Key facts
- Costa's proposal would charge a 0.05% levy instead of a lump sum, applied only above €750 million turnover.
- Two diplomats told POLITICO they doubt the concessions will win enough support for the CORE levy.
- Costa's team suggested adding 25 cents per kilo to EU levies on non-collected plastic and electronic waste.
- The share of a carbon imports tax flowing to the EU budget would rise to 100% from 75% under the proposal.
- Costa will put forward a new budget negotiating document on November 21 ahead of a special summit the following week.
- Further budget cuts may affect cohesion policy, a setback for the Friends of Cohesion group of Southern and Eastern European countries.
European Council President António Costa suggested narrowing a contested EU business tax to companies with annual turnover above €750 million, two EU diplomats briefed on the discussions told POLITICO on November 5. The idea was raised in bilateral meetings, known as "confessionals," between Costa's head of cabinet Pedro Lourtie and EU governments on November 5 to test the most sensitive parts of the negotiations.
Lourtie proposed overhauling CORE, the corporate tax the European Commission put forward last year that charges a lump sum on companies' revenues above €100 million. Under his proposal the EU would charge a 0.05% levy instead of a lump sum, and only on firms with annual turnover above €750 million. The changes are expected to soften opposition from a group of countries led by Germany, which argued CORE undermines competitiveness and burdens medium-sized enterprises.
Two diplomats told POLITICO they doubt the concessions will be enough to win support for the levy. "I don't think this is going to solve the problem on CORE," one of them said. The diplomats were granted anonymity to discuss the sensitive negotiations.
In a concession to France, which is pushing new taxes to reduce its EU budget contributions, Costa's team indicated it would not cut total revenue projections from the Commission's tax proposal, which was expected to generate €65 billion annually. To raise more, the team suggested adding 25 cents per kilo to two largely uncontested levies on non-collected plastic and electronic waste, raising the share of a carbon imports tax going to the EU budget to 100% from 75%, and exploring levies on crypto firms and national spectrum auctions.
Lourtie also suggested phasing in two taxes, on tobacco products and on polluting firms under the Emissions Trading System, for countries that are overwhelmingly affected. The bilateral meetings began on November 5 and will continue until November 9, the report said, and are expected to pave the way for a budget deal by the end of 2026, before elections in Poland, France and Italy.
Costa will put forward a new budget negotiating document on November 21 ahead of a special summit the following week, the two diplomats said. During the November 5 meetings, Costa's team indicated the budget would be cut further, with reductions possibly affecting cohesion policy, a setback for the Friends of Cohesion alliance of Southern and Eastern European countries. Cuts to farmers' subsidies were deemed less likely, the diplomats said.