Report: EU to unveil plan to tap frozen Russian assets amid doubts

MOSCOW, Nov 30 (PRIME) -- The European Union is moving ahead with a proposal to tax profits from more than 200 billion euros, or U.S. $218 billion, of frozen Russian central bank assets to aid Ukraine’s reconstruction despite concerns from several member nations, Bloomberg reported on Thursday.

The European Commission tentatively plans to unveil its legislative proposed on December 12 to impose a windfall tax on profits generated by the frozen assets. The draft plan would clarify that several issues raised by member states still need to be addressed and that the E.U. proposal won’t interfere with national taxes or other measures, according to a person familiar with the discussions.

The issue has divided the 27-nation union, with Belgium, Germany, France, Italy and Luxembourg among those expressing caution about speeding up the process and calling for a more gradual approach. Instead, they told other E.U. ambassadors last week that the E.U.’s executive arm should begin with a more informal document to continue narrowing down different options on how to use the profits, because they considered it premature to put forward a legal proposal, said people familiar with the matter.

The commission, however, said that E.U. leaders had told the bloc’s executive to accelerate its work on a proposal, the people added.

A meeting between national experts and the commission on December 6 will be a key moment to determine whether the differences have been narrowed down enough, the people said.

The E.U. has been debating for months how swiftly to pursue the option to apply a windfall tax on the profits generated by the assets and tap the proceeds for Ukraine’s reconstruction. Estimates suggest that more than 200 billion euros of Russia’s sanctioned sovereign assets are in the E.U., with the majority at the Belgium-based Euroclear clearinghouse. Smaller amounts are located in other E.U. nations.

Sanctioned Russian assets frozen at Euroclear have generated nearly 3 billion euros in profits from the time they were frozen through the third quarter of this year, according to data published last month. That figure is expected to continue to rise.

Belgium has said it will invest 1.7 billion euros next year to assist Ukraine by drawing on its own domestic tax revenue from the frozen Russian assets.

European Commission President Ursula von der Leyen had originally promised an E.U.-level proposal by this summer, despite skepticism from many capitals and the European Central Bank. During a visit to Kyiv in October, she set a new end-of-year target.

Adoption of the plan on December 12 by the commission would allow E.U. leaders to consider it when they meet for a summit in Brussels later that week.

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