structure with a multiple-vote share structure or to change that structure in a way that affects voting rights is taken by qualified majority at the general meeting. Limitations on the voting weight of shares with multiple voting rights shall be implemented through restrictions either on the design of the multiple-vote share structure or on the exercise of voting rights attached to multiple vote shares for the adoption of certain decisions. These safeguards shall be similar to those already in place in the legal systems of member states with well-functioning multiple voting rights structures. Member states shall ensure that a company's decision to introduce a multiple-vote share structure, and any subsequent decision to change such structure that affects voting rights is taken by the general meeting of that company and approved by the qualified majority provided for in national law. Member states may provide for further safeguards. A provision may be introduced that prevents the extended voting rights attached to multiple voting shares from continuing after a certain period of time. Additionally, the transfer of those rights to a third person after the death of a shareholder can be prohibited.

Legislative procedure completed: On 13 March 2024, the European Commission the Proposal for a Regulation amending Regulations (EU) No 260/2012 and (EU) 2021/1230 and Directives 98/26/EC and (EU) 2015/2366 as regards instant credit transfers in euro was adopted. It mandates that payment service providers (PSPs) offer instant credit transfer services to all users, aiming to increase the uptake of such transfers by ensuring they are accessible and standardized across the EU. The regulation also addresses charges for instant credit transfers, ensuring they do not exceed those for traditional credit transfers, and establishes a framework for verifying payees to enhance transaction security. Additionally, it sets out obligations for PSPs to screen users against EU financial sanctions lists, simplifying compliance while fostering the integration and resilience of the EU's financial market.

Proposal: On the 26th of October 2022 the European Commission published a Proposal for a Regulation amending Regulations (EU) No 260/2012 and (EU) 2021/1230 as regards instant credit transfers in euro (press release).

Problem: Due to low adoption within the Union, the significant benefits and network effects of instant payments for consumers and businesses in the EU have not yet been realised since their introduction in 2017. Furthermore, individual national regulations may risk fragmenting the single market, increasing compliance costs and making cross-border instant payments more difficult to execute.

Objective: The proposed Regulation aims to promote instant credit transfers in euro by updating and modernising the Single Euro Payments Area (SEPA) in order to contribute to the definition and effective implementation of an independent, efficient, well-functioning, open and autonomous payments area.

Subject Matter: The Regulation aims to adapt existing Union legislation with regard to instant credit transfers. These amendments would require payment service providers to offer the sending or receiving of instant credit transfers in Euro as a service. There should be no differences in the interfaces through which payment service users can execute instant credit transfers or other types of credit transfers. In addition, levied charges by the payment service provider on payers and payees for instant credit transfers should not be higher than for corresponding other types of credit transfers. Payment service users should nevertheless be able to opt out of the use of instant credit transfers at any time during their contractual relationship. Since the time for checking the transfer by the payment service provider is eliminated with instant transfers, specifications are also made to guarantee an immediate checking of transfers. On the one hand, this concerns incorrect transfers due to false data stated by the payer. The payment service provider should therefore check and, if necessary, inform within a few seconds whether and to what extent the customer identifier of the payee deviates from the name given. On the other hand, these amendments concern the prevention of transfers to persons, institutions, or organisations against which sanctions have been imposed. Since a transaction-based verification is no longer possible due to the nature of instant credit transfers, payment service providers shall instead verify at least on a daily basis whether the users of their payment services are listed persons or organisations. Due to the complexity, the introduction of the amendments to these regulations shall be step-based. Firstly, payment service providers shall be obliged to accept instant credit transfers, which at the same time presupposes the daily checking of users for listed persons and organisations. Only in the second step are payment service providers to be obliged to send instant transfers, which includes the systems for notifying false information. Payment service providers in non-euro countries will be given more time to implement these requirements.

Proposal: On the 7th of December 2022 the European Commission published a Proposal for a Directive harmonising certain aspects of insolvency law (press release).

Problem: Discrepancies of insolvency regimes have long been seen as one of the major obstacles to the freedom of capital movement and to greater integration of the EU’s capital markets. Different degrees of efficiency accompanied by legal uncertainty restrict cross-border flow of capital and investment, thus limiting the depth of the EU capital markets.

Objective: The Proposal aims to address and reduce the fragmentation of insolvency regimes within the Union, thus further integrating the EU single market and strengthening the Capital Markets Union (CMU).

Subject Matter: The Directive lays down common rules for a number of areas of insolvency policy. It thereby addresses avoidance actions, concerning the timeframe, within which any legal acts benefitting a creditor can be declared void. To this end, those legal acts can be declared void if they were perfected within three months but no more than a year prior to the submission; or after the submission of the request for the opening of insolvency proceedings. It addresses the tracing of assets belonging to the insolvency estate, which regulates the access to bank account information by designated courts, access by insolvency practitioners to beneficial ownership information and national asset registers. Moreover, harmonising rules are set for pre-pack proceedings, by laying down two consecutive phases of preparation and liquidation. With regards to the process of opening of insolvency proceedings, the directors of the respective legal entity shall submit a request for the opening of an insolvency proceeding no later than 3 months after they can reasonably be expected to have been aware that the legal entity is insolvent. Another area of the Directive is concerned with the simplification of winding-up proceedings for microenterprises. To this end, the Member States shall ensure that the conditions of the simplified insolvency process are clear, simple, and easily ascertainable by the microenterprise concerned. Furthermore, the Directive also addresses regulation of the establishment and responsibilities of creditors’ committees. Lastly, the Directive introduces measures enhancing transparency of national insolvency laws by requiring member states to draw-up a key information factsheet on certain elements of their national law on insolvency proceedings. These include, among others, the conditions for the opening of insolvency proceedings and the average reported length of insolvency proceedings.

Non-legislative Act: On the 7th of December 2022 the European Commission published a Communication on a path towards a stronger EU clearing system (press release).

Problem: An efficient, robust and safe EU clearing ecosystem is an important factor for the well-functioning of the Capital Markets Union. Even though rules for clearing are set out in existing EU-Regulation, new challenges for the functioning of the CMU have arisen which require further strengthening of the regulatory frameworks regarding the EU clearing systems.

Objective: The Communication lays out key actions on addressing the challenges for the CMU with regards to clearing, in order to guarantee a competitive and modern EU clearing system.

Subject Matter: Firstly, supervisory approval procedures for Central Counterparties (CCPs) will be shortened and simplified, to reduce the time it takes CCPs to bring a product to market or make a substantial model change. To ensure high security in the EU clearing ecosystem, CCPs shall be subject to supervision on a national as well as Union level. To this end, the EU supervisory framework shall be strengthened by establishing joint supervisory teams and by facilitating the monitoring of cross-border risks to the EU throughout the clearing chain. Furthermore, recent spikes and extreme volatility in energy derivative market have revealed the need for structural improvements of the European Market Infrastructure Regulation (EMIR) framework. Therefore, the package accompanied by the Communication include amendments to the EMIR framework to enable firms to get a better understanding of potential liquidity needs when clearing centrally. In light of further developing the Union’s open strategic autonomy, the clearing capacity within the EU shall be improved, in order to reduce the excessive exposures of EU market participants on third-country CCPs. Lastly, the Communication addresses the role of public authorities both at national and Union level in the development of a competitive clearing ecosystem. The Commission thus encourages public authorities within the EU to clear at EU CCPs, invites national authorities to amend national accounting rules and remove obstacles to transferring exposures and calls for central banks and CCPs to engage with the Eurosystem on the topics of the European payment systems.

Proposal: On the 7th of December 2022 the European Commission published a Proposal for a Directive amending Directives 2009/65/EU, 2013/36/EU and (EU) 2019/2034 as regards the treatment of concentration risk towards central counterparties and the counterparty risk on centrally cleared derivative transactions (press release).

Problem: An efficient, robust and safe EU clearing ecosystem is an important factor for the well-functioning of the Capital Markets Union. New challenges for the functioning of the CMU have arisen, which require further strengthening of the regulatory frameworks regarding the EU clearing systems.

Objective: While the key legislative measures of the package ensuring an efficient EU clearing ecosystem lies within the amendments to the European Market Infrastructure Regulation (EMIR), this Proposal complements these efforts by ensuring its coherence. The two proposals should therefore be read in conjunction.

Subject Matter: The intended amendments of this Directive are designed to complement the amendments to the EMIR framework by the other Proposal of the clearing package in order to ensure consistency. Therefore, the scope of the Directive on undertakings for collective investment in transferable securities (UCITS) from 2009 is widened to the distinction between transactions which have been cleared centrally by a Central Counterparty (CCP) that is authorised or recognised under the amended EMIR framework, and transaction which have not been cleared centrally. Additionally, Directives on prudential supervision of credit institutions and investment firms from 2013 and 2019 respectively shall be amended to encourage these institutions to adapt their business model to ensure consistency with the modified EMIR framework.

Legislative procedure completed: On the 14th of December 2022, the Council Directive on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union was adopted (press release). It enters into force on 1st January 2024. The Directive introduces the Income Inclusion Rule (IIR) and the Undertaxed Profit Rule (UTPR), together referred to as the 'GloBE rules.' These rules are designed to apply a 'top-up tax' whenever the effective tax rate of a multinational enterprise (MNE) in a given jurisdiction falls below 15 per cent.

Proposal: On the 25th of December 2021, the European Commission published a Proposal for a Directive on ensuring a global minimum level of taxation for multinational groups in the Union (press release).

Problem: Challenges arising from Base Erosion and Profit Shifting (BEPS) and the tax implications of the digitalisation of the economy include ensuring that corporations pay a fair share of tax on profits generated by their activities in the EU. The Proposal acknowledges the twin challenges of BEPS and the need to address excessive tax competition between jurisdictions, especially in the context of increasing globalisation and digitalisation.

