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Source: Government of the Netherlands

News item | 22-11-2021 | 16:50

The Committee is calling on the government to ensure greater transparency about conduit companies, subject them to greater supervision and oblige them to report on their activities more. These measures would make the Netherlands less attractive to shell companies and, from being an outlier, could bring the Netherlands into the mainstream as regards its position on conduit companies.

The sector can be made more transparent by making changes to the register of ultimate beneficial owners (UBO register), which identifies the person or organisation behind these companies. Currently, conduit companies need only draw up a limited annual report. If statutory reporting requirements were brought into line with those applicable to companies that do have active business operations, it would be less attractive to set up a shell company.

On the international stage, the Committee would like to see countries agreeing to end tax advantages like the participation exemption for empty entities and actively sharing information about conduit companies. To this end, the Committee is proposing the establishment of an international UBO register.

In 2019 there were some 12,400 conduit companies in the Netherlands holding total assets of around 4,500 billion euros, which is five and a half times the size of the Dutch economy. Tax is not levied on total assets, of course; only on incoming and outgoing payments. An average of 170 billion euros flowed through conduit companies annually between 2015 and 2019. The direct employment these companies generate is limited; estimated at three to four thousand jobs. The treasury received an estimated 650 million euros from conduit companies in 2019, which amounts to 0.2% of total tax revenues. 

The Committee believes that the term ‘conduit company’ as defined in existing legislation results in too narrow a conception of conduit arrangements that is at odds with the expectations of the House of Representatives, the government and the public at large. The relevant factors are whether a company has international structures, conducts transactions with related parties, has little if any real presence in the Netherlands, and has tax, financial or legal motives and/or substantial international money flows or balance sheet positions. The concurrence of a number of these elements would point to the existence of ‘conduit arrangements’ or a ‘conduit company’.

Source: Government of the Netherlands

News item | 21-09-2021 | 15:54

The main changes are set out below.

Working from home

Many employees and employers want to make agreements so that working partly from home can continue, even after the coronavirus crisis. That is why from 1 January 2022 it will be possible to provide a tax-free home working allowance of up to € 2 per day. This is based on a calculation by the National Institute for Family Finance Information (NIBUD) of the average extra costs per day worked from home, for coffee, heating, etc. 

Employers already had the option of providing a tax-free allowance for setting up a workspace at home. A tax-free travel-to-work allowance of up to € 0.19 per kilometre will also continue to exist, for days on which an employee goes to the office. The employee and employer can make agreements about the number of days per week on which the employee works from home, so that the employer can pay a fixed allowance. The amount does not need to be adjusted if work is occasionally done at the office on a home working day, or vice versa. 

Housing

Homeownership-related tax rules and transfer tax will be made fairer from 1 January 2022.

Three changes will be made to the tax rules on homeownership. Unintended effects of the legislation will be eliminated, for example in cases where someone who already owned a home buys a home with a partner. Or where someone owns a home with a partner and the partner dies. 

Since 1 January 2021, buyers under the age of 35 have not had to pay transfer tax when purchasing their first home. Buyers aged 35 or over who are going to live in the home themselves pay 2%, while buyers who are not going to live there pay 8%. Under a new government measure, buyers who decide not to proceed with the purchase due to unforeseen circumstances, after signing the purchase contract but before the transfer of ownership, will not automatically pay the 8% rate. 

Where housing associations and property developers sell homes to first-time buyers or people with a lower middle income at a substantial discount and later buy them back from those individuals, they will no longer pay transfer tax from 1 January 2022 (this year they have to pay 8%). As a result, these homes will remain affordable for subsequent private buyers.

Purchasing power

purchasing power developments are distributed more evenly. The employment tax credit will, however, be phased out a little more slowly. 

As of 2 August 2022, parents will get nine weeks of paid parental leave. To partly cover the costs, the maximum income-related combination tax credit will be reduced by € 318 per year from 2022.
 

Climate measures

Measures to encourage the sale of zero-emission cars (such as electric cars and hydrogen cars) will continue next year.  These cars are selling better than expected and this is good for the climate. At the same time, it is costing the government more money than was set out in the National Climate Agreement. Under the agreement, such measures would as a result be scaled back from 2022 onwards. Since climate targets still present a major challenge, the government will continue these measures in 2022. This means that, where employees make private use of company cars, the reduction in the percentage of the vehicle’s value that is added to their taxable income will remain in place until the end of 2025.  

