Week Ahead (6 November)

W/C Monday, 6 November – European Commission expected to unveil 12th package of sanctions

The European Commission is expected to present member states its 12th package of sanctions against Russia this week. In her address to the Ukrainian parliament last weekend, President von der Leyen confirmed the Commission’s plan to introduce new sanctions, adding that we should expect new ‘’tough measures’’ for third-country companies avoiding current sanctions, and the inclusion of 100 Russian individuals on the list of targeted sanctions.

On 23 June, EU member states reached an agreement on an 11th package of sanctions against Russia, targeting sanctions circumvention by countries such as Iran and China. This package also included the phase-out of exemptions allowing Germany and Poland to import Russian crude oil through the Druzhba pipeline. At a joint meeting with EU foreign ministers in Kyiv last month, Ukrainian President Volodymyr Zelenskyy expressed concerns over the prolonged pause in sanctions against Russia, asserting that such breaks contribute to the duration of Russian aggression. He particularly highlighted the inadequacy of existing sanctions, citing an increase in Russian drone and missile strikes.

Although the 11th package focused more on the enforcement of pre-existing sanctions, rather than the introduction of new measures, the next package could include export restrictions on welding machines, chemicals, and military-related technologies with potential ‘’dual-use’’ applications, and bans on the exports of certain software licenses to Russia. It could also entail import restrictions on specific materials, such as metals, aluminium products, and construction materials. Furthermore, a potential ban on Russian diamonds is also under consideration, albeit contingent on an agreement within the G7 to implement a system of tracking and tracing diamonds across borders. In previous sanctions packages, the trade of diamonds was not added to the luxury goods prohibition, due to Belgium’s strong opposition. These measures could amount to €5 billion in trade restrictions.

Tuesday, 7 November – Deadline for Meta to comply with ban on processing personal data for behavioral advertising

The European Data Protection Board (EDPB) has ordered Ireland, which serves as Meta's lead data protection authority, to take action against Meta for processing personal data for behavioral advertising. This ‘’urgent binding decision’’ involves banning Meta from processing personal data for targeted ads and comes in response to a request from Norwegian authorities. Meta has until tomorrow to comply with the ban. The ban was approved on 27 October by the EDPB and will extend temporary measures already in place in Norway to the entire European Economic Area (EEA).

As initially flagged in our 9 August report, Datatilsynet, Norway’s data protection authority, informed Meta that it would impose a daily 1 million Norwegian kroner (€89,500) penalty fine on the tech company for its failure to comply with a privacy order related to behavioural ads. This followed a ruling by the Court of Justice of the European Union in July that dismissed Meta's legal basis of "legitimate interest" to justify gathering users' personal data for targetd advertising. The ruling determined that Meta's existing advertising practices violated the General Data Protection Regulation (GDPR). The order of the Norwegian regulatory authority demanded that Meta cease displaying personalised ads to users in Norway based on their online behaviours and approximate locations without obtaining their consent. The Norwegians also issued a request to the EDPB to take final measures that would have effect in the entire EEA which the EDPB ultimately agreed to.

Thursday, 9 November – EU Court of Justice advocate general to issue opinion on Apple tax state aid case

On Thursday, the EU Court of Justice Advocate General Giovanni Pitruzzella will publish his opinion on the European Commission’s appeal in the Apple/Ireland state aid case. This appeal follows the EU's General Court ruling in 2020 that overturned the Commission's finding that Apple had underpaid €13.1 billion in tax owed to Ireland between 2003 and 2014.

In 2016, DG COMP concluded that Apple had concluded illegal deals with the Irish government to avoid taxation on profits from the sales of its technology products within the European Union. The amount owed in taxes over the last decade to the Irish state, DG COMP ruled in 2016, amounted to approximately €13.1 billion in back taxes. Both Apple and the Irish government appealed this decision and in July 2020, the General Court annulled the Commission's findings, stating that DG COMP had not demonstrated to the required legal standard that Apple enjoyed illegal state aid.

At the hearing in May 2023, the European Commission lawyer Paul-John Loewenthal told the Court that the case “is of the utmost importance for the future of fiscal state aid” and whether some EU governments “can continue to grant multinationals substantial tax breaks in return for jobs and investment”.

Ireland’s legal representative, Paul Gallagher, said that all Ireland could do “was apply its tax rate and it applied the full tax rate to the profits it was entitled to tax” arguing that the two units that were taxed in Ireland carried out “routine functions but not the critical functions” in developing Apple’s products. He said it would be astonishing if two companies in Cork performing these routine functions were responsible for earning all of Apple’s intellectual property profits worldwide outside the Americas.

Apple’s representative Daniel Beard argued that its profits were taxable in the US, as that’s where the value of its products is generated and that it is paying €20 billion in tax to the US on the same profits that the European Commission argues should be subject to back taxes of €13.1 billion in Ireland. It said its Irish tax structure used the possibility of deferring US tax on foreign earnings and did not aim to avoid taxation entirely.

The Advocate General ruling is not binding but the Court tends to follow their recommendations. A final ruling is expected in H1 2024.

Thursday, 9 November – CSO to publish consumer prices for the month of October

Ireland’s Consumer Price Index (CPI) data will be published on Thursday by the Central Statistics Office (CSO) revealing the latest trends in consumer pricing for October. The CPI for the month of September was 6.4%, up from 6.3% in August.

This week’s release of the CPI for the month of October will come a week after CSO published the flash estimate of the Harmonised Index of Consumer Prices (HICP), which showed annual inflation to have dropped by 3.6%, mainly due to a significant fall in energy. Energy prices are estimated to have decreased by 0.3% over the previous month, whereas transport costs increased by 1.2%. More importantly, energy prices are projected to be 4.2% down compared with October last year. Meanwhile, Eurostat’s flash estimate for the eurozone, released last week, demonstrated a sharp decline with inflation projected to be 2.9% in October, down from 4.3% in September, indicating a broader deflationary trend.

Friday, 10 November – Deadline for interested EU cities to submit their bids to host AMLA

On Friday, a deadline for interested cities to submit their bids to host the future EU anti-money laundering authority (AMLA) expires, following the launch of the long-awaited application process by the European Commission on 28 September. In June, the Parliament and Council reached an agreement on the criteria that European cities should meet to be considered as potential hosts for AMLA, including the concept of ‘’geographical balance’’, the accessibility of the location, and taking into account the needs of the families of AMLA staff.

However, a significant dispute exists between EU capitals and MEPs regarding the extent of the Parliament’s involvement in selecting the winning city. According to a Court of Justice of the EU decision last year, the competence of deciding its location lies with the Union’s legislator and not with the member states. However, in the past, member states have relied on behind-the-scenes dealmaking to decide on the location of EU agencies. This disagreement, coupled with a political deadline as the Parliament is set to dissolve ahead of the upcoming EU elections in June, has added urgency to the process.

Brussels, Dublin, Frankfurt, Luxembourg, Madrid, Paris, Riga, Rome, Vienna, and Vilnius are the 10 cities competing to host the agency. Baltic states Lithuania and Latvia have argued that their capitals would offer a geographically and politically balanced solution, countering the concentration of most financial agencies in cities like Paris and Frankfurt.