This update was written automatically with AI from market data and news wire reports, and published without review by a person.
Key Takeaways
- The European Commission is exploring the use of revenue from the 2021 OECD global tax deal to fund the bloc's next seven-year budget (2028-2034), potentially raising €65 billion annually from new "own resources."
- European Council President António Costa is pushing for these new revenue streams to avoid increasing direct national contributions from member states, which currently face a €1.82 trillion total budget proposal.
- The proposal targets multinational enterprises (MNEs) with annual turnovers exceeding €750 million, leveraging the 15% global minimum tax (Pillar Two) to create a sustainable EU-wide funding mechanism.
- France has signaled support for the initiative, while Germany remains a key opponent, specifically regarding the "CORE" corporate levy that would tax companies with revenues over €100 million.
The European Commission is actively considering a plan to redirect revenue from the OECD global tax agreement into the European Union’s next long-term budget. This move comes as Brussels faces a significant deadlock in negotiations for the 2028-2034 Multiannual Financial Framework (MFF). By tapping into corporate tax profits rather than revenues, officials hope to gain broader political support from member states wary of traditional tax hikes.
European Council President António Costa has urged leaders to finalize new "own resources" to preserve the EU's ambitious spending goals in defense and green energy without placing additional pressure on national treasuries. The current proposal for the seven-year cycle sits at approximately €1.82 trillion. Without new revenue streams, net contributors like Germany and the Netherlands may be forced to increase their annual payments, a prospect that has met fierce resistance in domestic parliaments.
The strategy focuses on the Pillar Two mechanism of the 2021 OECD deal, which mandates a 15% minimum corporate tax on large multinationals. While these funds currently flow into national budgets, the Commission suggests a portion could be centralized at the EU level. This approach is seen as a more palatable alternative to the Corporate Resource for Europe (CORE) levy, which faced criticism for taxing top-line revenue rather than net profit.
French President Emmanuel Macron reportedly backed the initiative during the October leaders' summit, viewing it as a way to ensure that "Big Tech" and other highly profitable sectors contribute directly to European sovereignty. However, the plan faces technical hurdles, including a January 2026 "side-by-side" agreement that allows certain U.S. tax systems to coexist with Pillar Two, potentially complicating the calculation of available EU revenue.
If successful, the inclusion of global tax revenue could unlock stalled negotiations and provide the "firepower" needed for the European Competitiveness Fund. The Commission estimates that a combination of new corporate, carbon, and digital taxes could generate up to €65 billion per year. As the 2026 deadline for a budget deal approaches, the shift toward global tax revenue represents a critical attempt to bridge the gap between "frugal" northern states and those seeking expanded EU investment.
Automated market updates written with AI from market data and news wire reports, published without human review.