Objective: The Directive aims to implement rules ensuring a minimum level of effective corporate taxation for large multinational and large-scale purely domestic groups operating in the Single Market. This is in line with the agreement reached by the OECD/G20 Inclusive Framework and the OECD Model Rules. The objective is to address tax challenges through two work streams.

Subject Matter: The Proposal introduces a two-pillar solution to tackle the tax challenges. Pillar 1 focuses on the reallocation of taxing rights towards market jurisdictions, suggesting a partial redistribution of taxation powers across countries where economic activities occur, and profits are generated. Pillar 2 proposes the introduction of a global minimum corporate tax rate, aiming to put a floor on tax competition between jurisdictions and ensure that multinational companies contribute their fair share wherever they operate. A critical component of Pillar 2 is the set of rules known as the Global anti-Base Erosion (GloBE) rules, comprising the Income Inclusion Rule (IIR) and the Under Taxed Payments Rule (UTPR). The IIR aims to impose a minimum level of tax on income of multinational entities, while the UTPR serves as a backstop to the IIR, allocating the right to tax additional income where other jurisdictions have not exercised their primary taxing rights. These rules are designed to be introduced into national domestic tax laws and are complemented by the Subject to Tax Rule (STTR), a treaty-based rule allowing source jurisdictions to impose limited taxation on certain payments that are subject to tax below the minimum rate. The Proposal extends the scope of these rules to large multinational groups and large-scale purely domestic groups operating within the EU Single Market. It outlines a comprehensive architecture for the GloBE rules, detailing the application of the IIR and UTPR, the calculation of the Effective Tax Rate (ETR), and the conditions for applying the top-up tax. The Proposal also includes specific provisions for large-scale domestic groups, ensuring that they are subject to similar rules as multinational enterprises.

Legislative procedure completed: On the 30th of January 2023, the Council Recommendation on adequate minimum income ensuring active inclusion was adopted (press release). Minimum income support is an effective means of combating poverty and social exclusion and of achieving a high level of employment. The Council therefore recommends that Member States provide and, where necessary, reinforce robust social safety nets by combining adequate income support through minimum income support and other related cash and in-kind benefits and by providing access to supportive and essential services. The exact amount is left to the Member States.

Proposal: On the 28th of September 2022 the Commission published a Proposal for a Council Recommendation on adequate minimum income ensuring active inclusion (Press release).

Problem: Despite efforts to combat poverty and some improvements over the last decade, the poverty risk for people living in (quasi) jobless households has increased in many member states over the last decade, adding up to over 95.4 million Europeans affected by the risk of poverty or social exclusion in 2021. This trend is mostly due to the economic shock by the COVID-19 pandemic which disproportionately affected women and people in vulnerable situations, and will likely worsen because of a sharp increase in energy prices and hiking inflation following Russia’s aggression against Ukraine.

Objective: This Recommendation aims to combat poverty and social exclusion by promoting adequate income support, effective access to essential services for persons lacking sufficient resources as well fostering labour market integration of those who can work, in line with the active inclusion approach. The proposed measurements thus contribute to meet the headline targets by the European Council in the areas of poverty, employment, and skills: As adopted by the member states in June 2022, the ambition hereby is to reduce of the number of people at risk of poverty or social exclusion to 15 million as well as reaching an employment rate of at least 78 per cent of people aged 20 to 64 by 2030.

Subject Matter: The Recommendation focusses on strengthening social safety nets for ‘persons lacking sufficient resources’, meaning persons living in households with insufficient, irregular or uncertain monetary and material resources, which are indispensable for their health and well-being and for participating in the economic and social life. Although all member states have social safety nets in place, the proposed measurements aim to even out accessibility and adequateness throughout the Union, which has varied across member states. The focus lies on minimum income because it can act as an automatic stabiliser in times of economic crisis, thus constituting a key element of strategies to exit poverty and exclusion. Thereby, age, the length of legal residence for non-nationals, accessibility of digital tools or the lack of a permanent address should not form a barrier to access minimum income. The Recommendation aims to establish a robust and transparent methodology for setting and adjusting income support at regular intervals, informed by relevant indicators to ensure adequacy of the overall income support. Its measures focus on individual members of the household to address gender inequality and enable tailored measures for the social and economic integration. Moreover, it gives particular attention to the youth and young adults and to the needs of persons with disabilities. Furthermore, the Recommendation proposes sufficient simplicity of the application procedures, administrative support to the potential claimants, regular reviews of incentives and disincentives resulting from tax and benefit systems or a gradual phasing out of income support upon taking up employment to guarantee sustainable income through labour, reducing in-work poverty and incentivising formal employment. Minimum income shall be accompanied by in-kind benefits to provide targeted support for persons lacking sufficient resources to facilitate their access to specific services such as early childhood education and care, healthcare and long-term care, social housing, employment, and training. Lastly, the Recommendation emphasises effective governance mechanisms by data exchange and closer co-operation across different levels of governance and services, as well as an analytical exchange of best practices at a Union level. In terms of funding, investments in social infrastructure can therefore be drawn from the European Regional Development Fund and InvestEU. Moreover, each member states should allocate at least 25 per cent of the European Social Fund Plus to combat social exclusion, though an implementation of this Recommendation should not significantly affect the financial equilibrium of member states’ social protection systems to guarantee an overall sustainability of public finances.

Legislative procedure completed: On the 5th of March 2024, the Parliament and Council reached a provisional agreement for the Regulation on prohibiting products made with forced labour on the Union market (press release).  The European Commission will create a database with updated information on forced labour risks, including reports from international organisations, to help assess potential regulation violations. A risk-based approach with clear criteria will be used to evaluate the likelihood of violations, considering factors such as the severity of forced labour and the proximity of economic actors to the risk in their supply chains. The Commission will issue guidelines and support measures for businesses to comply with the regulation, and investigations will be led by either the Commission or national authorities based on jurisdiction. Final decisions on product bans or removals due to forced labour will be made by the investigating authority and recognised across all member states.

Proposal: On the 14th of September 2022 the European Commission published a Proposal for a Regulation of the European Parliament and of the Council on prohibiting products made with forced labour on the Union market (press release).

Problem: Despite the commitments of the United Nations to eradicate forced labour by 2030 its use remains widespread: The International Labour Organisation has estimated the global number of people in forced labour at 27.6 million.

Objective: The proposal aims to effectively prohibit the placing and making available on the EU market and the export from the EU of products made with forced labour through creating and supporting competent authorities within the member states to address and enforce forced labour issues. To avoid obstacles to the free movement of goods and distortions of competition in the internal market that would result from divergences in national laws regarding forced labour, the implementation must be uniform across the EU. Building on international standards, the proposal complements existing horizontal and sectoral EU initiatives, in particular corporate sustainability due diligence and reporting requirements, and establishes a ban backed by a robust, risk-based enforcement framework.

Subject Matter: The proposal attempts to establish a system within company law and corporate governance to address human rights and environmental abuses in companies, including their subsidiaries’ and their value chains. It aims to establish a network of relevant authorities; enforcement powers therefore lie with the member states and focus on larger economic operators at early stages of the EU value chain. Competent authorities shall follow a risk-based approach in investigating products and economic operators concerned, based on relevant information such as submissions my individuals, risk indicators and a shared database of forced labour risk areas or products, which will be set up for this purpose. In case of a violation, competent authorities will be able to prohibit the availability and exportation of the product in concern, withdraw the respective economic operators and dispose their remaining products from the Union market. A control of products entering or leaving the Union market will be enforced. Additionally, an interconnection to enable the automated communication of decisions will be developed by the Commission and a Union Network Against Forced Labour Products (“the Network”) is established to create a platform for structured coordination and cooperation between the competent authorities of the member states and the Commission. In addition, within 18 months of the entry into force of this Regulation, the Commission will publish guidelines providing guidance on due diligence on forced labour and information on forced labour risk indicators.

Non-legislative Act: On the 3rd of May 2022 the Commission put forward a Communication on a renewed strategic Partnership with the outermost regions (press release).

Problem: The COVID-19-crisis has hit the ORs particularly hard. Furthermore, while the EU's outermost regions, such as the Atlantic, the Caribbean, and the Caribbean Basin, have important resources, they face constant obstacles to development. In order to realise the potential of the territories, it is necessary to ensure that basic needs are met, thus ensuring both the quality of life and the achievement of the Sustainable Development Goals.

Objective: The EU's priority actions with and for these areas, will focus on the people of the areas on the road to sustainable recovery and growth after the COVID-19-crisis. The specificities of the outermost regions will be considered in specific EU legislation, funds, and programmes. In light of this, the Commission calls on the affected Member States and the outermost regions to improve their resilience across sectors and supply chains. Access to adequate housing, water, internet, affordable transport and energy will also be ensured by the Commission and Member States. In the area of health care, the development of the health care system and access to health care are to be promoted. To improve opportunities for young people, education, and training will be promoted, as well as entrepreneurship and employment in general.

