As published on: news.yahoo.com, Thursday 7 September, 2023.
European Union officials will begin meeting with member states this week to outline the bloc’s plan on how to impose a windfall tax on profits generated by more than €200 billion ($215 billion) of frozen Russian central bank assets to aid Ukraine’s reconstruction.
The European Commission, the EU’s executive arm, will propose how to legally transfer revenue being generated by the assets to the bloc’s budget, according to a draft paper on the process seen by Bloomberg.
The commission will meet with officials from Spain, Belgium, Italy, France and Germany on Thursday, then with all member states next week, according to a person familiar with the plans who spoke on the condition of anonymity. Commission President Ursula von der Leyen previously said she would put forward a legislative proposal before the summer break but that timeline has since slipped.
A commission working group backs implementing the three main proposals in the paper step-by-step, rather than all at once, according to the document.
The steps include clarifying the scope of the duties of the financial obligations involved, imposing requirements for central securities depositories to separate cash balances of the Russian assets and transferring the revenues to the EU’s budget as external assigned revenues, according to the paper.
The Russian central bank assets immobilized in the EU are expected to generate some €3 billion in windfall profits. Over half the assets are in cash and deposits, while a “substantial amount” of the remainder is in securities that will transform to cash as they mature in the next two to three years, Bloomberg previously reported.
Many of the funds are in Belgium at settlement giant Euroclear Ltd., where they generated nearly €750 million by the first quarter of this year.
The prospect of taxing and seizing the windfall profits raises legal as well as financial questions. Several countries have raised concerns that using the proceeds from the assets could encourage official reserve holders to turn their back on the euro, according to the people.