What is a coronavirus tracing and warning app?
Most public health authorities in the EU have developed apps that support contact tracing and warning in the fight against coronavirus. The apps notify you if you have been at risk of exposure to the virus over the last 14 days, whether or not you feel symptoms. You will then get appropriate health advice. This helps to minimise the spread of the virus and speed up a return to normal life within the EU. Furthermore, you can get tested and receive any necessary treatment promptly and lower the risk of serious consequences, if you get alerted at an early stage.
Tracing and warning apps are part of a package of measures to prevent the spread of the virus, along with hygiene measures such as hand washing, social distancing and using everyday facemasks.
Why using a coronavirus tracing and warning app?
A tracing and warning app can help break the chain of coronavirus infections, nationally and across borders, and help save lives by complementing manual tracing. The faster people who have been diagnosed with COVID-19 and their contacts can be informed, the less quickly and widely the virus can spread. The app therefore help to protect yourself, your family, your friends and everyone around you.
If you use an official app available in your country, developed with the health authorities, you can trust them and use them without concerns. More information also on re-open EU.
How does a coronavirus tracing and warning app work?
A coronavirus tracing and waring app informs you if you have been, for a certain period, close, to another app user who was confirmed infected with COVID-19. Such an encounter would be considered a high-risk exposure. Typically, this means a contact for more than 15 minutes and less than 2 meters. The exact parameters are set by national health authorities.
When you have installed the app, your smartphone generates random ‘keys’ multiple times a day. These keys are exchanged through Bluetooth between nearby smartphones running a tracing app, and stored on the device for 14 days.
In case you are tested positive for COVID-19, you can share this information to warn the people you have previously been close to. Your phone will then share the keys generated during the last 14 days with the backend server of your national app.
On the basis of the keys received, each app calculates the risk score of a user, who may receive an exposure alert if the criteria are met.
What data will I share when using these apps?
The apps generate arbitrary identifiers, which are random sets of numbers and letters. These arbitrary identifiers do not allow the identification of an individual person. The keys are exchanged via Bluetooth between phones at short distance. No geolocation or movement data are used.
Do tracing apps use a lot of data or battery?
Once you have downloaded the app, its data usage is minimal. You should also not notice a significant difference in terms of battery life, nor should your smartphone overheat. The contact and warning app runs in the background. It uses Bluetooth Low Energy, a technology designed to be particularly energy efficient.
Can I use the app without internet connection?
For the tracing functionality as such, a permanent Internet connection is not necessary. Bluetooth, which is used to detect proximity with other app users, does not require Internet. It would even work in flight mode if you switch on Bluetooth during the flight. However, the app does need to connect to the internet at least once a day to download the information necessary to check if you have been exposed to other, infected users. Hence, to check infection chains, to receive alerts, and for additional functionalities, the apps will need to connect through mobile Internet or Wi-Fi.
Is the exposure notification automatic?
The apps work in the background of the device without requiring any daily action. Notifications come in automatically. You do not have to activate updates manually, however you need to have the exposure notification function switched on.
May I use several national coronavirus tracing and warning apps at the same time?
No. Using two or more apps at the same time is not possible as the Google/Apple exposure notification interface always supports only one tracing app at a time. Thanks to the EU interoperability gateway service, citizens can use one single app even when they travel cross-borders, while continuing to benefit from contact tracing and being able to report a positive test or to receive an alert.
- In case of a notification
What should I do if I receive an alert?
Receiving a contact alert does not necessarily mean you have been infected with COVID-19. An alert is a simple way of making you aware that there is a risk of exposure to coronavirus. The app will guide you on what you should do, according to the instructions of national health authorities, such as advice to get tested or to self-isolate, and who you have to contact.
Which criteria are used to assess exposure risk levels?
Potential exposures happen when you encounter, for a certain amount of time and at a certain distance, a person who has reported being infected with the virus. Bluetooth technology is used to determine whether or not an encounter is close and long enough to result in a potential exposure. There are typically three levels of risk:
Low risk: The app user had no encounter with anyone known to have been diagnosed with COVID-19, or if they have had such an encounter it was not close and/or long enough according to the criteria. The user is informed about generally applicable social distancing regulations and hygiene recommendations.