Subject Matter: The REACT-EU programme is to be used to its full extent for the designated areas and to accelerate the increase in resilience. In addition, the Commission will pay particular attention to the territories in the relevant country reports in the context of the European Semester, as well as address supply chain resilience in the territories through adequate crisis preparedness and management under the Single Market Emergency Instrument. With a view to sustainable and inclusive recovery and growth, the Commission calls on the member states concerned and the outermost regions to, i.a., set targets for the implementation of the European Pillar of Social Rights; take action to reduce poverty through national strategies; and ensure the implementation of the Youth and Child Guarantee. In order to implement the measures, advantages are to be used, restrictions are to be removed and the focus is to be placed on key sectors. Fields of work such as research and innovation, mobility and transport, biodiversity, blue economy, as well as agriculture and rural development require specific measures in this respect. To promote the green and digital transformation, research on climate change should be promoted, as well as research in the areas of smart grids, energy storage, ocean energy and renewable energies. Furthermore, action plans for the circular economy will be developed and implemented; opportunities for financing digital infrastructure and connectivity will be exploited; and the exchange of information and best practices will be promoted. The Communication aims at cooperation with other European regions, neighbouring and wider countries, e.g. in the field of trade and migration. Partnership, dialogue, and support will be strengthened, i.a., through the development of joint regional development plans for each area.

Non-legislative act: On the 19th of October 2022 the European Commission published a Communication on a Framework for State aid for research and development and innovation (press release).

Problem: In Principle, state subsidies are prohibited under the Treaty on the Functioning of the European Union (“the Treaty”) in order to avoid distortions of competition in the internal market or affect trade between member states. However, State Aid may in certain cases be compatible with the internal market to promote innovation within an industry.

Objective: The Framework aims to provide guidance, based on a recent compatibility assessment conducted by the Commission, regarding aid to support research, development, and innovation ("R&D&I") and its compatibility with the Treaty. The aim is to promote positive effects of State Aid for R&D&I towards the Union's objectives and strategies, such as the Green Deal, the Digital Strategy or the Next-Generation EU.

Subject Matter: The Framework generally applies to all technologies, industries, and sectors in order to keep the direction of research open towards innovative solutions for products, processes, and services. State intervention in markets must be carried out when market participants do not otherwise take broader positive effects for the European economy into account or consider the risk of not achieving a positive economic outcome to be too high. In this respect, State Aid may be necessary to promote R&D&I and to develop certain economic sectors if the market does not produce an efficient outcome. Specific aid measures include aid for research and development projects with a focus on basic and applied research; feasibility studies construction and upgrade of testing and experimentation structures; innovation activities; process or organisational innovation and innovation clusters. Any aid granted by member states is subject to notification requirements to the Union. State aid is generally not passed on if a research institution conducts research by contract for which it receives an appropriate fee, if several research institutions work together on joint cooperation projects, or if the respective companies conduct research on the basis of public tender procedures. Fundamentally, on the basis of the Treaty, two conditions must be met for aid measures. First, the aid must facilitate the development of an economic activity. To this end, it should be comprehensively examined to what extent the aid leads the companies concerned to change their behaviour and take up additional activities. Second, the aid must not unduly affect trading conditions to an extent contrary to the common interest. For this to be the case, the aid measure in question must bring about a substantial improvement that the market cannot bring about itself, while being an appropriate and proportionate instrument for this matter. The hoped-for effects relate to possible knowledge spill-over effects, coordination, and networking failures or the counteracting of imperfect and asymmetric information caused by a high degree of uncertainty in R&D&I activities. In addition, transparency of the aid towards member states, the Commission, economic operators and the public must be maintained. Finally, market analyses by the Commission should constantly verify to what extent specific negative effects of R&D&I aid on competition and trading conditions are minimised or avoided. These identified effects shall then be examined and weighed against the hoped-for positive effects. Finally, the aid schemes will be subject to ex-post evaluation in order to minimise distortions of Union competition and trade.

Legislative procedure completed: On the 18th of February 2021 the Regulation of the European Parliament and of the Council establishing the Recovery and Resilience Facility entered into force (press release). As a result, member states can now officially submit their national recovery and resilience plans, which will then be assessed by the Commission and adopted by the Council. Once the plans are approved, member states are to receive 13 per cent of the total amount allocated to them as pre-financing. At least 37 per cent of the planned expenditure in the national recovery and resilience plans will be allocated to investments and reforms to achieve the climate change targets, and 20 per cent to the digital transformation.  

Proposal: On the 28th of May 2020 the Commission put forward a Proposal on establishing a Recovery and Resilience Facility.

Problem: The outbreak of the COVID-19 pandemic in early 2020 has changed the economic, social and budgetary outlook in the Union and globally. The crisis has shown that building sound, sustainable and resilient economies, financial and social systems based on strong economic and social structures helps member states respond more effectively and recover more quickly from shocks in an equitable and inclusive way

Objective: In view of the COVID-19 crisis, it is necessary to strengthen the support framework currently provided to member states and to offer direct financial support to member states through an innovative instrument. For this purpose, a Recovery and Resilience Facility is to be established. The Facility will provide financial support for the achievement of the milestones and targets set out in the member state-specific Recovery and Resilience Plans. The corresponding reforms and investments will be made available to achieve the general objective of promoting the economic, territorial and social cohesion of the Union.

Subject matter: The reforms and investments with a view to the Facility are intended to help make the Union more resilient and less dependent. Support for actions in specific policy areas of European importance is intended to generate recovery and strengthen the resilience of the Union and its member states. These policy areas are grouped into six pillars: (1) environmental change, (2) digital transformation, (3) smart growth and economic cohesion and a well-functioning internal market, (4) social and territorial cohesion, (5) health and economic, social and institutional resilience, and (6) actions for the next generation such as education. Regarding to environmental change, the aim is to strengthen reforms and investments in green technologies and capacities and to contribute to the Union's climate goals. With regard to the digital transformation, reforms and investments in digital technologies are to be implemented in order to improve the competitiveness of the Union on a global level. Diversification of key supply chains should help the Union become more resilient, innovative and independent. In the area of smart growth and strengthening economic cooperation, the aim is to increase the growth potential and enable a sustainable recovery of the Union's economy. The fourth pillar of social and territorial cohesion aims to combat poverty and unemployment. Investments and reforms in this area should, among other things, create jobs, integrate disadvantaged groups and strengthen social dialogue. The COVID-19 pandemic has highlighted the importance of investing in the fifth pillar of health and economic, social and institutional resilience to increase crisis preparedness and response capacity. Finally, it is important to invest in the next generation to promote education and skills and not continue to widening the generation gap.

Non-legislative Act: On 25th of November 2021, the European Commission published a Communication⁶ to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions about the Capital Markets Union (press release⁷).

Problem: Capital markets play a key role in providing funding for EU companies to invest and expand. Additionally they are important as the EU economy is gradually recovering from the COVID-19 crisis. To enhance the companies’ ability to raise capital across the EU, the EU capital markets must not be fragmented. An integrated EU capital market would contribute significantly to a sustained recovery, sustainable growth and cost-efficient green and digital transitions.

Objective: The Communication aims to underline the importance and the opportunities provided by the Capital Markets Union (CMU). One year after the adoption of the 2020 CMU actin plan, the European Commission is now delivering on its commitments, putting forward a set of four legislative proposals to contribute to achieving the CMU objectives.

Subject matter: The political importance of the CMU is composed by the economic recovery from the COVID-19 crisis, the green and the digital transition and the open strategic autonomy. The EU’s leadership in the area of green transition offers a unique opportunity to build a truly integrated capital green market, which can give a stronger impetus to the integration of EU capital markets more broadly. To realize the digital transition an integrated and efficient market for capital is essential to generate investment. Additionally the EU capital markets must remain open to global financial markets and be underpinned by competitive and cost-efficient market infrastructures, such as central counterparties, to play a key role in reducing the EU’s overreliance on third-country providers for critical financial services. Together with the Banking Union, the CMU, will enhance the EU’s open strategic autonomy and global economic role and strengthen confidence in the euro. The three core CMU objectives are to make the financing more accessible to EU companies (1), to make the EU an even safer place for individuals to save and invest long-term (2) and to integrate national capital markets into a genuine single market (3). The legislative proposals adopted together with this communication help achieve the core CMU objectives. The legislative measures firstly include the set-up of a European Single Access Point (ESAP) to create more funding and business opportunities for companies. Secondly the Promotion of long-term investments through European Long-Term Investment Funds (ELTIF’s). At third place funding should be more diversified for companies by reviewing the Alternative Investment Fund Managers Directive (AIFMD). The revised rules will also give investors better protection. Finally the market transparency should be enhanced by reviewing the Markets in Financial Instruments Regulation (MiFIR). Furthermore the communication names the Commissions’ deliverables for 2022 including the listing review to help companies raise funds on public markets. Additionally the Commissions aims to implement an open finance framework to support capital markets and add value for consumers and companies. A good level of financial literacy should be achieved. The Commission will propose an initiative by Q3 2022 that will seek to harmonize targeted aspects of the corporate insolvency framework and procedures.

Proposal: On the 22nd of September 2021 the European Commission published a Proposal for a Directive of the European Parliament and of the Council establishing a framework for the recovery and resolution of insurance and reinsurance undertakings and amending Directives 2002/47/EC, 2004/25/EC, 2009/138/EC, (EU) 2017/1132 and Regulations (EU) No 1094/2010 and (EU) No 648/2012 (press release).

Problem: The activities, services, or operations performed by insurance and reinsurance undertakings are considered to be critical functions, as they are hardly substitutable for beneficiaries or injured parties within a reasonable period of time. Despite adopting the Solvency-II-Directive in response to the financial crisis of 2009, which helped to reduce the probability of default and improve the resilience of the European insurance industry, there is currently no harmonised procedure for the resolution of insurance undertakings at European level. This leads to significant differences of content and procedure between legal and administrative provisions on the failure of insurance undertakings in the member states. Though a disorderly failure of insurance undertakings can have a significant impact on policyholders, beneficiaries of insurance benefits, injured parties or affected companies.

Objective: The proposal focuses on preventing failures of the services of these undertakings and minimising negative impacts by preserving the continuity of these critical functions in case of failures. Based on the preparatory work of the European Insurance and Occupational Pensions Authority (EIOPA), measures of the Proposal shall provide authorities with a credible set of resolution tools that will allow them to intervene at early stages in the event of the failure of an insurance undertaking.