However, the maximum vehicle value (or ‘cap’) to which the reduction applies will be lowered sooner than set out in the National Climate Agreement. This means that the maximum vehicle value subject to the 6% reduction applicable from 1 January 2022 will be € 35,000, falling to € 30,000 from 2023. The percentage of the remainder of the vehicle value that will be added to taxable income will be the standard 22%. This will make less expensive, zero-emission cars attractive for the business market. These cars will also be of interest to private individuals on the second-hand market after the lease period.

The environmental investment tax credit percentages will be increased to give businesses an extra incentive to invest in innovative, environmentally friendly business assets. This will allow them to deduct more costs from their taxable profit. From 1 January 2022, the percentages will be increased from 13.5%, 27% and 36% to 27%, 36% and 45% respectively.

Measures for startups

Employers sometimes offer employees stock options instead of a normal salary. Young startups, for example, often offer stock options if they want to attract talented employees but do not yet have enough money to pay a commensurate salary. 

Tax is payable on the stock options since they are a form of salary. Tax is currently levied if an employee converts the options into shares. This means that employees (and the employer) have to pay tax immediately whereas they cannot always afford this and are not yet always allowed to sell the shares. From 1 January 2022, tax will therefore normally be levied only once the shares can be traded and money becomes available. Employees can also choose to leave things as they are. 

Tax avoidance

Tackling tax avoidance is one of this government’s priorities. The Tax Plan includes a measure that targets the cause of ‘hybrid mismatches’. Hybrid mismatches enabled businesses to deduct a payment (e.g. interest) from their taxes in one country without it being taxed in the other country, or to deduct a single payment in multiple countries. This policy measure had already been introduced, but it is now being modified so that it better aligns with corporation tax, dividend tax and withholding tax. It will still take effect on 1 January 2022.

Aside from the Tax Plan, another bill that targets the cause of mismatches has been sent to the House of Representatives. Transactions within a group must be conducted in the same arm’s length manner as would be done by independent parties in similar circumstances. In other words, the arm’s length principle must always be adhered to. However, because different countries apply this principle differently or even not at all, differences (‘mismatches’) can arise in international situations that result in part of a group’s profit not being taxed anywhere – i.e. double non-taxation. 

Changes in corporation tax offsetting

From 1 January 2022, around 20,000 Dutch businesses will only be allowed to offset advance payments of dividend tax and tax on games of chance (withholding taxes) against payable corporation tax. If no corporation tax is owed in a particular year, the Tax Administration will no longer provide a refund in that year. The business can offset the withholding taxes in a later year against payable corporation tax. This does not have to be done in the very next year; withholding taxes that have not been offset can be carried forward indefinitely to later years. This proposal is based on a ruling by the EU Court of Justice.

Source: Government of the Netherlands

News item | 21-09-2021 | 15:15

The economy is recovering quickly from the COVID-19 crisis and GDP will already reach its pre-pandemic level this year. Substantial economic growth is also forecast for next year. Public finances have come out of the crisis in good shape, despite sizeable support packages. Although the public debt rose during the pandemic, it remains under control thanks to the buffers that had already been put in place. This favourable picture is attributable to the enormous resilience of businesses, employees and society in general. The government’s substantial support packages have fulfilled their purpose: retaining jobs and minimising unnecessary bankruptcies. Nevertheless, the pandemic has had a huge impact on people’s lives in the Netherlands, especially on those who were ill, lost close friends or family members, or lost their livelihoods.

Key figures

Expected GDP growth is 3.9% in 2021 and 3.5% in 2022. According to estimates, the average rate of unemployment will be 3.4% this year, rising very slightly to 3.5% in 2022. Low unemployment is good news but also presents a challenge: businesses are finding it more difficult to recruit good staff. The national debt is estimated to be 57.7% in 2022, therefore remaining below the European Union limit of 60% of GDP. The budget deficit will also fall. While the government balance will be -6% this year, it is projected to stand at -2.4% in 2022.