Increased risk: The user is informed that the check of their exposure logging has shown an increased risk of infection, as they have encountered at least one person in the last 14 days who has been diagnosed with COVID-19. The person is recommended to stay at home if possible, and to seek advice from their general practitioner or local health authorities.
Unknown risk: If the risk identification has not been activated for long enough by the person, then no risk of infection can be calculated yet. Risk identification is possible within 24 hours of installation, at which point the status information displayed changes from “unknown risk” to “low risk” or “increased risk”.
Can the app warn me how to avoid contact with people who tested positive?
No, the app cannot predict such contacts or detect risky contact in real time. To protect user privacy, no app user can be identified or located using the app, and no app can detect whether there is an infected person in, for example a supermarket. The app is no substitute for the usual necessary precautions, like wearing a mask.
- EU interoperability gateway: contact tracing across borders
How do coronavirus tracing and warning apps work across borders?
Coronavirus does not stop at borders. This is why Member States, supported by the Commission, were working on an interoperability solution for national contact tracing and warning apps, to allow citizens to use one single app when they travel abroad in Europe, while continuing to benefit from contact tracing and being able to receive an alert.
At the request of Member States, the Commission has set up an interoperability gateway service, an interface to efficiently receive and pass on relevant information from national contact tracing apps. It will ensure the secure and efficient cross-border exchange between participating apps while keeping mobile data usage to a minimum.
How does the exchange of data between the apps work?
The individual coronavirus tracing and warning apps only connect to their own national backend server. The national backend servers do not connect directly with each other. They exchange the information via the EU interoperability gateway service, which reduces data consumption compared with direct exchanges between participating apps.
The exchange consists of two main parts: Uploading of national keys to the gateway server takes places if users upload their keys and have agreed with sharing them with other European app users; downloading of keys to the national backend server is required so that the keys can be distributed to the users of the individual national app.
What is the EU interoperability gateway service?
The interoperability gateway service (gateway) is a digital infrastructure that ensures the secure transmission of generated keys between the backend servers of participating national contact tracing and warning apps. While doing so, the gateway will share the minimum information necessary for a person to be alerted if they have been exposed to an infected person also using one of the participating apps.
The data exchanged will only be stored in the gateway for a maximum period of 14 days. No other information except the keys, generated by the national apps, will be handled by the gateway.
The design of the gateway builds on the guidelines for interoperability, the set of technical specifications agreed between Member States and the Commission, the principles set out in the EU toolbox and the Commission and European Data Protection Board guidelines on data protection for contact tracing and warning apps.
The gateway was developed and set up by companies T-Systems and SAP, and is operated from the Commission’s data centre in Luxembourg.
Are all contact tracing apps interoperable?
The gateway ensures a safe exchange of information between contact tracing apps based on a ‘decentralised’ architecture. This concerns the vast majority of tracing apps that were, or are to be, launched in the EU. Apps that are interoperable can exchange information among themselves, so people in the EU only need install one app – typically the app of their home country – and still be able to report a positive test or to receive an alert, even if they travel in the EU.
What is the difference between ‘centralised’ and ‘decentralised’ apps?
Confronted with the new potential of smartphones to combat the coronavirus pandemic, developers discussed mainly two different ways of how to set up contact tracing and waring apps, typically referred to as ‘decentralised’ and ‘centralised’ architectures. In both approaches, smartphones exchange temporary keys via Bluetooth and communicate with a central server. The main difference is in the calculation of the exposure risk of users and the storage of the data. Regardless of the approach, none of the tracing apps track location or movements
In a centralised system, a central server receives the keys of the contacts collected by users confirmed with COVID-19, and the server does the matchmaking to alert users at risk.
In a decentralised approach, the keys of the contacts remain on the phone. The app downloads the arbitrary keys of COVID-19 infected users and checks whether there is a match, directly on the device. The decentralised approach uses a joint interface provided by Apple and Google (see below). In the end, almost all national health authorities in the EU opted for a decentralised app, and these apps are all potentially interoperable.
Which national apps are, or will be, linked to the gateway?