Subject Matter: The content of the proposal is to strengthen coordination and cooperation between cross-border authorities in preparing for and managing emergencies or failures, which is currently not harmonised at Union level. In detail, this means that each member state will appoint a competent resolution authority as well as a group resolution authority. These will draw up a (group) resolution plan for sufficiently large insurance and reinsurance undertakings or for groups of undertakings with corresponding measures in the event of a failure. Member states are also required to draw up and annually update a preventive recovery plan for setting out the measures to be taken in the event of a significant deterioration of the financial situation of undertakings at risk. The recovery plans shall be reviewed and controlled by the competent supervisory authorities and subsequently submitted to the resolution authority. Preventive group recovery plans must be prepared by parent companies at the head of individual subsidiaries. The objectives of resolution consist of protecting policyholders, beneficiaries and claimants, preserving financial stability, ensuring continuity of critical functions and protecting public funds by minimising the use of extraordinary public financial support. Specific resolution tools include the solvent run-off, sale of business, bridge undertaking, asset and liability separation as well as the write-down or conversion tool. Particular attention is paid to measures that may have an impact on other member states, such as the establishment of resolution colleges and the intensification of the exchange of information between competent authorities. In order to ensure consistency with existing Union legislation, the proposal refers to the Solvency-II-Directive (2009/138/EC) by an amendment of the latter and other Directives of relevance. The necessary laws, regulations and administrative provisions shall be adopted by the member states no later than 18 months after the entry into force of the Directive.

Non-legislative Act: On 25th of November 2021, the European Commission published a Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions about the Capital Markets Union (press release).

Problem: Capital markets play a key role in providing funding for EU companies to invest and expand. Additionally they are important as the EU economy is gradually recovering from the COVID-19 crisis. To enhance the companies’ ability to raise capital across the EU, the EU capital markets must not be fragmented. An integrated EU capital market would contribute significantly to a sustained recovery, sustainable growth and cost-efficient green and digital transitions.

Objective: The Communication aims to underline the importance and the opportunities provided by the Capital Markets Union (CMU). One year after the adoption of the 2020 CMU actin plan, the European Commission is now delivering on its commitments, putting forward a set of four legislative proposals to contribute to achieving the CMU objectives.

Subject matter: The political importance of the CMU is composed by the economic recovery from the COVID-19 crisis, the green and the digital transition and the open strategic autonomy. The EU’s leadership in the area of green transition offers a unique opportunity to build a truly integrated capital green market, which can give a stronger impetus to the integration of EU capital markets more broadly. To realize the digital transition an integrated and efficient market for capital is essential to generate investment. Additionally the EU capital markets must remain open to global financial markets and be underpinned by competitive and cost-efficient market infrastructures, such as central counterparties, to play a key role in reducing the EU’s overreliance on third-country providers for critical financial services. Together with the Banking Union, the CMU, will enhance the EU’s open strategic autonomy and global economic role and strengthen confidence in the euro. The three core CMU objectives are to make the financing more accessible to EU companies (1), to make the EU an even safer place for individuals to save and invest long-term (2) and to integrate national capital markets into a genuine single market (3). The legislative proposals adopted together with this communication help achieve the core CMU objectives. The legislative measures firstly include the set-up of a European Single Access Point (ESAP) to create more funding and business opportunities for companies. Secondly the Promotion of long-term investments through European Long-Term Investment Funds (ELTIF’s). At third place funding should be more diversified for companies by reviewing the Alternative Investment Fund Managers Directive (AIFMD). The revised rules will also give investors better protection. Finally the market transparency should be enhanced by reviewing the Markets in Financial Instruments Regulation (MiFIR). Furthermore the communication names the Commissions’ deliverables for 2022 including the listing review to help companies raise funds on public markets. Additionally the Commissions aims to implement an open finance framework to support capital markets and add value for consumers and companies. A good level of financial literacy should be achieved. The Commission will propose an initiative by Q3 2022 that will seek to harmonize targeted aspects of the corporate insolvency framework and procedures.

⁶

Proposal: On 27th of October 2021 the European Commission published a Proposal¹³ for a directive of the European Parliament and of the Council amending Directive 2013/36/EU as regard supervisory powers, sanctions, third-country branches, and environmental, social and governance risks, and amending Directive 2014/59/EU (press release¹⁴).

Problem: Supervisors often lack the information and powers that they need to properly address increased financial stability risks for the EU. The absence of common prudential, governance and detailed supervisory reporting requirements, as well as the insufficient exchange of information between the authorities in charge of supervising different entities/activities of a third country leaves blind spots. These shortcomings create various risks concerning the financial stability and market integrity of the EU.

Objective: The review of Directive 2013/36/EU (the Capital Requirements Directive or CRD) aims at finalizing the Basel III reform implementation in the EU introducing measures that are needed to further strengthen resilience of the banking sector. The CRD should be amended as regard supervisory powers, sanctions, third-country branches and environmental, social and governance risks. Additionally, Directive 2014/59/EU is to be amended.

Subject matter: The specific provisions of the proposal include the independence of competent authorities (1), the convergence of supervisory practices (2), the harmonization of the fit-and-proper framework (3), the clarification of the interplay between the failing or likely to fail declaration (FOLTF) and the withdrawal of authorization (4), the facing of environmental, social and governance (ESG) risks (5) and the direct provision of banking services in the EU by third country undertakings (6). To guarantee the independence of competent authorities (1), member states must ensure that the competent authorities, including their staff and governance bodies, act independently and objectively. The European Banking Authority (EBA) should issue guidelines addressed to the prevention of conflicts of interest, based on international best practices. To increase the efficiency of the Banking Union, the convergence of supervisory practices (2) must be guaranteed. The current discrepancies between Member States need to be fixed. Therefore the Commission’s proposal expands the list of supervisory powers available in the CRD to competent authorities to cover operations such as acquisitions by a credit institution of a material holding in a financial or non-financial entity, the material transfer of assets or liabilities and the merger or divisions. To ensure a more consistent, efficient and effective supervision of members of the management body and of key function holders, amendments to the CRD are necessary (3). Therefore, in addition to the fit-and-proper criteria in Article 91, Articles 91a und 91b are introduced to clarify the role of banks and competent authorities for checking the compliance of board members. In order to clarify, that where a credit institution is declared failing or likely to fail by the competent authority or by the resolution authority, the competent authority is empowered to withdraw the banking authorization, article 18 is amended (4). New adjustments are made and provisions introduced to several Articles in the CRD and in the CRR in order to address the significant risks that credit institutions will face due to climate chance and the profound economic transitions that are needed to manage this and other ESG risks (5). Short, medium and long-term horizons of ESG risks require to be included in credit institutions’ strategies and processes for evaluating internal capital needs as well as adequate internal governance. In terms of the direct provision of banking services in the EU by third country undertakings (6), the proposal clarifies that the provision of banking services in the Union requires having a physical presence in a member state through a branch or a legal person. In terms of third country branches (TCBs) the proposal aims to create an ad hoc set of minimum-harmonizing requirements that builds on existing national frameworks of Member States currently in force and ensures minimum standard and consistent requirements throughout the Union. Additionally TCBs currently operating in the EU will need to be reauthorized.

Legislative procedure completed: On the 14th of December 2023, the Proposal for a Directive on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937 was adopted (press release). In order to comply with the corporate risk-based due diligence duty, companies need to take measures to identify, asses and priritise actual or potential adverse impacts and prevent or mitigate potential impacts. Companies that do not comply with these rules will face sanctions from national administrative authorities. Victims will have the opportunity to seek legal redress for damages that they suffer as a result of the failure to conduct appropriate due diligence.

Proposal: On the 23rd of February 2022 the Commission put forward a Proposal for a Directive on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937 (press release).

Problem: Many EU companies may encounter difficulties to identify and mitigate risks in their value chains linked to respect of human rights or environmental impacts. Certain EU companies have even been associated with adverse human rights and environmental impacts, including in their value chains.

Objective: Since the behaviour of companies across all sectors of the economy is key to succeed in the Union’s transition to a climate-neutral and green economy, the EU wants to advance respect for human rights and environmental protection. The Directive aims to set out a horizontal framework to foster the contribution of business operating in the single market to the respect of the human rights and environment in their own operations and through their value chain. With this directive, the EU intends to improve corporate governance practices (1), avoid fragmentation of due diligence requirements in the single market and create legal certainty for businesses and stakeholders (2), increase corporate accountability for adverse impacts and ensure coherence for companies (3), improve access to remedies for the affected ones (4) and being a horizontal instrument focusing on business processes to complement other measures in force or proposed (5).

Subject matter: In taking appropriate action, consideration should be given to the specifics of the company's value chain, the sector or geographic area in which the value chain partners operate, the company's ability to influence its direct and indirect business relationships, and whether the company could increase its ability to influence. Additionally, the due diligence process should cover six steps defined by the OECD Due Diligence Guidance for Responsible Business Conduct. The steps include (1) integrating due diligence into policies and management systems, (2) identifying and assessing adverse human rights and environmental impacts, (3) preventing, ceasing or minimising actual and potential adverse human rights, and environmental impacts, (4) assessing the effectiveness of measures, (5) communicating, and (6) providing remediation. For the purpose of due diligence, the member states shall ensure that companies are entitled to share resources and information within the respective groups of companies and with other legal entities in compliance with applicable competition law. Furthermore, the companies shall update their due diligence policy annually. Besides, companies shall take appropriate measures to identify actual and potential adverse impacts. Potential adverse impacts should be prevented, actual adverse impact should be brought to an end. Member states shall also ensure that companies provide the possibility for persons and organisations to submit complaints to them in case of legitimate concerns regarding actual or potential adverse impacts. Additionally, the companies should carry out periodic assessments of their own operations and measures. One or more supervisory authorities shall be designated by each member states to supervise compliance with these obligations. To facilitate the cooperation of the supervisory authorities and the coordination and alignment of regulatory, investigate, sanctioning and supervisory practices of the supervisory authorities, the Commission shall set up a European Network of supervisory authorities, composed of representatives of the supervisory authorities.