Policy measures for 2022

Climate

If we are to curb climate change, more rapid action is needed. The longer we wait, the more costly the solutions will be. In this year’s Budget Memorandum, the government therefore sets out additional steps to reduce greenhouse gas emissions. In total, the government will invest an additional sum of over €6.8 billion in climate measures on top of existing spending on climate policy. Part of this investment is necessary to carry out the National Climate Agreement. The remainder of this package is directed at the further implementation of the Urgenda judgment. The government is aware that further climate policy measures are needed in the coming years to achieve the climate objectives. The action the government is now taking, in the light of its caretaker status, will contribute to this end.

Security and safety

Nor can we afford to delay in investing in security and safety, in view of the dislocating effect of crime that undermines society. From next year, €400 million will be provided annually to combat crime of this kind. In addition, extra funding will be allocated from 2022 onwards to enhance protection and security. The government will also increase the payments received by legal-aid lawyers in order to safeguard access to and the availability of legal representation. Also, the government will invest in the training of military personnel and the availability of sufficient munitions.

Extra money for building homes

From 2022, the government will make available €100 million a year over 10 years in order to increase the supply of homes in this period.

Tax cuts

The government will cut taxes and social insurance contributions by €226 million on a structural basis to boost the purchasing power of people on low incomes, sole earners and families. In addition, the government will reduce the landlord levy by €30 million a year from 2022.

The caretaker government is therefore addressing the most pressing issues for 2022. However, looking further ahead, structural problems remain in the fields of education, healthcare, benefits and the labour market. It is up to an incoming government to determine how to tackle them.

Source: Government of the Netherlands

News item | 22-04-2022 | 09:41

By promoting energy efficiency, speeding up the energy transition and increased energy imports from other countries, the Netherlands aims to save and replace in full the share of its energy needs that is met by Russian gas by the end of the year. In keeping with the rest of the European Union, the Netherlands will stop importing coal from Russia by 11 August 2022 at the latest. Over the coming weeks the government will seek to reach agreements with other countries in order to end the dependence on Russian oil as quickly as possible, while maintaining sufficient security of supply.

The government is also taking action to guarantee that gas storage facilities will be sufficiently filled by next winter, by introducing a guarantee scheme to mitigate the risks of high gas prices and having the Dutch state-owned company Energie Beheer Nederland (EBN) partially fill the gas storage facilities.

Phasing out fossil fuels

It is estimated that Dutch gas consumption can be reduced by around 9 billion cubic metres by 2025 by means of sustainability measures. This is more than the volume of gas imported from Russia (around 6 billion cubic metres). Expanding the LNG (liquefied natural gas) terminal in Rotterdam and installing a floating LNG terminal in the port of Eemshaven will enable the Netherlands to import an extra 8 billion cubic metres of LNG by the end of the year. This is dependent on the availability of sufficient LNG on the global market. Because the gas market is international, European agreements are needed to phase out Russian gas completely.

The European Union agreed as part of its fifth sanctions package that coal from Russia would no longer be bought in Europe after 11 August 2022. The government also wants to stop importing oil from Russia as soon as possible. The Netherlands has therefore requested the European Commission to do an analysis how Europe can wind down its purchases of Russian oil while maintaining sufficient security of supply.

Filling gas storage facilities

It is important that gas storage facilities are sufficiently filled in preparation for next winter, but this is currently not attractive for companies due to high gas prices and the associated risks of losses. The government is therefore setting up a guarantee scheme to encourage companies to do so. Under the scheme, it will reimburse the difference between current gas prices and gas prices next winter. In this way the government will assume part of the price risk. In addition, the government is instructing EBN to fill the Bergermeer gas storage facility up to 70% of its capacity, in so far as other companies do not do so despite the guarantee scheme. The estimated total cost of the measure is €623 million, depending on gas prices. It will be recovered, by means of an extra levy, from gas consumers who profit from the filling of the gas storage facilities.

Source: Government of the Netherlands

News item | 14-04-2022 | 15:15

The committee advised the government to allocate €5 billion from the National Growth Fund, with a proportion of this allocation (€3.7 billion) to be made subject to certain conditions. Extra steps are still required before a final decision is made on the additional €1.3 billion that has been reserved. The government has therefore allocated (in part conditionally) and reserved a total of €6.3 billion. On average, 50% of the investment in the projects will come from the fund, with the remaining 50% being provided by various other public and private sector parties. Today’s announcement means that total investment in this funding round could exceed €12 billion in the coming years.

