ViDA brings major changes, especially impacting SMEs in intra-EU trade. Read Accountancy Europe’s new factsheet
Read Accountancy Europe's response to the European Commission's consultation on its Multi-annual financial framework
The new VAT in the Digital Age (ViDA) Directive comprises three legislative texts:
Following an extensive legislative process, the Directive was finally published in the EU Official Journal on 25 March.
In the meantime, Accountancy Europe has released a new factsheet outlining the main elements of the ViDA package. Accountants are strongly encouraged to familiarise themselves with the new rules and prepare for them accordingly.
The EU is prepared to deploy its most powerful trade measures and may impose levies on US digital companies if negotiations with Donald Trump fail to end his tariff war against Europe.
European Commission’s (EC) President Ursula von der Leyen told the Financial Times that the EU would push for a “completely balanced” agreement with Washington during Trump’s 90-day suspension on additional tariffs.
However, von der Leyen warned that if talks break down, the EC is ready to significantly widen the scope of the transatlantic trade war to include services, making a dramatic escalation. Among the possible measures is a tax on digital advertising revenues that would hit tech groups such as Amazon, Google and Facebook.
“We are developing retaliatory measures,” von der Leyen said, explaining these could include the first use of the bloc’s anti-coercion instrument with the power to hit services exports. “There’s a wide range of countermeasures… in case the negotiations are not satisfactory.”
She further said this could include tariffs on the services trade between the US and the EU, stressing the exact measures would depend on the outcome of talks with Washington. “An example is you could put a levy on the advertising revenues of digital services.”
The EC issued a targeted consultation on removing barriers and fostering the further integration of EU capital markets on 15 April. This initiative is part of the Savings and Investments Union (SIU) objectives.
Among the many questions to stakeholders, the document also asks for input to identify and address potential tax barriers to capital market integration, including withholding tax collection.
The deadline to provide input is 10 June.
This non-legislative own-initiative report titled “The role of simple tax rules and tax fragmentation in European competitiveness” and prepared by MEP Michalis Hadjipantela (EPP/Cyprus), puts forward recommendations towards the EC on reducing administrative burdens in the EU tax system. The EC’s proposals for a so-called tax simplification omnibus are currently expected in early 2026.
Mr. Hadjipantelas’ draft report calls for coordinated tax policies whilst also reducing administrative burdens for companies, SMEs in particular.
His recommendations span several critical areas including:
Other MEPs may now submit their own amendments to the draft report, ahead of an ECON Committee vote, currently scheduled for 15 July. This will be followed by a final vote in the European Parliament’s (EP) Plenary most likely on 8 September.
The study assesses the potential economic impacts of US tariffs on the EU.. Notably, it presents ways in which the European Central Bank (ECB) could react to shield the continent against these impacts.
Interestingly, the authors contemplate the option of the EU imposing a digital services tax or a tariff on US service exports. “IT services provided by US Big Tech companies make up the largest share of US service exports to the EU, making them a prime target for countermeasures”, the authors note. The EU could also respond with restrictions on “American consulting and financial firms, revoking intellectual property rights, tightening data flow regulations, or increasing digital taxes on US-based platforms”.
However, the authors also warn that the extent to which this type of retaliation “would damage the EU’s productive sector and reduce its productivity would need to be carefully assessed.”
The EP’s FISC Committee recently discussed Mr. Hadjipantela’s draft parliamentary report (see article above), which underscores the urgent need to address the complexity of tax systems across Europe, particularly in a context where competitiveness is under pressure and persistent barriers continue to hamper the functioning of the single market. Mr. Hadjipantela noted that the EC has acknowledged this challenge and is now considering concrete measures to streamline and simplify the existing tax framework.
All shadow rapporteurs expressed their support for the report, commending it as a strong and constructive basis for further work. They welcomed its nuanced and balanced approach to a complex policy area. Several MEPS called for greater emphasis on the OECD Pillar 2 rules, especially in light of recent developments in the US.
However, the debate also reflected a clear division among MEPs. Some advocated for strict adherence to national competences in taxation and defended the value of maintaining a diversity of tax systems across the EU. Others argued that greater harmonisation of tax rules at the EU level may be necessary to address fragmentation and improve the overall functioning of the single market.
The EP’s FISC Committee held a public hearing on “The Role of Tax in Aligning the Green Transition and competitiveness”.
This hearing touched upon the efficiency of tax incentives, with various doubts cast on its conduciveness to meeting environmental goals.
Above all else, it was clear from the interventions that designing effective green taxes is quite complicated. Other tools beyond taxation were also brought forth by the panellists, with a focus on the overall policy mix being highlighted.