About two third of EU Member States have developed compatible tracing and warning apps, and the gateway is open to all of them, once they are ready to connect. The connection will gradually take place during October and November, however apps can also connect at a later stage if national authorities wish so. An ‘onboarding protocol’ has been developed, setting out the necessary steps.
While your app is able to detect proximity with other participating apps everywhere in the world, including during flights in a plane, it does of course matter if people around you also have access to and use a participating app.
The overview of participating countries is updated regularly and available here.
What about if I did a test in another EU country?
You can only insert a positive coronavirus test result in the app of the country where the test was taken. However, when you enter the code in that app, thanks to the interoperability, citizens from the country that you have visited will get notified that they have been in close contact of an infected case.
I never travel anywhere. Do I need to take part in interoperability?
Downloading and using an app is voluntary, and participating in the interoperability framework is as well. To do so, you need to agree to your data being processed. However, even if you do not intend to travel, other people may do so, and you may be close to them without knowing. Therefore, interoperability also benefits those who stay in their home country.
Do I need to download a new app to benefit from interoperability?
No. You can continue to use your national app. Most EU Member States have decided to set up a national coronavirus tracing and warning app, and almost all of those have opted for a decentralised system – all these apps are potentially interoperable and can connect to the gateway, once they are ready. Once an app gets connected to the gateway, an update needs to be issued in the app stores so the additional functionality can be used. Users need to install that update so that their app works cross-border.
How do I update the app?
If your phone is set to update automatically, your tracing app will update automatically within a few days of the update being released. If you want to update manually:
- For iPhone users, open the App Store and tap ‘Today’ at the bottom of the screen. Then tap your profile icon to bring up your Account. Scroll down until you see your national app and then tap ‘Update’.
- For Android users, open the ‘Play Store’ and tap on the three horizonal lines at the top-left of the screen to open the sidebar. Open ‘My apps & games’ and select the ‘Updates’ tab. Then scroll down to your national app and tap ‘Update’.
- Privacy and security
Can tracing apps be used by authorities to monitor quarantine?
No, this is technically impossible. Contact tracing and warning apps do not gather any location or movement data.
How is my privacy protected?
Throughout the entire process of design and development of contact and warning tracing apps, respect for privacy has been of paramount importance:
- The app does not collect any data that could lead to unveiling your identity. It does not ask for and cannot obtain your name, date of birth, address, telephone number, or email address.
- The app does not collect any geolocation data, including GPS data. It also does not track any movements.
- The Bluetooth Low Energy code is generated completely randomly and does not contain any information about you or your device. This code changes several times each hour, as a further protection.
- All data stored by the app on your smartphone, and all connections between the app and the server, and between the servers and the gateway, are encrypted.
- All data, whether stored on your device or on the server, is deleted when no longer relevant, i.e. 14 days after transfer between app and server.
- The data is stored on secure backend servers, managed by national authorities. The gateway uses a secure server, hosted by the Commission in its own data centre in Luxembourg.
- EU rules, notably the General Data Protection Regulation (GDPR) and the ePrivacy Directive, provide the strongest safeguards of trustworthiness (e.g. voluntary approach, data minimisation).
- The apps – as well as the gateway – are time-limited, that means they will only be in place as long as the pandemic persists.
- The European Data Protection Board was consulted on the draft guidance and issued a letter to welcome the Commission’s initiative to develop a pan-European and coordinated approach.
Will personal data be shared between Member States through the gateway?
The Commission developed with Member States a privacy preserving interoperability protocol. If an app from one Member State is to work in another Member State, some encrypted data will be shared with the server of that other Member State. All backend servers are under the control of the competent national authority. Each app must be fully compliant with the EU data protection and privacy rules, following the Commission’s guidance.
- App usage information
How will we know that tracing apps are working?
Member States are monitoring and evaluating the apps and their contribution to the fight against the pandemic. The Commission, with the European Centre for Disease Prevention and Control, is assisting Member States to identify a series of assessment criteria to evaluate the effectiveness of the apps. Some of those criteria could include, for example, the uptake of the app as a percentage of population and number of users notified of potential exposure.