‘Our current level of prosperity and public spending would not have been possible without past investments,’ noted Ms Adriaansens. ‘I want us to be able to continue investing in society in the future too. But to pay for that we need economic growth. The National Growth Fund makes that sustainable growth possible: tomorrow’s prosperity begins today.’

Speaking about the projects to be funded, Mr Dijsselbloem said ‘We have a nice varied package of proposals. Both big, bold projects like the Einstein Telescope and smaller – but high-impact – ventures like CROP-XR to foster the rapid and efficient development of climate-resistant crops. It is also essential, in the committee’s view, to invest in the quality of education and lifelong learning. Because we need more skilled professionals to ensure that projects are carried out. The investments will therefore be mutually reinforcing.’

National Growth Fund

The National Growth Fund was launched in 2020 to bring about a sustainable increase in the earning power of the Netherlands. The Fund invests together with initiators in projects that generate sustainable economic growth in the long term. Economic growth provides scope to continue investing in, for example, healthcare, education and climate action. Growth also means the country earns more, so that we can maintain our standard of living in the future.

The National Growth Fund was initially allocated €20 billion for investment in three areas: knowledge development; infrastructure; and research, development and innovation. Infrastructure was dropped from this list under the terms of the coalition agreement. But this does not apply to the current, second round of funding which was already under way at the time when the coalition agreement was reached. In the first round, the amount allocated (including conditional allocations) and reserved by the government for various projects totalled €4.1 billion. The first projects are now under way.

In collaboration with public and private parties, various government ministries submitted investment proposals to the National Growth Fund for the second round of funding. In the next round of funding – the third – the government wants to enable businesses, knowledge and educational institutions, public authorities, civil society organisations and other parties to submit their investment proposals directly to the National Growth Fund by means of a grant scheme. In March 2022 the House of Representatives approved the legislation that provides the basis for setting up the necessary grant scheme. The legislation is now awaiting the approval of the Senate.

Source: Government of the Netherlands

News item | 21-03-2022 | 19:38

Increase in one-off energy allowance for people on low incomes

At the end of 2021, the previous government announced it would set aside € 3.2 billion to reduce energy tax. It also presented plans for a one-off energy allowance of around € 200 per household to mitigate the impact of higher energy costs on people on incomes around the level of social assistance benefit. Older people on low incomes will also be eligible for the allowance. This one-off payment will now be raised to € 800 per eligible household. The government and municipalities will get this money to the people concerned as soon as they can. 

Reduction in VAT on energy and excise duty on petrol and diesel

The government plans to cut the rate of VAT on energy (natural gas, electricity and district heating) from 21% to 9% for six months from 1 July this year. This measure will bring down energy bills for households with average consumption by around € 140 over the period. The government also proposes reducing excise duty on petrol and diesel by 21%, from 1 April 2022 until the end of the year. This will lower the price of petrol by 17.3 cents per litre and that of diesel by 11.1 cents per litre.

More money for households to take energy-saving measures

At the end of last year, the previous government decided to earmark € 150 million to help households make their homes more sustainable. An additional € 150 million is now being provided to take extra energy-saving measures. Money is also being set aside for a campaign to raise people’s awareness of the different ways they can save energy.

Caribbean part of the Netherlands

€ 5 million is being made available to mitigate the impact of rising energy prices in the Caribbean part of the Netherlands. Detailed plans will be announced as soon as possible.

Covering the costs

The temporary package of measures will affect the budget. This additional package will cost a total of € 2.8 billion. The government considers it crucial that this cost is covered properly, to avoid passing on the bill to future generations. The government will fund the package in part from extra gas revenue. It will also use remaining funds from the Brexit Adjustment Reserve (BAR). A maximum of € 364 million in BAR funds is available.

Source: Government of the Netherlands

News item | 17-02-2022 | 06:00

The 423 projects are expected to create nearly 13,400 direct jobs and an investment value of EUR 2.3 billion in the first three years. In 2020, the number was substantially lower as COVID-19 led to foreign companies postponing or changing investment decisions.

A growing number of these companies strengthen regional ecosystems and actively contribute to the Netherlands’ social and economic goals, relating to innovation, digitalization and sustainability.