Attention was also given to the transport sector, due to the presence of a DHL representative. Discussions on that front revolved around sustainable aviation fuels, bridging technologies and decarbonisation efforts in general.
Some discontent was also expressed about tax incentives available to businesses.
The governments of Germany and Netherlands jointly submitted in December 2024 their common thoughts on the tax simplification agenda to the EC. These recommendations have now been published.
Both countries underline their support for tax simplification, identifying Pillar 2 as a key “starting point”. They argue that any simplification efforts in this area should first take place in the OECD Inclusive Framework forum. The joint paper also refers to the anti-tax avoidance Directive (ATAD), where further streamlining and alignment could be achieved. The countries also call for “detailed consideration” for the interaction between Pillar 2 and ATAD’s anti-hybrid mismatch rules.
Beyond this, Germany and the Netherlands call for identifying and abolishing overlapping standards, make suggestions for revisiting DAC 6 hallmarks, and for prospective future Directives urge more attention to be paid on the practical administrative aspects both from taxpayers’ and tax administrations’ perspectives.
The EU finance ministers formally adopted the revised rules aimed at extending cooperation and the exchange of information between tax authorities in the area of minimum effective corporate taxation (DAC 9). This adoption on 14 April follows the political agreement reached in March.
DAC 9 represents a significant step towards tax returns for large companies by allowing a top-up tax information return (TTIR) to be filed centrally, enabling a company to file a single return for the entire group to which it belongs, instead of filing separate returns locally. It also introduces a standard form for filing ‘TTIR’ across the EU, in line with that developed by the inclusive G20/OECD framework.
Member States have until 31 December to comply with this directive. The first top-up tax return filling deadline is set for 30 June 2026.
The European Court of Auditors (ECA) has published a new audit report assessing whether the EU’s financial interests and the single market are protected effectively against VAT fraud on imports when simplified import customs procedures are used.
Overall, the report concludes that the EU’s financial interests are insufficiently protected against VAT fraud on imports when the simplified import customs procedures are used. ECA found that loopholes and inconsistencies in the EU regulatory framework and the EC’s monitoring, for the customs procedure 42 and the import one stop shop procedure present a significant risk of abuse. Furthermore, there are serious weaknesses in member states’ controls and shortcomings in the cooperation between member states, at EU level and in the EC’s monitoring of Member States’ activities to combat abuse of these procedures.
The Brussels-based think tank CEPS has published a new report examining a prospective EU digital services tax (DST). CEPS’ estimates suggest that a 5% DST could generate EUR 37.5 billion in 2026, representing nearly 19% of the EU’s 2025 budget and about 8% of corporate income tax revenue in 2023. These figures highlight the potential of a DST to provide a substantial source of revenue for the EU at a time of heightened fiscal pressure, the report notes.
The report also highlights that while a DST offers a significant revenue source, alternative digital taxation methods exist, including the digital permanent establishment tax, a destination-based cash-flow tax, and expanding VAT on digital transactions. Each presents challenges in implementation and enforcement, but the DST remains the most viable short-term option, given the EC’s prior work and Member States’ experience with similar measures.
Moving forward, CEPS urges the EU to reassess its digital taxation strategy. A renewed push for an EU-wide DST could provide an immediate solution, but long-term reforms are necessary. With OECD negotiations stalled, the EU must strike a balance between fiscal autonomy and global tax cooperation to ensure digital firms pay their fair share without distorting markets.
The US is engaging in efforts to negotiate a landmark global tax deal despite President Donald Trump’s criticism of the agreement, according to the OECD.
OECD Secretary-General Mathias Cormann told the Financial Times the US was taking part in active discussions, including technical concerns on implementation. “We are continuing the conversation,” he said on the sidelines of the Delphi Economic Forum in Greece.
The comments show the deal to close tax loopholes for Big Tech groups and multinationals could get US backing. More than 135 countries signed up to the biggest corporate tax reform in more than a century more than four years ago, but since then half the agreement has not been enacted.
According to the latest figures published by the OECD on 22 April, almost 55% of the total support for business research and development (R&D) in the OECD area takes the form of tax incentives.
In 2024, 34 of the 38 OECD countries granted tax relief for R&D expenditure, including Estonia for the first time. Costa Rica, Israel, Latvia and Luxembourg were the only four OECD countries without such tax incentives.
In several countries, SMEs benefit from more favourable tax treatment for their R&D expenditure. In 2024, Portugal, France and Poland were the OECD economies offering the most generous R&D tax incentives for large corporations, while Iceland, Portugal and France were the most generous in terms of those granted to SMEs.
European Commission
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Business Europe
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Tax Foundation
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Corporate Europe Observatory
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EU Tax Observatory
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