Berlin, Brussels Another escalation level could soon follow in the dispute between the EU Commission and Poland. Poland has been sentenced to fines by the European Court of Justice (ECJ), but it does not pay them.
The EU Commission has sent Poland three requests for payment. The last call was sent by the Commission on January 3rd with a 15-day deadline. So it ends on Tuesday next week.
If Poland does not pay by then, the EU Commission wants to withhold money that it would have otherwise paid to Poland, so offsetting the fine.
The penalties are the result of infringement proceedings against Poland because the government continues to operate the controversial Turow opencast mine on the border with the Czech Republic, although the Czech government claims that this will also lower the groundwater level on the Czech side.
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The ECJ had imposed a fine of 500,000 euros a day if Poland stuck to the company. More than 100 days have passed since then. Poland’s debts thus amount to more than 50 million euros.
Prime Minister Mateusz Morawiecki had announced that he expected a final judgment by May at the latest and that he would not pay any fines until then. His cabinet will decide at a later date whether we should pay any of the illegal sanctions imposed on us and whether we can find a suitable formula. Poland wants to continue to operate the opencast mine, because according to the government, this would generate seven percent of Polish electricity.
The ECJ imposed a further fine on account of the Polish disciplinary body, which allows the government of Poland to intervene in the judicial system. At the end of October, the ECJ imposed a fine of one million euros a day. Since then, debts of almost 80 million euros are likely to have accumulated.
“We will not allow ourselves to be blackmailed by the EU,” said Vice Justice Minister Sebastian Kaleta. The penalty payments due to the disciplinary body “violate Poland’s jurisdiction” and are “illegal”. A spokesman for the EU Commission said that the EU countries had always paid their fines in the past.
Poland opposes minimum tax rule
Another point of contention between Warsaw and Brussels is likely to develop into tax cuts, which Morawiecki announced on Tuesday. Among other things, sales tax will no longer be charged for six months on gas and fertilizers.
According to the EU Commission, this is not possible under EU rules. In order not to get caught in an undercutting competition, the EU states have agreed on minimum taxes. In December they jointly decided that certain taxes could be further reduced. A lower limit of five percent applies to gas and electricity.
We hear that Poland has turned to the Commission about a reduction in VAT on diesel and petrol. The Commission made it clear that the standard VAT rate must continue to apply there. In Poland this is 23 percent. Despite the rejection by the commission, the government has now announced that it will reduce it to eight percent.
Should Poland implement the tax cut, the EU Commission has only one infringement procedure that can ultimately end up before the ECJ, which has the option of ordering a fine.
Infringement proceedings are not uncommon in the EU. There are currently 92 proceedings pending against Poland and 71 against Germany. Some of them are brought up to the ECJ. It is rare that a state condemned by the highest European court does not comply with the judgment.
Dispute over 36 billion
The sums involved in fines are manageable for Poland. The dispute over the Corona reconstruction fund reaches completely different dimensions. It is supposed to help the EU countries to get out of the crisis. Poland is entitled to 36 billion euros over six years. This would finance 1.2 percent GDP growth.
Read more about the dispute between the EU and Poland here
Most EU countries have received an initial payment from the fund, but Poland has not. In order to get the money, the government has to agree on an investment plan with the EU Commission, in which it is set out in which projects the money flows and which goals are to be achieved with it.
A clause must also be observed that the money must be protected against embezzlement. The Commission can therefore rely on the fact that no money can flow into Poland because of the legal system that has been sidelined. That would hit the country much harder than the fines ordered by the ECJ.
However, Poland has come out of the crisis well so far. Morawiecki has already prepared his compatriots so that they can recover without help from the EU.
More: Suddenly powerful: How the EU Commission directs the countries with Corona billions