Currently, download rates range from below 10% to above 40%, depending on the Member State. But even at low uptake, apps can make a difference, according to researchers – and each notification is a life potentially saved.
What are the minimum device requirements?
All coronavirus tracing and warning apps should be accessible to everybody. They can be used on the vast majority of devices with commonly used operating systems. The required update to the relevant operating system (iOS, Android) is usually carried out automatically on smartphones. The apps run on iOS smartphones from the iPhone 6s upwards using iOS 13.5, and on Android-based smartphones from Android 6 upwards. If the result of your COVID-19 test is verified via QR code, the camera on your phone must be functional.
What role do Apple and Google play?
Almost all, that is 99% of smartphones in the EU, run on iOS or Android mobile operating systems. In the context of the development of contact tracing and warning apps, Apple and Google provided a uniform standard for Bluetooth distance measurement. This was important so apps running on the two main operating systems would be able to register each other’s Bluetooth signal. Furthermore, the companies needed to ensure that the Bluetooth signal continues to operate passively in the background in battery-saving mode, even if the apps is not actively used. National apps based on a ‘decentralised’ architecture rely on this basic functionality – these are interoperable and can be linked to the gateway.
Commission approves 2022-2027 regional aid map for Greece
The European Commission has approved under EU State aid rules Greece’s map for granting regional aid from 1 January 2022 to 31 December 2027 within the framework of the revised Regional aid Guidelines (‘RAG’).
The revised RAG, adopted by the Commission on 19 April 2021 and entering into force on 1 January 2022, enable Member States to support the least favoured European regions in catching up and to reduce disparities in terms of economic well-being, income and unemployment – cohesion objectives that are at the heart of the Union. They also provide increased possibilities for Member States to support regions facing transition or structural challenges such as depopulation, to contribute fully to the green and digital transitions.
At the same time, the revised RAG maintain strong safeguards to prevent Member States from using public money to trigger the relocation of jobs from one EU Member State to another, which is essential for fair competition in the Single Market.
Greece’s regional map defines the Greek regions eligible for regional investment aid. The map also establishes the maximum aid intensities in the eligible regions. The aid intensity is the maximum amount of State aid that can be granted per beneficiary, expressed as a percentage of eligible investment costs.
Under the revised RAG, regions covering 82.34% of the population of Greece will be eligible for regional investment aid:
Twelve regions (Βόρειο Αιγαίο / Voreio Aigaio, Νότιο Αιγαίο / Notio Aigaio, Κρήτη / Kriti, Aνατολική Μακεδονία, Θράκη / Anatoliki Makedonia, Thraki, Κεντρική Μακεδονία / Kentriki Makedonia, Δυτική Μακεδονία / Dytiki Makedonia, Ήπειρος / Ipeiros, Θεσσαλία / Thessalia, Ιόνια Νησιά / Ionia Nisia, Δυτική Ελλάδα / Dytiki Elláda, Στερεά Ελλάδα / Sterea Elláda and Πελοπόννησος / Peloponnisos) are among the most disadvantaged regions in the EU, with a GDP per capita below 75% of EU average. These regions are eligible for aid under Article 107(3)(a) TFEU (so-called ‘a’ areas), with maximum aid intensities for large enterprises between 30% and 50%, depending on the GDP per capita of the respective ‘a’ area. The region Ευρυτανία / Evrytania, which is part of Στερεά Ελλάδα / Sterea Elláda, also qualifies as a sparsely populated area having fewer than 12,5 inhabitants per km². In sparsely populated areas, Member States can use operating aid schemes to prevent or reduce depopulation.
In order to address regional disparities, Greece has designated as so-called non-predefined ‘c’ areas the regions of Δυτικός Τομέας Αθηνών / Dytikos Tomeas Athinon, Ανατολική Αττική / Anatoliki Attiki, Δυτική Αττική / Dytiki Attiki and Πειραιάς, Νήσοι / Peiraias, Nisoi. The maximum aid intensities for large enterprises in Δυτικός Τομέας Αθηνών / Dytikos Tomeas Athinon is 15%. The other ‘c’ areas mentioned above border with ‘a’ areas. For this reason, the aid intensity in these regions has been increased to 25%, so that the difference in aid intensity with the bordering ‘a’ areas is limited to 15 percentage points.