Legislative procedure completed (provisional agreement): On the 1st of March 2023, the European Parliament and the Council reached a provisional agreement on the creation of European green bonds (EuGB). The Regulation establishes normed requirements for bond issuers that provide environmentally sustainable bonds. The Regulation is intended to increase investor confidence and comparability of sustainable investments while simultaneously countering greenwashing. To enter into force, the provisional agreement must now be formally adopted by the Council and the Parliament. (press release).

Proposal: On the 6th of July 2021 the Commission published a Proposal for a Regulation of the European Parliament and of the Council on European green bonds (press release).

Problem: Environmentally sustainable bonds represent one of the most important instruments for financing investments in low-carbon technologies, energy and resource efficiency, etc. However, there is a lack of uniform definition of environmentally sustainable economic activities among the various existing initiatives for environmentally sustainable bonds. On the issuer side, the lack of uniform definitions of environmentally sustainable economic activities introduces uncertainty as to which economic activities are legitimately classified as green. This can affect the profitability of projects with significant climate and environmental impacts. The supply of such investment opportunities will be diminished, making it more difficult to achieve the Union's environmental objectives.

Objective: The proposal aims to overcome these barriers by setting a standard for high quality green bonds. This is to better exploit the potential of the Single Market and the Capital Markets Union to achieve the Union's climate and environmental goals under the 2016 Paris Climate Agreement and under the European Green Deal.

Subject matter: The green bond standard should (1) improve the ability of investors to identify and trust high-quality green bonds, (2) facilitate the issuance of these high-quality green bonds by clarifying the definitions of green economic activity and reducing the potential reputational risk for issuers in transition sectors, and (3) standardize the external evaluation process. Trust in external evaluators should be improved by introducing a voluntary registration and oversight system. In order for investors to be able to identify and trust green bonds, the transparency of bonds needs to be increased. To this end, specific and standardized disclosure requirements should be established, among other things, that make transparent how the issuer intends to use the bond proceeds for eligible assets, expenses and financial assets, and how the proceeds were actually used. To increase the comparability of European green bonds, as well as to make it easier to find the relevant information, model disclosures of such information should be established. Furthermore, conditions for the use of the designation "European green bond" or "EuGB" are established. These include that the bond so designated may use its proceeds only for specified purposes. The use of the proceeds in accordance with the taxonomy must be ensured. In order to standardize the procedure of external valuation, certain conditions must be fulfilled for the commencement of activities as an external valuer of European green bonds. Among others, the registration of the external valuers with ESMA is to be mentioned here. Supervision by competent authorities and ESMA must be guaranteed.

Legislative procedure completed: On the 18th of January 2024, the Proposal for a Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing was adopted (press release). This agreement introduces a unified AML/CFT rulebook, forming the basis for the Anti-Money Laundering Authority's (AMLA) future operations. The new rules establish consistent checks across the Single Market, enhance cross-border cooperation, and improve transparency in ownership structures. These measures, part of the July 2021 AML legislative package, also focus on real estate and crypto-assets, aiming to combat financial crimes more effectively.

Proposal: On the 20th of July 2021 the EU Commission published a Proposal for a Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (Press release).

Problem: The previous regulations on combating money laundering and terrorist financing must be reformed, as the previously presented Regulation No. 2015/847 had deficiencies in direct applicability and depth of detail, which led to inconsistent application along national guidelines and different interpretations within the member states.

Objective: The proposal aims to ensure the effective handling of cross-border situations in order to adequately protect EU’s internal market and further reduce additional costs and burdens for providers of cross-border services. Coherence with the already existing Directives 2015/849 and 2018/843 as well as with the general policy of the Union, i.e. EU legislation in the areas of financial services and criminal law, is to be ensured when harmonizing the rules against money laundering and terrorist financing. Targeted measures for obliged entities are advocated as a way to prevent money laundering and terrorist financing with the intention of curbing the misuse of bearer instruments, as well as simulating new requirements for beneficial ownership transparency for entities and legal arrangements.

Subject Matter: In order to support the consistent application of rules across the internal market, clear requirements regarding internal policies, controls and procedures will be defined. Third country requirements will further be revised in order to apply enhanced due diligence requirements for countries that could potentially pose a threat to the Union's financial system. In addition to introducing new requirements in relation to agents and foreign entities, existing beneficial ownership measures will be streamlined with the aim to reduce the risks of criminals hiding behind intermediary layers as well as a way to ensure an appropriate level of transparency within the EU. To better guide the reporting of suspicious transactions, alerts on suspicious cases will be further clarified and new requirements for the processing of certain categories of personal data will be developed. To ensure full consistency with EU data protection rules, the storage of personal data will be accelerated. The optimization of measures that mitigate the misuse of bearer instruments by putting limitations on the use of cash for large transactions has also been planned. Finally, the list of obliged entities will be extended to include, among others, crypto service providers, but also other sectors such as crowdfunding platforms and migration providers. It is crucial to note the companies addressed by the regulation as obliged parties are i.e. credit institutions, financial institutions, natural or legal persons in the exercise of their professional activity (e.g. auditors, notaries, real estate or business operators, etc.).

Legislative procedure completed: On the 31st of May 2023, the Proposal for a Directive on information accompanying transfers of funds and certain crypto-assets and amending Directive (EU) 2015/849 (recast) was adopted. The Regulation focuses on enhancing the traceability of both traditional fund transfers and crypto-asset transactions to combat money laundering and terrorist financing. It extends the requirements for sharing payer and payee information to include crypto-asset transfers, aiming for uniform application across the EU to ensure the financial system's integrity. By setting detailed information-sharing obligations for service providers, the regulation addresses the risks posed by the anonymity and cross-border nature of crypto-assets. Additionally, it introduces specific provisions for handling transfers involving unregistered or high-risk entities, emphasizing the need for effective risk management and international cooperation to mitigate money laundering and terrorist financing risks associated with crypto-assets and fund transfers.

Proposal: On 20th of July 2021 the European Commission published a recast of a Proposal for a Regulation of the European Parliament and of the Council on information accompanying transfers of funds and certain crypto-assets (press release).

Problem: As transfers of virtual assets have so far fallen outside the scope of the Union's financial services legislation, crypto holders have been exposed to risks related to money laundering and terrorist financing. As transfers of virtual assets pose similar risks to electronic transfers of funds in terms of money laundering and terrorist financing, they must be subject to similar requirements.

Objective: The proposal aims at the recast of the Regulation to expand traceability requirements to crypto-assets. Given that virtual assets transfers are subject to similar money laundering and terrorist financing risks as wire funds transfers, it is important to address these common risks through a single legal instrument.

Subject matter: The Proposal extends the current scope of Regulation to include transfers of crypto-assets made by Crypto-asset Service Providers (CASPs). There are new information obligations for the originator and beneficiary CASPs at the two ends of a cryto-assets transfer. This Regulation shall apply to transfers of funds or crypto-assets which are sent or received by a payment service provider, a crypto-asset service provider or an intermediary payment service provider established in the Union. The obligations of the payment service provider include the transmission of payment-related personal data of the parties to the transfer. In addition, the obligations on the payment service provider of the payee include the detection of missing information on the payer or the payee and the implementation of effective risk-based procedures for determining how to deal with incomplete transfers and which measures must be taken. Both the failure and the steps taken must be reported to the Financial Intelligence Unit (FIU). Crypto value transfers in excess of €1000 must additionally be verified using documents, data or information from a reliable and independent source. In case of missing or incomplete information of transfers of crypto-assets, the CASP of the beneficiary shall report that failure. Member states shall ensure that the obligations are obeyed. Sanctions and measures can be, subject to national law, applied in case of breaches of the provisions of this Regulation. Furthermore member states should establish effective mechanisms to encourage the reporting to competent authorities of breaches of this Regulation. There are agreements with countries and territories which do not form part of the territory of the Union.

Non-legislative Act: On the 4th of March 2021 the European Commission put forward a Communication about the European Pillar of Social Rights Action Plan (press release).

Problem: The European social and economic model should bring opportunities for all European citizens, irrespective of sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. But especially in these times of deep transformations through global challenges such as climate change, digitalization, globalization and the COVID-19 pandemic our social fabric is put to the test.

Objective: The Action Plan aims to improve and adapt social EU’s rulebook to promote a social economy and social progress. The transition to climate-neutrality, digitalization and demographic change must be socially fair and just. Concretely the Commission proposes three EU-headline targets to be achieved by 2030: 1) at least 78% of the population aged 20 to 64 should be in employment, 2) at least 60% of all adults should participate in training every year and 3) the number of people at risk of poverty or social exclusion should be reduced by at least 15 million.

