Brussels Edition: Taxing the world

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

It’s an issue that has befuddled EU leaders for years and has since moved to the global stage: how to stop major corporations — like Amazon — from shrinking their tax bill by shifting profits between countries. The world’s richest nations have set the stage for a revolution in corporate taxation, but still have their work cut out for them. Talks in the coming weeks between more than 100 governments before a Group of 20 meeting in July will build on the outlines of a deal earlier this month by G-7 finance ministers. Agreeing on the companies that will be covered and ensuring governments can continue to use low taxes to encourage virtuous economic activity are among challenges that have overshadowed seven years of talks hosted by the OECD. While a global 15% minimum will still be a hard sell for European countries like Ireland, whose corporate rate is 12.5%, the reward for succeeding is massive. 

What’s Happening
Let's Wait  |
Don’t expect too much from today’s Eurogroup meeting as far as banking union is concerned — given the upcoming German elections in particular. There’s goodwill around the table, said an EU official, but the ministers may fall short of agreeing on an ambitious work plan. This is not the most auspicious of moments, the official reflected, with the end of the year a more practical proposition.

Nuclear Election | The front-runner in tomorrow’s presidential election in Iran is an austere cleric and judiciary chief hostile to the West, who’s expected to prevail as millions boycott a vote that their favored reformist candidates weren’t allowed to contest. Golnar Motevalli looks at what the result would mean for nuclear talks.

Plane Truths | The truce between the U.S. and the EU over aircraft subsidies has left doubts that the dispute will ever get fully resolved. It all comes down to the fact that both sides have the right to reimpose punitive tariffs if the other side doesn’t live up to the deal.

Carbon Reform | Seven of the EU’s leading energy producers are calling on policymakers to agree to an ambitious and fast reform of the world’s largest carbon market in a bid to help investors in the transition to climate neutrality. Here’s what they want.

In Case You Missed It
Russian Rifts |
President Joe Biden said he wanted to meet Russia’s Vladimir Putin in Geneva to set some “rules of the road” in a relationship that has been eroding for years. After about three hours together, the two leaders showed how differently they interpreted that goal.

ECB Overhaul | In a countryside retreat near Frankfurt this weekend, European Central Bank President Christine Lagarde and her colleagues will try to settle the last remaining arguments in the biggest overhaul of their monetary policy in almost two decades. The aim is nothing less than to retool the ECB for the 21st century amid swirling expectations over potential new policies.

Banking Boost | The ECB is poised to extend a key plank of its pandemic relief measures by nine months to ensure lenders keep supplying credit to the economy. Banks had been lobbying for it, but the institution’s actions contrast with those of its peers in Switzerland and the U.S., which allowed leverage ratio relief measures to expire this year.

Tick-Tock | Talks aimed at resolving the dispute over post-Brexit trade in Northern Ireland are failing to make progress and running out of time, British minister David Frost said. He repeated Boris Johnson’s threat to suspend parts of the Brexit divorce agreement if the EU does not change its approach to checks on goods entering Northern Ireland.

Bottlegate Pressure | The UEFA European soccer tournament may have only just kicked off, but there’s already some big losers: drinks brands. Sponsors Heineken and Coca-Cola felt the virtual ripples of having football stars Paul Pogba and Cristiano Ronaldo remove their drinks from view during press conferences in clips that were widely shared online.

Chart of the Day

The EU’s eagerly awaited strategy to “push back” against Russia makes no mention of the Nord Stream 2 gas pipeline to Germany, which has been a central dilemma for the bloc for years. The report, requested by member states ahead of a leaders’ discussion planned next week, proposes little in the way of potential solutions, even as it recognizes that relations with Moscow continue to deteriorate.

Today’s Agenda
All times CET.

  • 11 a.m. Eurostat to release final inflation reading for May
  • 2 p.m. Armin Laschet, the head of Germany’s CDU and the front-runner in the race for chancellor, speaks at a Bloomberg webinar. Click here to sign up
  • 2:30 p.m. Belarusian opposition leader Sviatlana Tsikhanouskaya speaks at the GMF’s Brussels Forum
  • 3 p.m. U.S. Senator Jeff Merkley speaks at the Brussels Forum
  • 4 p.m. European Medicines Agency holds press briefing on the Covid situation
  • 4 p.m. Lisbon citizen’s event
  • Euro-area finance ministers meet in Luxembourg
  • The EU’s top court rules in a case questioning the scope under EU law of companies to defend IP rights infringements when copyright-protected works are shared on peer-to-peer networks
  • EU climate chief Frans Timmermans participates in the European Hydrogen Forum
  • The Commission approves first batch of spending plans for EU’s recovery funds for Greece and Denmark
John Ainger and Craig Stirling