Greece has the possibility to designate further so-called non-predefined ‘c’ areas (up to a maximum of 1.16% of the national population). The specific designation of these areas can take place in the future and would result in one or more amendments to the regional aid map approved today.
In all the above areas, the maximum aid intensities can be increased by 10 percentage points for investments made by medium-sized enterprises and by 20 percentage points for investments made by small enterprises, for their initial investments with eligible costs up to €50 million.
Once a future territorial Just Transition plan in the context of the Just Transition Fund Regulation will be in place, Greece has the possibility to notify the Commission an amendment to the regional aid map approved today, in order to apply a potential increase of the maximum aid intensity in the future Just Transition areas, as specified in the revised RAG for ‘a’ areas.
20 years of the euro in your pocket
Twenty years ago, on 1 January 2002, twelve EU countries changed their national currency banknotes and coins for the euro in the largest currency changeover in history. In these two decades, the euro has contributed to the stability, competitiveness and prosperity of European economies. Most importantly, it has improved the lives of citizens and made it easier to do business across Europe and beyond. With the euro in your pocket, saving, investing, travelling and doing business became much easier.
The euro is a symbol of EU integration and identity. Today, more than 340 million people use it across 19 EU countries, with 27.6 billion euro banknotes in circulation for a value of about €1.5 trillion. The euro is currently the second most widely used currency in the world behind the US dollar.
As it celebrates this 20th anniversary, the EU continues the work to strengthen the international role of the euro and adapt it to new challenges, including the rapid digitalisation of the economy and the development of virtual currencies. As a complement to cash, a digital euro would support a well-integrated payments sector and would offer greater choice to consumers and businesses.
Ursula von der Leyen, President of the European Commission, said: “It is now twenty years that we, European people, can carry Europe in our pockets. The euro is not just one of the most powerful currencies in the world. It is, first and foremost, a symbol of European unity. Euro banknotes have bridges on one side and a door on the other – because this is what the euro stands for. The euro is also the currency of the future, and in the coming years it will become a digital currency too. The euro also reflects our values. The world we want to live in. It is the global currency for sustainable investments. We can all be proud of that.”
David Sassoli, President of the European Parliament, said: “The euro is the embodiment of an ambitious political project to promote peace and integration within the European Union. But the euro is also a condition for protecting and relaunching the European economic, social, and political model in the face of the transformations of our time. The euro is a symbol, the coming to fruition of a historic political vision, an ancient vision of a united continent with a single currency for a single market.”
Charles Michel, President of the European Council, said: “The euro has come a long way — it’s a true European achievement. I would even say the euro has become part of who we are. And how we see ourselves as Europeans. Part of our mind-set. And part of our European spirit. The euro belongs to all of us all European citizens. But it isn’t just a success within our EU borders. It has also anchored itself on the international stage. Despite the crises, the euro has proven to be resilient — a symbol of European unity and stability. And never has that been truer than during COVID-19. The euro has served as a bedrock of stability. A stable asset for the Union. The euro also fuels our recovery. Unlocking the full potential of sustainable development, quality jobs, and innovation.”
Christine Lagarde, President of the European Central Bank, said: “The euros we hold in our hands have become a beacon of stability and solidity around the world. Hundreds of millions of Europeans trust it and transact with it every day. It is the second most international currency in the world. As European Central Bank President, I commit we will continue to work hard to make sure that we maintain price stability. And I also pledge that we will renew the face of those banknotes and that we will give them the digital dimension as well.”
Paschal Donohoe, President of the Eurogroup, said: “The euro has proven its mettle in dealing with great economic challenges. In particular, our response to the COVID 19 pandemic demonstrated that by sharing the euro we can achieve more collectively than we can individually. The euro has strengthened its foundations over the last 20 years. Now, we need to build on those foundations to make the euro the global currency for transitioning to a lower carbon future.”
