The Commission’s recent tax package could significantly cut red tape for businesses. Read our statement.
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The European Commission (EC) published on 24 June its long-awaited package of tax simplification proposals, consisting of the tax omnibus and a recast of the Directive on administrative cooperation on taxation (DAC). Accountancy Europe reported on the tax omnibus in the June tax update, and the key provisions we flagged then are mainly the same in these final proposals.
For the DAC recast, some of the main features proposed changes include the following:
On the day of the proposals, Accountancy Europe issued a public statement expressing its support for the EC’s level of ambition, and making initial suggestions for where and how the proposals could be further reinforced. Accountancy Europe’s experts are currently working on additional and more detailed recommendations.
These proposals will now need to be unanimously approved by Member States in the Council, and the European Parliament (EP) must provide its non-binding opinion.
The EC has published its evaluation of the EU’s Anti-Tax avoidance Directive (ATAD), assessing ATAD’s implementation and impact since 2019.
It finds that ATAD has helped deter aggressive tax planning, particularly among large multinational groups. Its most effective measure appears to be the Interest Limitation Rule (ILR), which is estimated to have increased corporate effective tax rates by around 1.5% in affected Member States.
Hybrid mismatch rules and the General Anti-Abuse Rule (GAAR) have also contributed to protecting tax bases, although their impact is more difficult to quantify. By contrast, the Controlled Foreign Company (CFC) rules are viewed primarily as preventive tools whose success lies in discouraging avoidance structures rather than generating direct tax revenue.
At the same time, the EC flags fragmentation, legal uncertainty and compliance burdens caused by uneven national implementation. Businesses also say some rules, particularly the ILR, can affect commercially motivated borrowing and investment, especially in capital-intensive sectors.
Looking ahead, the key issue is how ATAD interacts with the EU’s Pillar Two rules, including whether CFC rules still add value for groups already subject to the global minimum tax regime. The EC says ATAD remains relevant, but simplification, more harmonisation and closer alignment with Pillar Two should be considered.
The EC’s June 2026 report says the EU’s longstanding VAT exemption for financial services no longer fits today’s financial markets. Originally introduced because taxing financial services was technically difficult, the VAT exemption now creates hidden VAT costs and a fragmented, complex framework that differs considerably across Member States.
The report estimates this creates an annal VAT policy gap of around EUR 52 billion, while hidden VAT distorts business decisions by making outsourced services more expensive than in-house activities. These effects are particularly relevant as the sector becomes increasingly digitalised and reliant on specialised technology, fintech and shared service providers. Newer activities such as crypto-assets, digital payment services and fund management also create increased legal uncertainty.
Stakeholders broadly support clearer VAT definitions, more legal certainty and greater harmonisation, as well as tools like VAT grouping and the option to tax.
More far-reaching ideas, such as scrapping VAT exemption, applying a standard VAT to all financial services or introducing a new EU-wide Financial Activities Tax, have limited support because of concerns over complexity, competitiveness and costs.
The study concludes that gradual reform focused on simplification and reducing hidden VAT is the most realistic way forward.
From 1 July onward, the EU has removed the customs duty exemption for e-commerce parcels worth under EUR 150. This change aims to ensure fair conditions for EU businesses and safe choices for consumers, in response to the surge of billions of low-value e-commerce goods entering the EU. Goods sent directly from third countries to consumers will now pay EUR 3 per item
The old exemption reflected a different era of online purchases customs systems, and the EC says it no longer fits today’s reality.
The EUR 3 rate is a transitional solution, agreed by EU Member States as an urgent response to the challenges arising from the rapid growth of e-commerce. From July 2028, the EU Customs Data Hub will become operational, applying normal customs duties based on the good’s tariff classification, origin, and value, in accordance with existing/standard EU customs duty rules.
In the July infringements package, the EC announces its decision to call on Germany, France and Italy to align their legislation on the taxation of dividends received from subsidiaries in other Member States in line with the Parent Subsidiary Directive (PSD).
It also requires Belgium, Bulgaria and Cyprus to finalise the implementation of the information exchange rules on DAC. As always, should the countries not take appropriate corrective action, the EC will take further action.
On 23 June, the EP’s BUDG Committee held a workshop on a possible digital levy as an EU own resource.
Two expert panels discussed whether an EU-wide levy could help fund the budget.
Proponents argued that national Digital Services Taxes (DSTs) operating in several Member States have proven administratively feasible and have generated growing revenues. However, the proliferation of different national regimes has also created fragmentation. Advocates argued that an EU-wide framework could reduce this fragmentation while providing a new and potentially significant revenue source for the EU budget. Estimates at the hearing put potential annual revenues at EUR 20–43 billion, depending on the design and rate.
Critics warned that DSTs can distort markets, add compliance costs and ultimately fall on businesses and consumers, and said broader VAT reform would be more effective to raise revenue.
The international angle also loomed large, with concerns about potential trade tensions, particularly with the US, and about compatibility with future OECD or UN tax reforms. Several MEPs questioned whether the EU should wait for a global solution or move ahead on its own.