Subject Matter: The Action Plan comprises a variety of concrete measures. Steps to achieve the objective of preserving and creating new and better jobs are for example an updated Industrial strategy for Europe and an Action Plan on the Social Economy. Having in mind the consequences of the COVID-19 crisis, the European Commission presents, together with this Action Plan a Recommendation for Effective Active Support to Employment (EASE). This Recommendation should provide guidance on the combination of policy measures and available funding to promote job creation. Furthermore, the Commission will present a legislative proposal on the working conditions of platform workers, propose an EU regulation on Artificial Intelligence for the use in the EU economy and in the workplace and present a new Occupational Safety and Health Strategic Framework 2021-2027. The Investment in skills and education should unlock new opportunities for all. It comprises different measures such as a Transformation Agenda for Higher Education and an initiative on Individual Learning Accounts to overcome barriers to access to training and to empower adults to manage career transitions. To build a Union of equality a legislation to combat gender-based violence against women should be proposed. Member states are being encouraged to conclude a horizontal Equal treatment Directive. Companies should put in place mechanisms to combat discriminatory practices in recruitment, selection and promotion. The social protection and inclusion should be guaranteed by i.e. the “Affordable Housing Initiative”, a Council Recommendation on minimum income and an EU Strategy on the Rights of the Child. Member States should invest in health and care workforce and boost the digitalization of their health systems.
The Social Summit in Porto on 7-8 May 2021 will be an opportunity to further advance the implementation of the Social Pillar. Progress on the Action Plan will be reviewed by the Commission in 2025.

Non-legislative Act: On the 24th of March 2021 the European Council put forward a Recommendation about establishing a European Child Guarantee (press release).

Problem: In most EU-27 countries, the rate of people at risks of poverty or social exclusion is higher among children than among the population as a whole. The COVID-19 crisis has exacerbated already existing inequalities and could lead to a further increase in poverty and social exclusion. Because poverty and social exclusion of children prevent social progress and sustainable development, the supporting them is critical to building a sustainable, inclusive, equal and competitive knowledge economy and a fair society.

Objective: The European Child Guarantee aims to prevent and combat social exclusion by guaranteeing the access of children in need to a set of key services such as early childhood education and care. An inclusive and truly universal access should be guaranteed to ensure equal opportunities for all children.

Subject Matter: The guarantee refers to "children in need" under the age of 18. The focus in the identification of these children by the Member States is to take into account specific forms of disadvantage: 1) homeless children, 2) children with a disability, 3) children with a migrant background, 4) children with a minority racial or ethnic background (particularly Roma), 5) children in alternative care and 6) children in precarious family situations. To achieve this objective, the Commission proposes to support children in need in various areas. The member states must guarantee a free access to early childhood education and care, education, a healthy meal each school day and healthcare. Additionally the effective access to healthy nutrition and adequate housing must be guaranteed. The implementation provides monitoring and evaluation arrangements. The Member States are requested to uphold a political commitment to advance on equal opportunities for all children and to minimize the socio-economic impacts of the COVID-19 pandemic. To support these measures and the implementation of the European Child Guarantee Union funds are available. It is proposed that the Member States nominate a national Child Guantantee Coordinator, who should coordinate and monitor the implementation of the Recommendation and acts as a contact person for the Commission. After the initial period of this implementation, the Commission will take stock of progress and report to the Council by five years after the adoption.

Proposal: On the 22th of September 2021 the Commission put forward a Proposall for a Regulation on applying a generalised scheme of tariff preferences and repealing Regulation (EU) No 978/2012 of the European Parliament and of the Council.

Problem: The scheme of generalised tariff preferences (GSP) forms part of the EU's common trade policy and has granted trade preferences to developing countries since 1971. The current scheme is due to expire on 31 December 2023, so it is intended to extend the scheme beyond that date and improve its efficiency and effectiveness.

Objective: The revised GSP regulation aims to maintain the essential features of the current regulation, such as eradicating poverty and promoting sustainable development and good governance, but without compromising EU interests. At the same time, it aims to improve the efficiency and effectiveness of the GSP in order to adapt the scheme to future challenges. Specifically, the revised scheme aims to facilitate access to the GSP+ scheme for the increasing number of the least developed countries that lose EBA status due to graduation; adjust the thresholds for graduation of products to better focus preferences on less competitive products and countries and reflect changing priorities, such as those of the European Green Deal, among others. Furthermore, the list of international conventions should be updated in a targeted and controllable manner; the procedure for withdrawing preferences in urgent cases should be accelerated; and the monitoring and implementation of GSP+ commitments should be improved, e.g. through more transparency.

Subject matter: The GSP comprises three schemes: (1) the standard GSP; (2) the GSP+; and (3) the EBA (Everything But Arms). Thus, the structure of the last ten years is maintained. The standard GSP scheme should be granted to all developing countries that have common development needs and are at a similar stage of economic development. With regard to the standard GSP scheme, it should be noted that trade, financing, and development needs may change. It should therefore be ensured that the scheme remains open to countries as their situation changes. The special incentive arrangement for sustainable development and good governance (GSP+) should grant the envisaged additional tariff preferences to developing countries that are economically vulnerable due to a lack of diversification and have ratified basic international conventions on human rights, environmental and climate protection, etc., and ensure their implementation. The third arrangement, the special arrangement for least developed countries (LDCs), should continue to grant duty-free access to the Union market for products originating in countries recognised and classified by the United Nations as least developed. Temporary withdrawal of the arrangements under the scheme can be justified by systematic and serious violations of the principles laid down in international conventions on fundamental human rights or similar.

Legislative procedure completed (final agreement): On the 6th of June 2023, the European Parliament and the Council reached a final agreement on the Anti-Coercion Instrument. The instrument aims to improve the EU's ability to defend its interests by providing several countermeasures in the event of economic coercion by third countries. To enter into force, the Parliament and the Council will now have to complete the procedures of approval (press release).

Proposal: On the 8th of October 2021, the Commission published a Proposal for a Regulation of the European Parliament and of the Council on the protection of the Union and its member states from economic coercion by third countries (press release).

Problem: The problem of the increasing and significant use of economic coercion by third countries that threatens to undermine the rights and interests of the Union and member states asks for a response of the European Union. As none of the existing legal instruments of the Union addresses the issue of economic coercion, there is a legislative gap in addressing the evolving issue of economic coercion.

Objective: The proposal aims to protect the interests of the Union and its member states by enabling the Union to respond to economic coercion. The Union should be able to adequately respond to and stop economic coercion by third countries. Therefore, the proposal aims to fill existing legal gaps.

Subject Matter: The effective protection of the Union and its Member States against certain measures taken by third countries should be achieved through deterrence or countermeasures. The Union response measures should be defined by taking into account the need to avoid or minimize collateral effects, administrative burdens and costs imposed in Union economic operators. To decide whether a third-country measure is coercive, the Commission should examine if the measures were taken on its own initiative or following information received from any source. The Regulation applies where a third country interferes in the legitimate sovereign choices of the Union or a member state by seeking to prevent or obtain the cessation, modification or adoption of a particular act by the Union or a member state by applying or threatening to apply measures affecting trade or investment. The Commission should communicate any affirmative determination to the third country together with a request that the economic coercion cease and a request, where appropriate, that any injury be repaired. Countermeasures should only be imposed when other means such as negotiations, mediation or adjudication do not lead to the prompt and effective cessation of the economic coercion and to reparation of the injury it has caused. The response measures should be selected and designed on the basis of objective criteria. Different criteria should be taken into account: the effectiveness of the measures, their potential to provide relief, the aim of avoiding or minimizing negative economic and other effects on the Union, etc. After adopting the response measures, the Commission should continuously assess the situation in relation to the third-country measures of economic coercion, the effectiveness of the Union response measures and their effects. An effective communication and exchange of views and information between the Commission on the one hand and the European Parliament and the Council on the other is to be guaranteed.

Non-legislative Act: On the 8th of June 2021, the Commission published a Communication about the Performance Framework  of the EU budget between 2021 and 2027 (Press release).

Problem: The Multiannual Financial Framework is at the heart of the EU's economic coordination and is a key determinant of the EU's response to the COVID 19 pandemic. The EU budget is intended to help overcome the ongoing crisis and provide economic recovery. It also aims to strengthen the areas of sustainability, digitalization and resilience. To this end, enormous amounts will be made available from the EU budget over the next few years. Together with the NextGenerationEU-Program, the budget amounts to more than 1.8 trillion EUR. These funds must now be used in a targeted and efficient manner.

Objectiv: The performance framework of the EU budget is designed to ensure effective budget execution. The framework includes all the necessary tools and procedures to set the objectives of the various EU programs and to monitor and measure them. In general, it aims to demonstrate the value of the EU budget and improve transparency and accountability. Through high-quality performance information, it is intended to show what is being achieved with the EU budget and where there is a need for improvement.

Subject Matter: The first step is to identify challenges that can best be addressed at the EU level. This is followed by the establishment of clear and transparent targets to be achieved with the help of the measures from the respective spending programs. A system of performance indicators has been created to measure progress toward the goals, which must be monitored. The total number of indicators for the period 2021-2027 is 700 in total, which is a decrease from the previous period. Data must be collected on the indicators on a regular basis, and the source of information is explained transparently by the Commission. In all programs, the indicators have been included in the respective legal texts. Particularly important in the monitoring process is the Commission's annual management and performance review, which reports on the performance of the EU budget.

Legislative procedure completed: On 14 December 2020, the Regulation establishing a European Union Instrument for Reconstruction to support recovery from the COVID-19 crisis entered into force.

Problem: The measures taken by member states in response to the COVID-19 pandemic have led to significant disruptions in economic viability. There has been a significant deterioration in the financial situation of many businesses in relation to the measures taken. There is a risk that divergences between national economies will increase.

Objective: In order to prevent a deterioration of the economic and employment situation and social cohesion and to promote a sustainable and robust recovery of economic activity, a coordinated programme of economic and social support will be established.