A long journey
The euro has come a long way from the early discussions on an Economic and Monetary Union in the late 1960s. Specific steps towards a single currency were first approached in 1988 by the Delors Committee. In 1992, the Maastricht Treaty marked a decisive moment in the move towards the euro, as political leaders signed on the criteria that Member States had to meet to adopt the single currency. Two years later, the European Monetary Institute (EMI) started its preparatory work in Frankfurt for the European Central Bank (ECB) to assume its responsibility for monetary policy in the euro area. As a result, on 1 June 1998, the ECB became operational.
In 1999, the euro was launched in 11 Member States as an accounting currency on financial markets and used for electronic payments. It was finally on 1 January 2002 when Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain swapped their national notes and coins for euros. Slovenia joined the euro area in 2007, followed by Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015). Currently, Croatia is taking the preparatory steps to join the euro area, which it plans to do on 1 January 2023, provided it fulfils all the convergence criteria.
Twenty years of benefits for citizens and businesses
The euro has brought many benefits to Europe, especially to its citizens and businesses. The single currency has helped to keep prices stable and protected the euro area economies from exchange rate volatility. This has made it easier for European home buyers, businesses and governments to borrow money and has encouraged trade within Europe and beyond. The euro has also eliminated the need for currency exchange and has lowered the costs of transferring money, making travelling and moving to another country to work, study or retire simpler.
A large majority of Europeans support the single currency. According to the latest Eurobarometer, 78% of citizens across the euro area believe the euro is good for the EU.
A strengthened international role
The euro is the second most important currency in the international monetary system. Its stability and credibility has made it an international invoicing currency, a store of value and a reserve currency, accounting for around 20% of foreign exchange reserves. Sixty other countries and territories around the world, home to some 175 million people, have chosen to use the euro as their currency or to peg their own currency to it. Today, the euro is used for almost 40% of global cross-border payments and for more than half the EU’s exports.
Since the global financial crisis of 2008 and the subsequent sovereign debt crisis, the EU has continued to strengthen and deepen the Economic and Monetary Union. The EU’s unprecedented recovery plan NextGenerationEU will further improve the euro-area’s economic resilience and enhance economic convergence. The issuance of high-quality-denominated bonds under NextGenerationEU will add significant depth and liquidity to the EU’s capital markets and make them and the euro more attractive for investors. The euro is also now the leading currency for green investment: half of the world’s green bonds are denominated in euros, and this figure is rising thanks to the new green bonds issued to finance NextGenerationEU.
To further develop the international role of the euro, the Commission has launched outreach initiatives to promote euro denominated investments, facilitate the use of the euro as an invoicing and denomination currency, and foster a better understanding of the obstacles for its wider use. This outreach will take the form of dialogues, workshops and surveys with the public and private sector, financial regulatory agencies, and institutional investors in regional and global partner countries of the EU.
The Commission proposes the next generation of EU own resources
The Commission has today proposed to establish the next generation of own resources for the EU budget by putting forward three new sources of revenue: the first based on revenues from emissions trading (ETS), the second drawing on the resources generated by the proposed EU carbon border adjustment mechanism, and the third based on the share of residual profits from multinationals that will be re-allocated to EU Member States under the recent OECD/G20 agreement on a re-allocation of taxing rights (“Pillar One”). At cruising speed, in the years 2026-2030, these new sources of revenue are expected to generate on average a total of up to €17 billion annually for the EU budget.
The new own resources proposed today will help to repay the funds raised by the EU to finance the grant component of NextGenerationEU. The new own resources should also finance the Social Climate Fund. The latter is an essential element of the proposed new Emissions Trading System covering buildings and road transport, and will contribute to ensuring that the transition to a decarbonised economy will leave no one behind.
Johannes Hahn, Commissioner in charge of Budget and Administration, said: “With today’s package, we lay the foundations for the repayment of NextGenerationEU and provide essential support to the Fit for 55 package by putting in place the financing of the Social Climate Fund. With the set of new own resources, we, therefore, ensure that the next generation will truly benefit from NextGenerationEU.”
Today’s proposal builds on the Commission’s commitment undertaken as part of the political agreement on the 2021-2027 long-term budget and the NextGenerationEU recovery instrument. Once adopted, this package will strengthen the reform of the revenue system started in 2020 with the inclusion of the non-recycled plastic waste-based own resources.
