Vehicle tax: EU Commissioner Dombrovskis says there is scope to manage liquidity from PNRR projects

The recovery fund that financed the NRR ‘is a results-based rather than cost-based instrument, whereby countries have agreed on plans for investment and reform, and the Commission assesses whether the objectives for payments have been met: the requirements for payments may not be perfectly aligned with the flow of (actual) expenditure; there is some scope for managing liquidity’. This was how EU Commissioner for the Economy Valdis Dombrovskis responded to a question regarding the statements made by Minister Giancarlo Giorgetti regarding the fact that part of the financial cover for the measure to abolish motor vehicle tax came ‘from unused PNRR funds’, or rather from ‘savings that could not be reallocated’ as the deadline for doing so had passed. The minister had clarified that ‘these are savings from projects that have been completed and where funds remain unspent; therefore, this is national money, not funds from the NRRP or European funds’ and that this constitutes ‘normal funding, like all funding in the national budget’.

The EU Commissioner explained that the funds from the Recovery and Resilience Facility “are based on performance, not on costs. This means that Member States agree on Recovery and Resilience Plans setting out a series of investments and reforms, whilst our role is to assess whether these investments and reforms have actually been carried out – in other words, whether all the milestones and targets have been met – and, consequently, to disburse the payments. This may mean that the flow of payments might not be perfectly aligned with the flow of costs or the flow of expenditure in the Member State’.

“That is why I need to find out more,” remarked Valdis Dombrovskis, “from Minister Giorgetti’s statements. But there may well be some leeway in terms of cash management, because it is a performance-based tool, not a cost-based one.”

Dombrovskis went on to emphasise that the European Commission is prepared to consider ‘various options’ regarding the possible use of Russian sovereign assets frozen in the EU to facilitate an agreement between Member States, responding to a question on proposals that have returned to the centre of the debate, including that of placing the assets in a special European vehicle. “The European Commission has been very clear. We put forward a concrete legislative proposal as early as last year and we are now ready to support these discussions, including by exploring various options and facilitating the possibility of reaching decisions.’

“Frozen Russian assets were not part of our discussions during the Ecofin meeting,” Dombrovskis clarified. “In general terms, first of all we know that, as regards the support loan we have granted to Ukraine, Ukraine is only obliged to repay this loan if and when Russia pays reparations, which obviously raises the question: what happens if Russia does not pay reparations? And, in this case, in the regulation on support for Ukraine, we have explicitly reserved the Union’s right to use those Russian sovereign assets. So I would say that we will most likely have to return to these discussions in any case”, the Commissioner explained. “In the meantime, indeed, several EU Member States and also a fairly large number of Members of the European Parliament have, in a sense, reignited this debate.”