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On 20/07/2020, the European Council adopted an opinion on the EU's Multiannual Financial Framework (including the budget for the EU recovery plan) totalling €1.82 trillion. The Council proposes to introduce a tax on non-recycled plastic packaging of €0.80 per kilogram as part of its own new resources, which should be introduced as early as January 2021. The European Commission estimates that the introduction of the tax could contribute €6.6 million per year to the European budget. The decision whether to levy the tax on industry or on consumers should be taken at Member State level. The biggest taxes should be paid by France, Germany, and Italy. The funds raised through taxes should be used to cover part of the cost of the EU's recovery plan, which was approved by the Council at €750 billion. The proposal to introduce a tax must be approved by the European Parliament (the plenary vote should take place in mid-September 2020) and must then be ratified by all EU Member States.

On 30/07/2020, the Council of the European Union approved new rules on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages. The new rules will ensure that small and artisan alcohol producers have access to a new EU-wide certification system confirming their access to lower excise duty rates across the Union. The rules will also allow the use of reduced tax rates for beer with a lower alcohol content, the maximum alcohol limit will be increased to 3.5% (the current limit was 2.8%). The new rules will enter into force on January 2022.
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Poland planned to implement the increased alcohol tax from July 2020, but eventually decided to postpone the date due to the ongoing pandemic crisis and the presidential election. Taxes of €0.22 per 300 ml bottle of alcoholic beverages (to be sold by vendors offering the drinks for sale, not beverage producers) will be introduced from January 2021. Latvia also plans to reduce the consumption of alcoholic beverages, which should significantly reduce advertising for alcoholic beverages from 2022.
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The European Council of EU Member States reached an agreement on 21/07/2020 on the Multiannual Financial Framework (MFF) after 2021. The Council agreed on a budget for both the MFF and the EU's recovery plan.

The new MFF will amount to €1.074.3 trillion, the recovery plan will reach the proposed €750 billion. However, due to the reluctance of Denmark, Austria, the Netherlands, Sweden and Finland to allocate too much financial support to direct grants, the funding ratio has been adjusted - €390 billion will be allocated to direct grants, €360 billion to loans (at 2018 prices).

As regards the MFF, the total budget for the Common Agricultural Policy should be €356 374 million (in 2018 prices), amounting to €400 966 million in current prices.

Direct payments under the CAP will not exceed €239 916 million. Together with market measures, the first pillar of the CAP will therefore amount to a maximum of €258 259 million (in 2018 prices), with current prices now amounting to €291 091 million. A total of 40% of the CAP budget should be allocated to climate actions.

For external convergence, the European Council has decided that all Member States with direct payments below 90% of the EU average will receive at least a 50% difference from this average. From 2022, all Member States should receive at least €200 / ha, and from 2027 at least €215 / ha.

The European Council further decided that the capping of direct payments to large beneficiaries may be introduced by Member States on a voluntary basis, at a level of €100,000, and may only apply to basic income support for sustainability. If capping is introduced, Member States may deduct all employment-related costs from the amount of basic income support for sustainability.

For the crisis agricultural reserve, the European Council states that it should amount to €450 million in current prices each year for the period 2021-2027. Unused funds from 2020 should be carried over to 2021.

Regarding the transfer between the pillars, the European Council has decided that Member States may transfer up to 25% of the envelope for the second pillar in the envelope for the first pillar of the CAP. For countries, whose direct payments are less than 90% of the EU average, up to 30% can be moved instead of 25%. In the opposite direction, i.e. from the first to the second pillar, 25% of the funds are also allowed to be transferred, in the case of targeting climate action and young farmers, an additional 15% + 2%.

Co-financing for Areas with Natural Constraints (ANC) should be allowed at 65%, for other areas at 43%. Minimum co-financing rate in the second pillar should be 20%, a higher co-financing rate of 80% should apply to environmental, climate and other measures, including non-productive investments. In the case of an additional transfer of funds to the second pillar, it will be possible to co-finance them at 100%.

On the revenue side, the European Council decided on a new EU own resource and supported the introduction of a tax on waste from non-recycled plastic packaging, the tax should be introduced from 01/01/2021 at €0.80 per kilogram.

The agreement reached in the European Council will now be followed by negotiations in the Agriculture and Fisheries Council, which should address other still controversial points, including, for example, allocations for voluntary coupled support (VCS). The Agriculture and Fisheries Council should reach its opinion on the CAP according to the German Presidency's plan by October 2020, considering the European Council's views on external convergence, capping and transfers between pillars. The European Parliament's opinion on the CAP should also be adopted during October / November 2020, according to the current rapporteur's plan. If this happens, the trialogues of the European Parliament, the Council and the Commission could start later this year.

As part of the EU recovery plan, the European Commission proposed on 27/05/2020 to provide for Rural Development under the second pillar an additional €15 billion, but the European Council has now reduced these funds to €7.5 billion. It will be possible to make financial commitments under the recovery plan until 31/12/2023, they can be repaid until 31/12/2026.

More information is available here.

At its extraordinary plenary session on 23/07/2020, the European Parliament adopted a resolution on the conclusions of the extraordinary European Council of 17-21/07 2020. In the Resolution, Parliament welcomed the fact that the EU Heads of State and Governments had approved a recovery fund (EU recovery plan, a total of €750 billion) to kick-start the economy. However, in the resolution, Parliament further stated that it did not accept a political agreement on the Multiannual Financial Framework for 2021-2027 in its current form, stating that it was immediately willing to engage in constructive negotiations with the Council with a view to improving the proposal. Parliament recalls that under the TFEU, Parliament must give its consent to the MFF agreement. Parliament further states that it will not give its consent to the MFF unless an agreement is reached on reforming the EU's own resources system, including the introduction of a new own resources package by the end of the 2021-2027 MFF, which should seek at least to cover the costs of the EU recovery plan. According to Parliament, the MFF should be revised by mid-2024 at the latest.
More information is available here.