Read Accountancy Europe’s latest factsheet outlining key changes to the Carbon Border Adjustment Mechanism post-Omnibus
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The European Commission (EC) published on a proposal to reduce administrative burdens related to the EU Carbon Border Adjustment Mechanism (CBAM) on 26 February. While the product categories remain the same, it proposes that a mass-based threshold replaces the de-minimis threshold of €150. This new threshold will be designed to still ensure that 99% of embedded emissions on imported goods fall under the CBAM. The proposed initial threshold is 50 tonnes per importer, per type of imported goods covered by CBAM. According to the EC, this will exclude 90% of importers currently required to purchase CBAM certificates. The EC calculated the mass-based threshold on data obtained during the transition period.
As a mass-based threshold increases the risk for manipulation, the Omnibus also includes rules to monitor and penalise attempts to bypass registration or the purchase of CBAM certificates.
The proposal will still need to go through the EU legislative process, and key provisions may change in that time. Accountancy Europe published a factsheet on 17 March summarising the proposed key changes.
The EC’s Clean Industrial Deal (CID) outlines a roadmap of future measures, aiming at making the EU’s industry greener and sustainable for the future. Some of these measures relate to taxation.
Notably, the EC will issue a recommendation for Member States in Q4 2025 on reducing taxes on energy whilst retaining green objectives, with the overall of both cutting energy prices and fostering the economy’s sustainable transition. The EC will also issue a recommendation to Member States by June on tax incentive measures to support the green transition of industry. Particularly, this might include shorter depreciation periods for clean technology assets, and the use of tax credits for businesses in strategic sectors for the clean transition.
On CBAM, the EC’s plan is to conduct a review by Q3 2025 assessing the feasibility of extending the CBAM scope to other EU environmental trading system (ETS) sectors at risk of carbon leakage, to downstream sectors and to indirect emissions and support to exporters, closing loopholes. In Q1 2026, the EC aims to issue a proposal to extend the CBAM.
The Communication gives indications on the measures the EC wants to undertake in order to channel savings and investments into financing for Europe’s key objectives such as the digital and green transitions, and defence. This so-called Savings and Investments Union (SIU) would thus constitute a private financing arm for Europe’s strategic priorities.
Tax related measures are also a part of the EC’s announced SIU vision. For example, the EC notes that tax incentives are key to attracting more retail investors into capital markets, a point Accountancy Europe has in its recent response to the EC’s SIU consultation.
Consequently, the Communication indicates that the EC will publish in Q3 2025 “a European blueprint for savings and investments accounts or products based on existing best practice”. A recommendation to Member States on taxing savings and investments accounts will accompany this.
The Communication acknowledges undertaken EU initiatives to address capital market related tax issues, such as the proposed Debt-Equity Bias Reduction Allowance (DEBRA) and the FASTER legislation to streamline European withholding tax procedures. However, the Council has yet to agree on FASTER, and the debt-equity bias persists. The EC regrets this, noting that other barriers to investment also persist. In this regard – and according to the Communication – the EC will “take action to remove differences in national taxation procedures creating administrative burden and barriers to cross-border investment”. Nonetheless, much of this is likely to take the form of non-binding recommendations to Member States.
The report shows that the EU-27 Member States collected EUR 6,711 billion in taxes in 2023, an increase of 4.7% compared to 2022. However, the growth of nominal GDP in an inflationary economic context resulted in a fall in tax revenues as share of GDP (from 39.7% in 2022 to 39.0% in 2023). France (43.8%), Denmark (43.4%) and Austria (43.1%) were the EU-27 countries with the highest tax burden, while Ireland (21.9%), Romania (26.2%) and Malta (26.6%) registered the lowest rate.
Looking into the breakdown by economic function in the EU-27, revenues from labour taxes (including social contributions) increased in nominal terms in 2023 by 5.9%, due to salary rises and a strong labour market. Revenues from capital taxes increased by 4.5% supported by rising businesses profits, while revenues from consumption taxes had the lowest growth rate (2.5%) due to a sluggish internal demand. As a result, the share of labour taxes (including social contributions) in total tax revenues expanded in 2023, from 50.6% to 51.2%, equivalent to the decrease in the share from consumption taxes, from 27.6% to 26.9%. The share of capital tax revenues remained unchanged at 21.9%.
The EC decided to send a reasoned opinion to Spain, for failure to align its rules on withholding taxes charged on royalty payments received by non-resident taxpayers with the freedom to provide services. This was part of the infringements package published on 12 March. The EC has also referred Spain to the Court of Justice of the European Union (CJEU) for having failed to remedy an infringement related to the free movement of capital due to a discriminatory tax treatment of non-resident taxpayers.
Commissioner Hoekstra gave a high-level overview of the tax priorities of the current EC, speaking at the EU Tax Symposium co-organised with the European Parliament on 18 March. He underlined three main priority areas for the EC’s intervention:
EU finance ministers had a busy tax agenda for their 11 March ECOFIN meeting, during which several key decisions were made.
First, ECOFIN formally adopted the ViDA proposal, following an earlier agreement already reached at the November 2024 ECOFIN meeting. As the EP’s new opinion on ViDA was first needed, this formal adoption had to wait a few more months.
Second, the finance ministers reached an agreement on the latest Directive on Administrative Cooperation on tax (DAC 9). It aims to enhance cooperation and information exchange on minimum effective corporate taxation to better fulfil the filing obligations that multinational enterprise groups and large-scale domestic groups have under the Pillar 2 Directive.
And finally, the ministers adopted their Conclusions on the tax simplification agenda. These Conclusions effectively present to the EC Member States’ expectations in this area. The conclusions underline that the decluttering exercise must preserve EU achievements in combating tax fraud, evasion and avoidance, and that it should at least start with reviewing the DAC and ATAD. However, other tax legislation including on indirect taxation should be looked at as well, the ministers insist. As a concrete next step, the ministers’ conclusions ask the EC to present a road map of the envisaged work on tax simplification agenda before the end of Q3 2025 (i.e. by October) and to consult on that report with relevant stakeholders.