Subject matter: The support of the instrument created by the Regulation shall focus on measures aimed at restoring labour markets, social protection and health systems and supporting the transition to a green and digital economy. In order to ensure a stable and sustainable recovery across the Union and to facilitate the implementation of economic support, the existing mechanisms for expenditure under Union programmes shall be used in accordance with the Multiannual Financial Framework. Support under these programmes is partly in the form of non-repayable grants. The Instrument covers a budget of about 800 billion euro in 2021 prices and shall help repair the immediate economic and social damage caused by the coronavirus pandemic and make the EU fit for the future. 421.1 billion euro will be available mainly for grants (under the Reconstruction and Resilience Facility and other programmes of the EU budget). The remainder, about 385.8 billion euro, will be used to provide loans from the EU to individual member states on favourable conditions, which will be repaid by those member states. In addition, NextGenerationEU will reinforce several existing EU programmes and policies, as follows: the Cohesion policy, the Just Transition fund, the European Agricultural Fund for rural Development, InvestEU, rescEU and Horizon Europe with EUR 83.1 billion in total. The Commission will submit a report to the Council by October 31, 2022 on the progress made in implementing the instrument and the use of the funds.

Non-legislative act: On the 19th of October 2021 the Commission put forward a Communication on the EU economy after COVID-19 and the implications for economic governance (press release).

Problem: Even before the COVID-19-crisis, the EU economy faced several long-term structural challenges such as climate change and demographic change. The COVID-19-crisis has made these challenges more evident and urgent.

Objective: This Communication assesses the impact of the changed circumstances following the COVID-19-crisis on economic governance and aims to reopen the public debate on the review of the framework.

Subject matter: Looking at the impact of the crisis, we find that while the COVID-19-pandemic led to a severe economic downturn, it was followed by an unexpectedly strong, albeit uneven, recovery. With regard to the labour market, strong effects were cushioned by policy support measures. Nevertheless, certain regions and sectors across the EU continue to experience significant employment gaps compared to the pre-crisis period, while elsewhere labour shortages are again being faced. Appropriate labour market policies are urgently needed to facilitate adjustments. Likewise, the pandemic has further exacerbated already existing economic, social and territorial disparities, making the achievement of the sustainability goals an even greater challenge. As a result of the fiscal measures required, fiscal disparities between member states have increased. Against this backdrop, the measures in the Recovery and Resilience Plans to raise growth potential should help improve the sustainability of public finances. Furthermore, there is an urgent need for investment to, a.o. things, strengthen the EU's economic and social resilience and to further expand and strengthen areas such as digitalisation, healthcare, etc.. With regard to EU budgetary rules, it can be noted that it will be crucial to reduce heterogeneous debt ratios in a sustainable and growth-friendly manner. The stabilising function of a coordinated discretionary fiscal policy has proved to be an important instrument in the crisis. This has helped to address immediate challenges of a significant economic shock, strengthen confidence and reduce the risk of negative long-term consequences. It remains essential that the overarching goals of simplification, increased national ownership and better enforcement are achieved. In the macroeconomic imbalance procedure, one of the key issues is the return to a convergence path. This improves the ability of member states to respond to shocks. The implementation of the Build-up and Resilience Facility can be strengthened through a transparent evaluation and monitoring framework. With a view to relaunching the public debate on the review of the framework, the eleven key questions included in the updated online survey are adapted. The Commission invites the other institutions and all stakeholders to participate in the public debate on the review of economic governance.

Non-legislative Act: On the 14th of January 2020 the Commission published a Communication on a strong social Europe for just transitions (press release).

Problem: Social justice represents the foundation of the European social market economy and the very essence of the European Union. While the number of unemployed within the EU has continued to fall in recent years, inequalities persist and not everyone benefits from these positive developments. This inequality acts as a brake on growth and threatens social cohesion within the EU.

Objective: In order to guarantee a fair, green and prosperous future for future generations and to ensure intergenerational justice, a new social strategy must be developed that guarantees that the transformation in terms of climate neutrality, digitalization and demographic change is socially acceptable and fair. The communication aims to list the initiatives at EU level that support the implementation of the European Pillar of Social Rights.

Subject matter: The rights and principles enshrined in the Pillar include guaranteeing equal opportunities and jobs for all (1), ensuring fair working conditions (2), social protection and inclusion (3), promoting European values in the world (4) and joint elaboration (5). With a view to equal opportunities and job creation for all, the EU aims to empower people through quality education, training and skills. In order to identify which competences are important, it is important to work with employers, employees, teachers and trainers. In this context, the Commission also wants to further develop the objectives of the European Education Area and create a new framework for cooperation in the field of education and training with the member states. With the help of the Digital Europe program, the development of advanced digital skills is to be promoted. To do more to combat youth unemployment, the Commission will present its proposals in the second quarter of 2020 to strengthen the Youth Guarantee, which will provide support for young people to develop their skills and gain work experience. Furthermore, it aims to support job mobility and economic transition in the spirit of green change. New jobs are to be created through a specific strategy for small and medium-sized enterprises. In the area of equal opportunities, it is also important to promote gender equality, and to strengthen the commitment to people with disabilities. With regard to the goal of fair working conditions, fair minimum wages for employees are to be guaranteed. In this context, social dialogue and collective bargaining are to be promoted. To ensure a high level of social protection, a European unemployment insurance system is to be proposed, among other things. Poverty and exclusion are also to be limited in this course. The promotion of European values in the world is to be guaranteed by Europe's political and economic influence. Finally, it is crucial to initiate a comprehensive discussion with all EU countries and regions, as well as with all partners. The goal is to jointly elaborate an action plan that will incorporate all contributions and will be recommended for approval at the highest political level.

Legislative procedure completed: The Commission, the European Parliament and the EU member states reached political agreement on the following proposal on 7th of June 2022 (press release).
According to the agreement, clear criteria for setting minimum wages, such as purchasing power and cost of living, wage level, wage distribution, wage growth rate and national productivity, will apply. Furthermore, minimum wages are to be updated at least every two years, with the effective participation of the social partners. In addition, the minimum wage regulations also stipulate that EU countries must define action plans to increase collective bargaining coverage if its rate is below 80 per cent.

Proposal: On the 28th of October 2020 the Commission put forward a proposal for a Directive on adequate minimum wages in the European Union (press release).

Problem: In recent years, the gap between low wages and other wages has widened in many member states. Structural trends such as globalisation and digitalisation are increasingly polarising labour markets, which in turn has led to a growing share of low-wage occupations. This has allowed poverty to rise despite employment and wage equality. However, decent wages are essential to ensure good working and living conditions within the Union. To guarantee greater fairness in the EU labour market, convergence among member states in this area is crucial.

Objective: The directive is intended to ensure that employees in the Union are protected by adequate minimum wages. Thus, they are to be enabled to enjoy a decent standard of living in the place where they work. These objectives are to be achieved taking into account the specifics of national systems.

Subject matter: To achieve these goals, collective bargaining on wages is to be promoted in all member states. In countries where a statutory minimum wage has already been introduced, it is to be ensured that the member states create the conditions for statutory minimum wages to be set at an appropriate level. At the same time, socio-economic conditions as well as regional and sectoral differences are to be taken into account. In addition, the directive aims to further improve the adequacy of statutory minimum wages by minimizing the application of variations in statutory minimum wages for certain groups of workers or the application of deductions from pay. It needs to be guaranteed that applicable collective agreements or national legislation are respected so that workers benefit from effective access to minimum wage protection and businesses are protected from unfair competition. Against a backdrop of declining collective bargaining coverage, it is essential that member states promote collective bargaining to improve workers' access to collectively guaranteed minimum wage protection. Member states that do not achieve this level of coverage should, on the basis of consultation and/or agreement with the social partners, establish or develop a framework of support mechanisms and institutional arrangements, thus creating the conditions for collective bargaining. An effective enforcement system, including on-site checks and inspections, is needed to ensure that national statutory minimum wage frameworks are working well.

Non-legislative Act: On the 24th of September 2020 the Commission put forward a Communication on a new action plan for the Capital Markets Union for people and business (press release).

Problem: The Capital Markets Union (CMU) is necessary for the achievement of all key EU economic policy objectives. Against the backdrop of the crisis triggered by the COVID-19 pandemic, the Capital Markets Union has become even more important. It is crucial for supporting a resilient and inclusive economic recovery, as well as the green and digital transformation.

Objective: The new Action Plan and the measures it contains are intended to lead to further adjustments in the EU financial system and to help address the political and economic challenges ahead. The three main objectives include (1) supporting a green digital, inclusive and resilient economic recovery through better access to finance for European businesses; (2) making the EU an even safer place for people to save and invest for the long term; and (3) integrating national capital markets into a true single market.

Subject matter: In the area of the ecological turnaround and digital transformation, the Capital Markets Union should be able to mobilise investments and steer them in the right direction. The CMU is relevant for shaping a more inclusive economy, as it can increase the inclusion and resilience of the economy and society. In view of the EU's global competitiveness and open strategic autonomy, the CMU can help smaller capital markets to catch up with larger, more developed capital markets and thus help local companies to become global players. The Capital Markets Union is a prerequisite for a stronger international role for the euro and for Europe's open strategic autonomy. To this end, the new action plan includes 16 measures. Regarding the first objective (1), it proposes, among other things, the establishment of an EU-wide platform to provide investors with seamless access to financial and sustainability-related company information, as well as the simplification of listing rules for public markets to promote access to finance for small and innovative companies. The second main objective (2) is to be secured through a feasibility study carried out by the Commission on the development of a European financial education framework. In addition, "pension dashboards" are to be developed by the Commission in order to facilitate monitoring about the adequacy of pension provision in the member states. With regard to the third objective (3) of integrating national capital markets into a genuine single market, one of the aims is to reduce the burden of tax difficulties on cross-border investments by suggesting a common and standardised EU-wide system of withholding tax relief at source. Other measures in this area include, for example, the proposal to establish an effective and comprehensive consolidated post-trade data ticker for equity and quasi-equity instruments, and the strengthening of the framework for the protection and facilitation of investments in the EU. A general prerequisite for achieving the objectives set is the support of the European Parliament and the member states at the highest level, as well as of experts in the authorities.

