Portugal’s EU Council Presidency: A Look at the Tax Agenda

The Council of the European Union has a rotating presidency that in the second half of 2020 was held by Germany and transitioned to Portugal on Jan. 1, 2021.

The Council of the European Union is the institution that represents the member states' governments. Informally known as the Council, it is where the ministers from each EU country meet to adopt laws and coordinate policies. The Presidency represents the Council in relations with the other EU institutions, particularly with the Commission and the European Parliament. Its role is to try and reach an agreement on legislative files.

To ensure some continuity in terms of the program, three member states work closely together in a system of “trios.” The trio sets medium-term goals and prepares a joint agenda determining the topics and major issues that will be addressed by the Council over a period of 18 months. Based on this wider program, each of the three countries prepares its own more detailed 6-month program.

The current presidency trio is made up of Germany (second half of 2020), Portugal (first half of 2021) and Slovenia (second half of 2021).

Portugal will work on three major priorities

• Promote Europe's recovery, leveraged by the climate and digital transitions;
• Implement the Social Pillar of the European Union as a key element for ensuring a fair and inclusive climate and digital transition; and
• Strengthen Europe’s strategic autonomy, keeping it open to the world.

These priorities will be pursued along five lines of action that each consist of five to ten additional detailed actions

1. Resilient Europe
   Promote Europe’s recovery, cohesion and values.
    
2. Green Europe
   Promote the EU as a leader in climate action.
    
3. Digital Europe
   Accelerate digital transformation in the service of citizens and enterprises.
    
4. Social Europe
   Promote and strengthen the European social model.
    
5. Global Europe
   Promote Europe’s openness to the world.

Looking at these five lines of action from a taxation perspective, the following should be expected

• Proposal for a Carbon border adjustment mechanism;
• Proposal for a Digital levy (most likely a Digital Service Tax); and
• Proposal for an Emission Trading System.

The above is all part of the aforementioned action line “Resilient Europe,” for which Portugal will start execution of the Multiannual Financial Framework (MFF). The MFF, also referred to as a financial perspective, is a seven-year framework regulating an annual budget and setting the maximum amount of spending in the EU budget for broad policy areas. 

I’ll keep you posted as additional details unfold.