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The European Commission (EC) is advancing the VAT in the Digital Age (ViDA) package to modernise the EU VAT system, reduce business burdens, curb fraud, and tackle VAT challenges related to the platform economy (need a refresher on ViDA? Check out our factsheet).
The ViDA package was formally adopted in March 2025 and will be phased in gradually through 2035 with the following steps:
The EC has published additional timeline documentation, especially for 2026 and early 2027, including upcoming legislative initiatives and stakeholder consultations.
The EC intends to propose, on 24 June, a wide‑ranging Tax Omnibus Directive to simplify and modernise the EU’s direct tax framework, reduce compliance burdens, and support competitiveness. The initiative amends six key Directives, including the Interest & Royalties Directive (IRD), Parent‑Subsidiary Directive (PSD), Anti‑Tax Avoidance Directive (ATAD), Tax Merger Directive (TMD), Dispute Resolution Mechanism (DRM), and FASTER. It will be accompanied by a proposal consolidating and simplifying the Directive on administrative cooperation for taxation (DAC).
Accountancy Europe obtained a draft tax omnibus, proposing simpler withholding tax relief, with no minimum shareholding thresholds, and exemptions for intra‑EU interest, royalty and dividend payments, with taxpayers self‑assessing eligibility.
The ATAD is substantially reshaped: a mandatory €5m safe harbour, exclusion of low‑risk third‑party loans, a procyclicality safeguard, and streamlined CFC rules, including SME exemptions and a carve‑out for Pillar Two groups. Importantly, the package introduces a new harmonised rule allowing immediate expensing of tangible R&D assets, addressing fragmentation in national regimes and supporting innovation investment.
The TMD is aligned with the Mobility Directive, extending tax neutrality to simplified mergers, divisions by separation, and cross‑border conversions, while the DRM is clarified to improve access and procedural certainty.
Because the document is only a draft, the final version on 24 June may differ significantly.
The June infringements package asks Germany to end discriminatory conditions of an investment deduction allowance for SMEs investing abroad.
Moreover, the EC also calls on Poland to eliminate a violation of the DAC regarding reporting rules for foreign digital platform operators, and asks Spain to eliminate discrimination of non-residents regarding tax reductions for income from letting dwellings.
The European Parliament’s (EP) FISC Committee held a hearing on 2 June to assess the VAT reverse charge mechanism (RCM) in fighting VAT fraud, with Accountancy Europe’s Christine Weinzierl among the speakers.
The discussion focused on the implementation of the RCM under Articles 199a and 199b of the VAT Directive, currently in place until 31 December 2026. It examined its effectiveness in preventing VAT fraud, potential design improvements, and whether it should be extended beyond its current expiry, as well as broader implications for the EU VAT framework and efforts to strengthen compliance and combat cross-border fraud.
While reverse charge mechanisms may serve as a useful interim tool against VAT fraud, Professor Dr Rita de la Feria (University of Leeds) noted they are not a viable long-term solution, as they can increase market distortion and undermine the Single Market. Christine Weinzierl similarly stressed that exemptions should be limited to avoid fragmentation, despite evidence of fraud reduction benefits.
The introduction of digital reporting requirements under ViDA could eventually reduce or even replace the need for RCM, or confine it to high-risk sectors. Marta Val Jiménez (Repsol Group) added that reverse charges have been effective mainly in cases of isolated missing traders, but are less effective against more consolidated fraud structures.
MEP Francisco Assis (S&D/Portugal) said the EU is losing 128 billion to VAT fraud and called for stronger action, while other MEPs questioned the value of RCM, the complexity created by different VAT rates, and ways to ease SME burdens.
EP FISC Committee debated amendments to the non-legislative draft report on a 28th tax regime, with MEP L’udovít Ódor saying the compromises among MEPS reflected good cooperation and that the EC’s proposal was not ambitious enough. His draft aims to give scale-ups stronger incentives.
EPP said the 28th Regime proposal was not ambitious enough, stressed the need to focus on corporate taxation, and argued that simplification and digitisation alone could not solve structural issues. S&D welcomed the inclusion of social conditionalities regarding tax design. PfE is not supporting the final text, since it moved beyond simplification and interfered with national competences on taxation. Finally, the Left Group welcomed progress on anti-abuse, real economic substance, and shell companies, but criticised the very positive tone towards the broader 28th Regime.