Micky Adriaansens, Minister of Economic Affairs and Climate Policy, and responsible for NFIA, emphasizes the importance of foreign businesses for the Netherlands: “Businesses and entrepreneurs are indispensable to the Netherlands. Foreign companies also make an important contribution to our economy. For example, they account for 30% of the total private expenditure on research and development in the Netherlands. Commissioned by the cabinet, NFIA has since 2020 been focusing more on attracting high-quality business activities related to innovation, digitalization and sustainability. I am pleased that the annual figures are showing the first results of this focus.”

Hilde van der Meer, NFIA Commissioner and Chairman of the Invest in Holland network: “The Netherlands is committed to finding sustainable, innovative and digital solutions to global challenges. That is why Invest in Holland is keen to welcome and assist foreign companies that contribute to this goal and strengthen our international ecosystems. Our country offers an excellent business climate for scaling up solutions with impact for the European and global market.”

Investing in the future together

Since 2020, NFIA and the Invest in Holland network have proactively focused on attracting companies that accelerate sustainability, provide new digital applications or enable future innovations. In 2021, there were already several examples of this new focus.

American company Bristol Myers Squibb (BMS) started the construction of its first European CAR T-cell therapy facility in Leiden in 2021. In this manufacturing center, BMS develops personalized therapies for patients with blood cancer, and contributes to the growth of the Netherlands’ leading role in the field of CAR T-cell therapy.

The Scottish company ENOUGH started building a factory that produces alternative proteins in 2021. The factory in Sas van Gent produces circular raw materials from residual products that come from the nearby Cargill facility. ENOUGH also leads a European research consortium into alternative proteins, in which Wageningen University & Research participates as well.

U.S. and India based Quantiphi announced last year that it was opening a new service delivery center in Amsterdam. From this strategic European location, Quantiphi helps to streamline healthcare, education and public sector processes through AI, cloud and data solutions. The company aims to grow its presence in the Netherlands, including further developing their R&D together with Dutch engineers.

Increasing share of companies from Europe

Of the 423 foreign companies that chose the Netherlands in 2021, a third came from Europe (32%), a third from North and South America (30%), and a third from Asia (30%). The share of European companies was larger in 2021 than in previous years.

This growth is largely due to an increased number of companies impacted by Brexit that decided to establish presence in the Netherlands last year. Since the referendum in 2016, 316 Brexit companies (companies that have experienced disruption due to Brexit) have chosen the Netherlands. The activities of these companies in the Netherlands are expected to generate almost 8,000 jobs and EUR 782 million in investments in the first three years.

Source: Government of the Netherlands

News item | 14-12-2021 | 19:15

The government is therefore prolonging the measures introduced on 28 November, until at least Friday 14 January 2022. Primary schools, schools for special (primary) education, and out-of-school care facilities (BSO) will also be closed in the week before Christmas. BSO will be open during the regular Christmas break. Primary schools will reopen again on Monday 10 January 2022.

The situation will be reviewed on 14 January, or possibly at an earlier date if the Outbreak Management Team gains important new insights into the Omicron variant.

Measures and urgent advice

• Everyone should stay at home as much as possible, and limit their number of contacts outside the home.
• Always stay 1.5 metres away from other people.
• Be careful when receiving visitors and visiting others:
  • Receive no more than 4 visitors per day (not including children under 13) and limit visits to one a day.
  • Do a self-test before visiting others or receiving visitors.
  • People aged 70 years and over are advised to limit their contacts as much as possible, including with children under 13, and to observe 1.5 metre distancing.
• Face masks are required for everyone aged 13 and over on public transport and on platforms, at bus stops and stations, and when moving around schools or public indoor spaces such as shops, museums, restaurants and bars.
• Coronavirus entry passes are mandatory for everyone aged 13 and over at all locations where people are assigned seats, such as restaurants and bars, theatres, concert halls, museums and cinemas, and in indoor sports venues. At all these locations, people must stay 1.5 metres apart.
• Between 17.00 and 05.00 most locations must be closed and events are not permitted.
  • Essential shops, such as supermarkets and chemists, can stay open until 20.00.
  • Specific service providers, such as notaries, lawyers, mortgage advisors and medical health professionals, can be open for their normal opening hours.
• Amateur sports matches and training are not permitted between 17.00 and 05.00. Professional sports matches and training and professional artistic and cultural activities are permitted, even after 17.00. No spectators or audiences.
• At locations where there is a continuous flow of visitors, capacity is limited to 1 person per 5 square metres.
• In higher education the maximum group size is 75 people per room. In theatres and auditoriums up to 1,250 people are allowed at once.
• Work at home. If this is impossible: stay 1.5 metres apart at work.