Non-legislative act: On the 7th of May, the Commission put forward a Communication on an Action Plan for a comprehensive Union policy on preventing money laundering and terrorist financing (press release).

Problem: The fight against money laundering and terrorist financing is being tackled by the Commission, both in the EU and globally. In the context of the COVID-19-pandemic, there has been an increase in criminal activity, demonstrating once again that the EU's determined fight against this type of crime is of significant relevance.

Objective: The Commission aims to implement a comprehensive anti-money laundering and counter-terrorist financing policy that addresses the specific threats, risks, and vulnerabilities currently facing the EU. This should be designed in such a way that it can be developed efficiently in the light of ongoing innovation. This should also further promote the integrity of the EU financial system, thereby enabling the completion of the Banking Union and the Economic and Monetary Union. The objective of the Action Plan is based on six pillars: (1) ensuring the effective implementation of the existing EU anti-money laundering and counter-terrorist financing framework; (2) establishing a single EU anti-money laundering and counter-terrorist financing framework; (3) establishing EU-level anti-money laundering and counter-terrorist financing supervision; (4) establishing a support and cooperation mechanism for the FIU; (5) enforcement of criminal law provisions and exchange of information at Union level; and (6) strengthening the international dimension of the EU anti-money laundering and counter-terrorist financing framework.

Subject matter: With regard to the first pillar, it is important to ensure the effective implementation and application of the Money Laundering Directive. In addition, the capacities of the member states for the prevention of money laundering and the fight against terrorist financing must be kept in view through monitoring. The competences of the European Banking Authority (EBA) are to be further expanded, for example by setting up an EU-wide database to record risks and supervisory measures. With regard to the second pillar, the Commission will present legislative proposals for a uniform set of rules in the area of combating money laundering and terrorist financing in the first quarter of 2021 on the basis of a thorough impact assessment. The third pillar will be realised through Commission proposals in the first quarter of 2021 to establish an EU supervisory authority responsible for combating money laundering and terrorist financing. These are to be based on a thorough impact assessment of the options regarding the functions, scope, and structure of such supervision. The establishment of a support and cooperation mechanism for the FIU (4th pillar) is to be realised in the first quarter of 2021 through Commission proposals. In the fourth quarter of 2020, the Commission will also take over the management of the EU system for the exchange of information between FIUs, FIU.net. With regard to pillar five, the Commission envisages issuing guidelines on public-private partnerships (PPPs) by the first quarter of 2021. Finally, Pillar Six aims to strengthen the international dimension of the anti-money laundering and counter-terrorist financing framework. A new methodology for the assessment of high-risk third countries will be published together with this Action Plan.

Non-legislative Act: On the 18th of May 2021 the Commission put forward a Communication on Business Taxation for the 21st Century (press release).

Problem: The context of EU corporate taxation policy has changed fundamentally in recent years. In addition to the COVID-19-pandemic, trends such as climate change, globalisation and digitalisation are having a significant impact on the existing tax bases. It is therefore necessary to reflect the design of efficient, sustainable and fair tax frameworks for the future, taking into account the overall tax mix. The measures taken so far to combat tax avoidance and tax evasion have been successful in solving individual issues, but on the other hand the complexity of the systems has increased.

Objective: Against this background, the EU aims to create a stable, efficient and equitable tax framework that meets public finance needs while supporting recovery and environmental and digital transformation by providing favourable conditions for equitable and sustainable growth.

Subject matter: The EU's tax policy agenda includes promoting fair and sustainable growth by supporting overarching EU strategies such as the European Green Deal and the Commission's Digital Agenda. It also aims to ensure effective taxation. This is crucial for the financing of high-quality public services and a prerequisite for the fair distribution of the tax burden among taxpayers. It also helps to create a level playing field for businesses and improves the EU's competitiveness. Company taxation is designed to ensure that the tax burden is shared fairly between companies and that taxable revenues are allocated equitably between different tax jurisdictions. To ensure fair and effective taxation, public transparency of taxes paid by economic operators shall be guaranteed, inter alia, through a legislative proposal to combat the abusive use of letterbox companies for tax purposes. In addition, productive investment and entrepreneurship are to be promoted, e.g. through the adoption of a recommendation on the tax treatment of losses. Progress at the EU level in this area is to be complemented by supporting national measures in areas. Also, on the agenda is the reform of the international framework for corporate taxation. Ongoing discussions on behalf of the G20 aim to reach a global consensus on reforming the international framework for corporate taxation. These discussions focus on two major areas of work: (1) partial reallocation of taxing rights and (2) effective minimum taxation of multinational companies' profits. With an agreement reached in a multilateral convention, participating countries will be obliged to apply Pillar 1. The second area of work will mainly be implemented through an EU Directive, which will replicate the OECD Model Rules with the necessary adaptations. While an agreement at the global level is an administrative burden due to the different economic profiles, a strongly integrated Union with its internal market can go further than a global agreement. The new framework for corporate taxation in Europe should, among other things, create a common set of rules for groups of companies and remove obstacles to cross-border investment, cut red tape and reduce compliance costs in the Single Market, combat tax avoidance and support job, growth and investment creation, make the allocation of taxing rights among Member States simpler and fairer, and guarantee Member States reliable and predictable corporate tax revenues.

Non-legislative Act: On the 15th of July 2020 the Commission put forward a Communication on an action plan for fair and simple taxation supporting the recovery strategy (press release).

Problem: The EU, its institutions and member states, as well as citizens and businesses, face enormous implications of the COVID-19-crisis in times of fundamental change. Nevertheless, in order to be able to achieve the Union's objectives in the transition to a greener and more digitalised world, compatible with the principles of our social market economy, fair, efficient and sustainable taxation is key. This will continue to grow in importance as the EU and the global community seek to recover from the consequences of the COVID-19-crisis.

Objective: The Commission aims to fight tax fraud and other unfair practices even more vigorously to ensure that the recovery is marked by solidarity and fairness. This will enable member states to raise the tax revenues they need to meet the major challenges of the current crisis. This goal is to be achieved with the help of the 25-measure action plan.

Subject matter: The Action Plan is a key element of a comprehensive and ambitious EU agenda for the coming years. It includes measures to reduce tax obstacles for companies in the Internal Market to increase business competitiveness and economic growth, as well as initiatives that will help member states enforce existing tax rules and improve tax honesty. Despite a wide range of tools to detect and combat abusive behaviour, tax fraud and tax evasion remain a threat to sound public finances. Particularly with regard to the digital economy, it is clear that further action is needed at EU level to strengthen the fight against tax evasion and to help tax administrations keep pace with an economy in constant change. The EU has also made progress in simplifying tax systems, but. Tax compliance costs remain high in the EU. The new action plan puts the taxpayer at the centre. The steps of registration, reporting, payment and verification need to be developed and improved over time. Taxation is based on voluntary compliance and should be based on a cooperative and harmonious relationship between taxpayers and tax administrations. Disputes should be prevented, for example, through the Directive on Procedures for the Settlement of Tax Disputes. Measures and regulations are to be simplified in favour of taxpayers. Measures such as a charter of rights for taxpayers, a conference on data analysis and digital solutions, and greener taxation of passenger transport, to name but a few will contribute to this.

Non-legislative Act: On the 28th of September 2020 the Commission published a Communication on taking the Customs Union to the Next Level (press release).

Problem: Within the last few years, it has become apparent that the customs authorities of the Member States are increasingly experiencing difficulties in managing their tasks within the Customs Union. Despite a modernization of EU customs legislation in 2016, problems such as undervaluation of goods, imbalance between member states in customs controls, etc. persist. In addition, the UK's exit from the Customs Union has significantly increased the workload of EU customs authorities. Also, in the light of the COVID-19-pandemic, increasing the efficiency of the Customs Union and the Member States' customs authorities became even more urgent.

Objective: The aim of the Communication is to ensure uniform compliance and a balance between controls and facilitation of international trade and global supply chains. It also aims to ensure better availability and use of data and data analytics for customs purposes and to move towards smart, risk-based monitoring of supply chains.

Subject Matter: Measures include risk management, e-commerce management, compliance promotion, and customs authorities acting as one. The risk management category is intended to enable more effective controls. Starting in 2020, work will be done to develop tools within the EU electronic system for customs surveillance. Regarding the new Customs Import Control electronic system (ICS2), the proposed ICS2 analytical tool is to be endorsed by Member States and fully implemented by the end of 2024. Furthermore, a new risk management strategy is to be prepared in 2021 in the form of a Commission Communication. To manage e-commerce, VAT data is to be used for customs purposes and direct customs access to Eurofisc, the EU's hub for tax information, will be established. Also, to be reviewed are the roles and obligations of e-commerce players, particularly platforms. In the area of strengthening and facilitating compliance, the ongoing Authorized Economic Operators (AEO) program is to be expanded. The program's guidelines are also to be updated. In addition, a legislative proposal for a single window environment for customs is to be presented, among other things, and an interim evaluation of the Union Customs Code is to be carried out. Finally, in the area of unified action by customs authorities, cooperation between customs, security, and border management authorities is to be expanded and synergies between the respective information systems are to be strengthened. In addition, Member States should be better equipped with modern and reliable customs equipment, and cooperation mechanisms under the Customs program should be introduced and deepened. Member states are crucial in the implementation of the Action Plan, as they are responsible for providing the necessary resources at the national level.