ECON adopted the draft report on 3 June by 36 votes to 18, with one abstention. The final vote in Plenary is due on 6 July.
FISC Committee debated MEP Kinga Kollár’s draft report (EPP/Hungary) on corporate tax policy in a changing international environment.
Broad support emerged for continued international tax cooperation, despite growing difficulties in the OECD process. Most speakers also agreed that the OECD Two-Pillar framework was under pressure, particularly following the US’ withdrawal from Pillar One and the proliferation of Pillar Two carve-outs and side-by-side arrangements.
EPP and Renew members placed greater emphasis on competitiveness concerns, arguing that the current implementation of Pillar Two risked disadvantaging European businesses relative to competitors in third countries; S&D, Greens and The Left prioritised the fight against tax avoidance, warning that efforts to simplify tax rules should not weaken existing anti-avoidance measures or tax transparency requirements;
A clear divergence emerged on simplification, with MEP Kollár advocating a review of certain EU tax legislation to reduce administrative burdens, while MEPs Regner (S&D/Austria) and Andresen (Greens/Germany) argued that greater harmonisation, rather than deregulation, should be the objective.
ECON will vote on 2 September, followed by a final vote in the EP Plenary on 5 October.
ECON Committee adopted the draft opinion on the EC proposal concerning access by the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) to VAT information at EU level. All compromise and individual amendments were adopted before the final vote. The report passed with 47 votes in favour, none against and 6 abstentions.
Member States in the Council already adopted the EC proposal in May, the EP is only giving a non-binding opinion needed for the proposal to become EU law. The final vote in EP Plenary is currently scheduled for 15 June.
The draft report, prepared by MEP Pierre Pimpie (PfE/France), says the reverse charge mechanism (RCM) is still effective against missing trader and carousel fraud, particularly in high-risk sectors such as electronics, metals, energy products and emission allowances. However, it notes that while the mechanism reduces fraud in targeted sectors, it does not eliminate fraud entirely and may lead to displacement into other sectors or jurisdictions.
MEP Pimpie recommends extending Article 199a for a multiannual period, potentially around eight years, to provide certainty for businesses and tax administrations while the EU’s ViDA reforms and digital reporting systems are rolled out and evaluated.
The report warns that uneven national use of the RCM could create legal uncertainty and compliance costs for cross-border businesses, particularly SMEs. It also calls for a review of the Quick Reaction Mechanism (QRM), which has never been used, proposing simplification and faster activation procedures. Overall, the report supports maintaining targeted anti-fraud tools, while advancing a more digital and fraud-resistant VAT system.
ECON will vote on the draft report in the autumn followed by a final EP Plenary vote on 11 November.
The EU’s Code of Conduct Group for business taxation has elected Tina Humar from Slovenia as its new chair. Her term started on 21 May 2026 and will last for two years.
Established in 1998 and composed of high-level taxation experts of the Member States, the Code of Conduct Group is the EU body that promotes fair tax competition and monitors harmful tax measures, both within the EU and beyond.
Ms Humar is a Director General in the Directorate for the System of Tax, Customs and Other Public Finance Revenues at the Ministry of Finance of Slovenia.
Ireland will take over the rotating Council Presidency from Cyprus from 1 July onward, holding it until 31 December 2026. To mark the occasion, the Irish government has published its 6-month Presidency programme outlining the political priorities it intends to progress on as a priority.
For taxation, the Presidency programme outlines the following:
The jurisdictions implementing the global minimum tax from 2024 have agreed a common understanding to preserve the administrative and compliance benefits of the central filing mechanism for the GloBE Information Return (GIR).
Pursuant to this common understanding, the 2024 implementing jurisdictions have agreed to:
Separately, the OECD/G20 Inclusive Framework on BEPS released further administrative guidance on the application of the existing Transitional UTPR Safe Harbour and has updated the Central Record for Purposes of the Global Minimum Tax.
Following their meeting, the G7 finance ministers published a Communique that outlines the identified common priorities and solutions to address global economic challenges.
For taxation, the Communique notably welcomes the side-by-side agreement on minimum taxation reached with the US, and to engage in a “constructive dialogue” on digital taxation. The ministers expect a report from the OECD on the progress of work on taxation of the digital economy by the end of 2026, which should outline a shared understanding of any challenges posed to the existing international tax system by the digital economy.
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