Check the overview of basic rules, measures, conditions and exceptions.

Primary education

Primary schools and schools for special (primary) education will close the week before the Christmas holiday (in Dutch only). Out-of-school care facilities will also be closed during this week. Schools will be open to provide emergency care for vulnerable children and the children of key workers in crucial sectors (in Dutch only). Schools are not required to provide distance learning during this week.

Booster offensive accelerated for all adults

Because of the Omicron variant everyone aged 18 and over will be invited to receive a booster vaccination by the second half of January. This can help increase protection against the new variant and combat its spread. The booster vaccination schedule is based on age, from oldest to youngest. People will now be able to get the vaccine booster 3 months, instead of 6 months, after their last vaccination or most recent positive test. A total of 8.5 million adults are eligible for a booster. Before the end of the year nearly all people over 60 will have been invited to get their booster vaccination.

Financial support

The government is extending the support package (in Dutch only) for businesses, self-employed people, cultural organisations (in Dutch only) and sports organisations affected by these measures until the end of March 2022. A total of €4.4 billion has been set aside for this purpose.

Support for the events industry is being extended until the end of the third quarter. Events that are prohibited by the government during this period are eligible for support, although organisers will be liable for a greater share of the risk.

Source: Government of the Netherlands

News item | 26-11-2021 | 19:11

Measures and urgent advice

• Everyone should stay at home as much as possible.
• Between 17.00 and 05.00 locations must be closed and events are not permitted.
• Everyone aged 18 and over must stay 1.5 metres away from others.
• Essential shops, such as supermarkets and chemists, can stay open until 20.00. 
• Essential service providers, such as notaries, lawyers, mortgage advisors and medical health professionals, can be open for their normal opening hours.
• Amateur sports matches and training are not permitted between 17.00 and 05.00. Professional sports matches and training and professional artistic and cultural activities are permitted, even after 17.00. No spectators or audiences.
• Face masks while moving around and 1.5-metre distancing are required at all locations where people have assigned seats, such as restaurants, bars, cinemas and theatres. This means fewer people can be admitted to these locations.
• 1.5-metre distancing and face masks will be required at all locations with a continuous flow of visitors, such as trade fairs. This means fewer people can be admitted to these locations. 
• The rules for working from home have been tightened: ‘Work from home. If this is impossible: stay 1.5 metres apart at work.’
• Do a self-test before visiting others or receiving visitors.
• Take extra care in situations where people aged 70 and over come into contact with children aged 12 and under.

A complete overview of measures, conditions and exceptions can be found at government.nl/coronavirus.

The rules and advice already in place continue to apply. This includes the basic rules, the advice to receive no more than 4 visitors per day, face mask requirements, the ban on spectators at sports events, the maximum number of 1,250 people at large venues, and the coronavirus entry pass rules and assigned seating requirement in the hospitality and cultural sectors. 

Education

Schools will remain open. However, extra rules and arrangements are necessary to prevent the spread of the virus (in Dutch only) as much as possible. These include fixed routes in schools, a face mask requirement in hallways for pupils in primary years 6 to 8 and at secondary schools, as well as regular self-testing. Children aged 12 and under with cold symptoms – such as a runny nose – must stay at home and get tested by the municipal health service (GGD), even if their symptoms are mild. 

Financial support

The government realises that these stricter measures will have a significant impact on businesses and workers, and is therefore significantly expanding the support package (in Dutch only). The Temporary Emergency Scheme for Job Retention (NOW) will be reintroduced and the fixed costs grant will be raised. This expansion of the support package will total almost €2.2 billion.

Booster offensive

As many older people as possible will receive a vaccine booster before the end of 2021. The GGDs, the National Institute for Public Health and the Environment (RIVM) and other parties are launching a booster offensive to this end (in Dutch only). Assistance will be provided by 750 Ministry of Defence personnel and by students. The rollout of vaccine boosters for older people who cannot travel to a vaccination location,  originally scheduled to begin in January 2022, has been brought forward and will start next week.