At a 25 June hearing, the EP’s FISC Committee discussed the future of the VAT reverse charge mechanism (RCM), against the backdrop of a recently published draft report by MEP Pierre Pimpie (PfE/France) and a study from the EP services.
MEP Pimpie argued that the RCM remains an effective tool against VAT fraud but should continue as a targeted, temporary, and proportionate measure, calling for an extension of Article 199a beyond 2026 while ensuring it complements, rather than replaces, the VAT in the Digital Age (ViDA) package.
There was broad cross-party agreement that the RCM should be extended beyond 2026, with most speakers viewing it as an important interim anti-fraud tool until ViDA’s digital reporting and invoicing systems are fully operational.
Concerns were raised about fragmented implementation across Member States, with calls for greater clarity and consistency in definitions, thresholds, and application to reduce compliance costs and limit opportunities for fraud shifting across borders.
A vote on MEP Pimpie’s non-binding draft report is scheduled for 11 November
The debate focused on reinforcing coordinated action to better prevent, detect and prosecute VAT fraud in the EU. It also looked at ways to improve administrative and judicial cooperation, boost the exchange of information and access to VAT data, and make existing fraud-detection and prevention tools more effective.
Present in the room: Ms Laura Kövesi, European Chief Prosecutor (EPPO); Mr Petr Klement, Director-General, European Anti-Fraud Office (OLAF); and Ms Marina Marinelić, Chair of Eurofisc.
Laura Kövesi warned that VAT fraud is a major threat to the EU budget and urged stronger data-sharing powers, more resources, dedicated investigators, and making VAT fraud a higher EU priority.
Marina Marinelić called for faster VAT-number suspensions, better cross-agency cooperation and continued investment in digital tools.
Petr Klement stressed the role of trade-data analysis and closer cooperation with EPPO and Eurofisc.
MEPs broadly agreed that cross-border VAT fraud causes major losses and highlighted the need for digitalisation, information sharing, operational obstacles, resources, and stronger cooperation.
FISC Committee discussed on 25 June the amendments tabled for the draft report by Kinga Kollár (EPP/Hungary) on the EU’s approach to corporate tax policy in a changing international environment.
MEP Kollár said there was broad agreement across political groups on the main challenges facing international corporate taxation, with differences focused primarily on policy priorities, while emphasising competitiveness, simplification, and preserving the existing international tax framework.
Evelyn Regner (S&D/Austria) called for corporate taxation to be considered in the wider context of financing the green transition and climate adaptation, advocating fair taxation, stronger anti-avoidance measures, greater tax transparency, and renewed consideration of an EU digital levy.
Katri Kulmuni (Renew/Finland) highlighted the need for tax simplification to provide businesses with stability and legal certainty, while supporting international cooperation through the OECD, and stressing that simplification should improve the effectiveness of tax rules rather than weaken them.
There was broad cross-party support for simplifying international corporate tax rules and reducing unnecessary administrative burdens, although several MEPs also stressed that simplification should not amount to deregulation or weaken anti-avoidance standards.
MEPs also discussed the future of the OECD’s Pillar One, and digital taxation emerged as a key point of debate, with some MEPs advocating an EU digital levy if international negotiations remained stalled, while others warned that unilateral action could trigger trade disputes and have unintended economic consequences.
A final Plenary vote on MEP MEP Kollár’s draft report is currently scheduled for 5 October.
On 7 July, the EP Plenary adopted proposals for a tax framework for the EU financial sector to reduce fragmentation and tax avoidance. The draft report was prepared by MEP Matthias Ecke (S&D/Germany).
The report looks at financial sector taxation and the consequences of the VAT exemption for financial services. It explores how addressing these issues could lead to a more coherent and effective tax framework across the Single Market. The report argues that such improvements would facilitate the creation of a capital markets union and undo opportunities for tax avoidance.
The report seeks to open discussion on the need to reform or remove the antiquated EU-wide VAT exemption for financial services thus mitigating the highly fragmented and costly tax landscape this exemption has created. It therefore asks the EC to review the impacts of the current system and consider policy options to address distortive impacts. More broadly, the report also stresses the need for a coherent set of rules for the EU’s financial sector, while respecting the principle of tax sovereignty.
On 9 July, the EP Plenary adopted the draft report by MEP Ľudovít Ódor (Renew/Slovakia) on the feasibility of a 28th tax regime, with 366 votes in favour, 192 against and 39 abstentions.
The report recommends a consolidated corporate tax base, standardised tax returns, simplified VAT and withholding tax procedures, and coordinated R&D incentives. It also calls for safeguards to prevent tax avoidance by limiting the regime to companies with genuine economic activity in the EU.
The report is non-binding and does not affect the ongoing legislative work on the EC’s 28th regime proposal.
Donald Trump has threatened to place a 100% import tariff on any European country that imposes a tax on digital services from US companies.
Writing on “Truth” Social, the US president said that “numerous European countries” had been discussing putting a digital services tax on American companies and that “some of these countries are close to actually doing this”.
“Please let this statement serve to represent that any country that imposes such a tax will immediately be met with a 100% TARIFF (sic) on any and all Goods sent to the United States of America,” Trump continued.
He added that the tariff would be immediately imposed and supersede any other prior trade deals that existed with the country.
