European Council President António Costa is considering narrowing a controversial business tax so it applies only to large firms with annual turnover above €750 million, two EU diplomats briefed on the discussions told POLITICO.
The idea surfaced in bilateral meetings, known as "confessionals," that Costa's head of cabinet, Pedro Lourtie, held with EU governments on Thursday. Costa hopes the changes will help secure an overall agreement on new EU-wide levies, known as own resources, which the source describes as a major obstacle in the talks.
Lourtie's proposal reworks CORE, a corporate tax the European Commission put forward last year. CORE currently charges a lump sum on company revenues above €100 million. Under the revised plan, the EU would instead charge a 0.05% levy, and only on firms with annual turnover above €750 million. The source says these changes are expected to ease opposition from a group of countries led by Germany, which argues that CORE undermines competitiveness and burdens medium-sized enterprises.
One diplomat doubted the changes would be enough. "I don't think this is going to solve the problem on CORE," the diplomat told POLITICO. Both diplomats spoke on condition of anonymity.
According to the report, France is pushing for new taxes that would reduce member states' contributions to the EU budget. Costa's team signaled it will not reduce the total revenue projected from the Commission's tax proposal, which was expected to generate €65 billion a year.
To raise additional funds, Costa's team proposed adding 25 cents per kilo on non-collected plastic and electronic waste that flows to the EU budget. The diplomats also suggested raising the share of a carbon imports tax paid into the EU budget from 75% to 100%, and exploring levies on crypto firms and national spectrum auctions. Lourtie also suggested phasing in two levies, on tobacco products and on polluting firms under the Emissions Trading System, for countries that would be most affected.
The bilateral talks began Thursday and are scheduled to run until next Monday. The diplomats expect them to pave the way for a budget deal by the end of 2026, before elections next year in Poland, France and Italy could derail negotiations. Costa will present a new budget negotiating document on Nov. 21, ahead of a special summit the following week, according to the diplomats.
During Thursday's meetings, Costa's team indicated the budget would be cut further, possibly affecting cohesion policy funding for regions. That could be a major setback for a group of Southern and Eastern European countries known as the Friends of Cohesion. Cuts to farm subsidies were considered less likely, the diplomats said.