Source: Government of the Netherlands

News item | 11-11-2021 | 11:00

Geopolitical developments drive the EU to think in lines of open strategic autonomy. This means identifying our strengths and weaknesses such as a lack of commodities or unfair competition in the Single Market based on subsidies from non-EU countries. It requires us to decide where we need to uphold and where we need to target our efforts and spearhead innovation and technology at the global stage. This ensures our safety and prosperity against those operators that do not play the game according to a rules-based multilateral order. Not only on the short term but rather for the longer term.  

But we can only do this, by not forgetting that the cornerstone of our economic success is the EU’s Single Market. Fair and open competition ensures a level playing field in a home market of hundreds of millions of consumers. It provides ample opportunities for businesses big and small to grow far beyond EU borders. It has and will provide for the jobs and wellbeing of our European citizens and its future generations. The strength of that Single Market is our key leverage in a geopoliticised world.

In a few weeks’ time, the Commission is expected to publish a review of the EU’s competition toolbox in light of efforts to boost Europe’s economic recovery and tackling the challenges described above. Ensuring that our existing rulebook is fit for new challenges is very important. We need to adapt to enable structural changes such as digitalisation and fighting climate change. However, when modernising the rules, we must not jeopardise the effectiveness and politically independent character of our competition and state aid framework. Relaxation of our rules, as some suggest, is not the right way to tackle new challenges. It could easily lead to negative effects on competition, markets and growth on the Single Market as well as a harmful subsidy race that benefits few and hurts many. It will not strengthen the global competitiveness of European companies and will harm our level playing field at home.

So how should the European Commission protect the level playing field and strengthen the Single Market?
 

• First, it should preserve evidence-based and independent enforcement of the competition rules and maintain the strong competition framework on mergers and antitrust. To ensure high quality products and choice at the best possible price, the fundamental principles on which competition rules rest must be upheld. Relaxing the competition framework on mergers and anti-trust is not the solution to deal with global developments or strengthen the EU’s competitiveness and resilience. The Commission has put forward targeted solutions to ensure that the competition toolbox is fit for new challenges. We should await the full effect of these efforts before proceeding with new initiatives.
   
• Second, it should ensure that the so-called Important Projects of Common European Interest (IPCEI) target clear market failures and address a restrictive number of strategic objectives and challenges of the Union. IPCEI is an instrument that, in a smart and selective manner, enables member states to provide state aid for projects of broad European importance. It is a justified instrument which we support and participate in, but it also poses risks for the level playing field in the EU. Excessive and non-targeted use of the instrument would lead to subsidy races and unfair competition within the EU. That is why, IPCEIs should be used proportionately, carried out in a fully open and transparent manner, target clear market failures, involve support for neither mass production nor commercial activities, and result from clear and balanced EU long-term strategies. We, therefore, support a larger role for the Commission to streamline the IPCEI processes and to ensure the projects benefit the whole of the EU.
   
• Finally, the Commission should formulate the conditions for an exit path from the Temporary State Aid Framework for Covid-19. The Temporary Framework has proved useful to allow support for our economies during the unprecedented coronavirus pandemic – also now with increasing infection rates that require restrictive measures. But once large parts of Europe will return to ‘normal’ life, restrictions will no longer be necessary and our economies will recover from the pandemic, an exit strategy from the temporary framework needs to be in place.

Maintaining a robust competition and state aid framework matters to ensure a level playing field on the Single Market. If we as the EU preach a global level playing field, we should lead by example and set the stage with suitable policies. If we do so, we have the best chance of strengthening our competitiveness, realising sustainable growth through innovation and aspiring to prosperity for all EU citizens. 

By Denmark’s Minister for Industry, Business and Financial Affairs Simon Kollerup, Dutch Minister of Economic Affairs and Climate Policy Stef Blok, Finnish Minister of Employment Tuula Haatainen, Irish Tánaiste and Minster for Enterprise, Trade and Employment Leo Varadkar, Romania’s Chairman of the Competition Authority Bogdan Chiritoiu, and Swedish Minister for Business, Industry and Innovation Ibrahim Baylan.