EU emissions trading
The Fit for 55 package of July 2021 aims to reduce net greenhouse gas emissions in the EU by at least 55% by 2030, compared to 1990, to stay on track to reach climate neutrality by 2050. This package includes a revision of the EU Emissions Trading System. In future, emissions trading will also apply to the maritime sector, auctioning of aviation allowances will increase, and a new system for buildings and road transport will be established.
Under the current EU Emissions Trading System, most revenues from the auctioning of emission allowances are transferred to national budgets. Today, the Commission proposes that in future, 25% of the revenue from EU emissions trading flows into the EU budget. At cruising speed, revenues for the EU budget are estimated at around €12 billion per year on average over 2026-2030 (€9 billion on average between 2023-2030).
In addition to the repayment of NextGenerationEU funds, these new revenues would finance the Social Climate Fund, put forward by the Commission in July 2021. This Fund will ensure a socially fair transition and support vulnerable households, transport users and micro-enterprises to finance investments in energy efficiency, new heating and cooling systems and cleaner mobility, as well as, when appropriate, temporary direct income support. The total financial envelope of the Fund in principle corresponds to an amount equivalent to around 25% of the expected revenue from the new emissions trading system for buildings and road transport.
Carbon border adjustment mechanism
The objective of the carbon border adjustment mechanism, which the Commission also proposed in July 2021, is to reduce the risk of carbon leakage by encouraging producers in non-EU countries to green their production processes. It will put a carbon price on imports, corresponding to what would have been paid, had the goods been produced in the EU. This mechanism will apply to a targeted selection of sectors and is fully consistent with WTO rules.
The Commission proposes to allocate to the EU budget 75% of the revenues generated by this carbon border adjustment mechanism.Revenues for the EU budget are estimated at around €1 billion per year on average over 2026-2030 (€0.5 billion on average between 2023-2030).CBAM is not expected to generate revenue in the transitional period from 2023 to 2025.
Reform of the international corporate taxation framework
On 8 October 2021, more than 130 countries that are members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting agreed on a reform of the international tax framework: a two-pillar solution to tackle tax avoidance and aims at ensuring that profits are taxed where economic activity and value creation occur. The signatory countries representing more than 90% of global GDP. Pillar One of this agreement will reallocate the right to tax a share of so-called residual profits from the world’s largest multinational enterprises to participating countries worldwide. The Commission proposes an own resource equivalent to 15% of the share of the residual profits of in-scope companiesthat are reallocated to EU Member States.
The Commission has committed to propose a Directive in 2022, once the details of the OECD/G20 Inclusive Framework agreement on Pillar One are finalised, implementing the Pillar One agreement in line with the requirements of the Single Market. This process is complementary to the Pillar Two Directive for which the Commission adopted a separate proposal today. Pending the finalisation of the agreement, revenues for the EU budget could amount to roughly between €2.5 and €4 billion per year.
In order to incorporate these new own resources in the EU budget, the EU needs to amend two key pieces of legislation:
First, the Commission proposes to amend the Own Resources Decision to add the three proposed new resources to the existing ones.
Secondly, the Commission also puts forward a targeted amendment of the regulation on the current long-term EU budget 2021-2027, also known as the Multiannual Financial Framework (MFF Regulation). This amendment offers the legal possibility to start repaying the borrowing for NextGenerationEU already during the current MFF. At the same time, it proposes to increase the relevant MFF expenditure ceilings for the years 2025-2027 to accommodate the additional expenditure for the Social Climate Fund.
The Own Resources Decision needs to be approved unanimously in Council after consulting the European Parliament. The decision can enter into force once it is approved by all EU countries in line with their constitutional requirements. The MFF Regulation needs to be adopted unanimously by the Council after obtaining the consent of the European Parliament.
The European Commission will now work hand in hand with the European Parliament and the Council towards swift implementation of the package within the timelines set in the interinstitutional agreement.
Furthermore, the Commission will present a proposal for a second basket of new own resources by the end of 2023. This second package will build on the ‘Business in Europe: Framework for Income Taxation (BEFIT)’ proposal foreseen for 2023.
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