ViDA introduces sweeping tax changes for all businesses. Accountancy Europe’s factsheet explains what to expect
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At the EU Tax Observatory’s conference, Gerassimos Thomas, Director-General of DG TAXUD, delivered a keynote speech on 13 May outlining the European Commission’s (EC) tax research and policy agenda for the coming months and years. He highlighted the following key areas:
The EC’s DG TAXUD published an exploratory study on health taxes from an EU perspective on 16 May. The study provides an in-depth analysis of the current state of taxes on products high in fat, sugar and salt (HFSS) in the EU, including their design, implementation, and impact on public health.
12 EU countries are already taxing soft drinks and others plan to do so, motivated by a mix of health and revenue considerations. The study notes that the design and implementation of such taxes can vary significantly across EU member states, which can lead to differences in their effectiveness and impact.
The study also considers the possibility and the potential added value of an EU harmonised tax on soft drinks. Initial analysis points out that the harmonisation of health taxes at the EU level could help to reduce differences in tax rates and structures across member states and promote a more level playing field for businesses and consumers. However, the study also notes that any efforts to harmonise health taxes would need to consider the different public health priorities and fiscal contexts of EU member states.
During the workshop, experts from ZEW presented a study (see article below) highlighting best practices to stimulate private investment and prevent harmful tax practices. They emphasised that input-based research and development (R&D) tax incentives are most effective, especially when broadly accessible and liquidity-enhancing.
The workshop’s discussion centred on the interaction with the Organisation for Economic Cooperation and Development’s (OECD) Pillar 2, which may neutralise certain incentives.
MEPs raised questions about the trade-off between incentives and fairness, the risk of tax competition, and the need for EU coordination.
The experts stressed the importance of careful design to ensure incentives are impactful, inclusive, and in line with Pillar 2 requirements.
The FISC Committee’s hearing on revising EU anti-avoidance tax rules highlighted the need for simplification without weakening protections.
The expert speakers warned that legal ambiguity, fragmented implementation of ATAD and DAC 6, and overlapping rules increase compliance costs and enable loopholes. While simplification was broadly supported, the speakers advocated harmonisation, especially of interest deduction and controlled foreign company (CFC) rules, rather than deregulation.
Several called for revisiting personal and capital income taxation, proposing EU-wide minimum standards to address tax avoidance by wealthy individuals. Panellists agreed that greater consistency, cooperation, and clarity are essential to preserve tax fairness, reduce burdens, and protect revenues needed for EU priorities like social welfare and defence.
FISC Committee held another public hearing on 15 May on the implementation of the Pillar 2 framework, where MEPs, EC representatives, and experts discussed the challenges and prospects of the global tax reform, particularly considering the evolving US position.
While many stressed the importance of Pillar 2 for addressing tax avoidance and ensuring fairer corporate taxation, concerns were raised about the complexity of the rules and potential burdens for businesses, especially SMEs. The uncertainty surrounding the US commitment to GILTI and UTPR was highlighted, although it was noted that many jurisdictions have already started implementing Pillar 2.
Experts called for further simplification, legal certainty, and harmonisation within the EU, including progress on initiatives such as BEFIT and a possible digital levy. Discussions also addressed the impact on developing countries and the need to prevent further profit shifting.
Overall, the speakers reaffirmed the need to commit to the reform and the importance of continued international cooperation to secure its effectiveness.
At a joint FISC-CONT hearing, François-Roger Cazala of the European Court of Auditors (ECA) presented its Special report 08/2025, warning EU financial interests remain poorly protected under simplified import customs procedures.
An additional hearing explored the role of tax policy in Europe’s housing crisis, with experts, sector representatives, and MEPs discussing how tax practices may impact housing affordability and accessibility, and what reforms could address both short-term and structural challenges.
MEP Danuše Nerudová (EPP, Czech Republic) prepared the draft budgetary assessment on BEFIT, outlining the EP’s views on its potential as an EU own resource.
The draft document highlights the EP’s recent support for the EC’s proposal to introduce a new own resource conceived as a national contribution based on statistics about the gross operational surplus of companies in the financial and non-financial sectors (CPOR). The draft argues that such a resource would align well with the establishment of a more harmonised calculation base under BEFIT.
On 19 May, the EP’s BUDG Committee discussed Nerudová’s draft report and proposed amendments. The discussion focused largely on own resources, with reiterated calls for progress in this matter. BEFIT was widely seen in a positive light and as benefitting advancements on own resources.
The lead committee on BEFIT, ECON (see article below), is set to vote on the file on 24 September, followed by a Plenary vote on 12 November.
The ECON Committee’s draft report on BEFIT, prepared by MEP Evelyn Regner (S&D, Austria) and published on 12 May, proposes a number of changes to the EC’s BEFIT proposal, including:
The EP’s scheduled timeline to adopt MEP Regner’s draft report is outlined in the article above.
The EP’s research services published their latest study on tax incentives in the EU, evaluating the effectiveness of tax incentives, with a particular focus on incentives for R&D.
The study analyses different design options for tax incentives and shows that input-based R&D tax incentives appear to be the most effective in stimulating additional R&D investment.
Based on empirical evaluations and the restrictions imposed by Pillar 2, the study’s authors argue that refundable, volume-based tax credits with a broad scope remain a convincing way forward for R&D tax incentives.
The EU finance ministers reached an agreement on 13 May on the Directive on VAT rules for distance sales of imported goods and import VAT. The Directive seeks to improve the collection of VAT on imported goods by making suppliers liable for the VAT paid on imports, which is likely to encourage them to use the VAT import one-stop-shop (IOSS).
In terms of next steps, the EP will be consulted on the agreed text and asked to deliver its opinion. The text will then need to be formally adopted by the Council before being published in the EU’s Official Journal and entering into force.
In its latest compromise proposal on the Energy Taxation Directive, dated 12 May, the Polish Presidency of the EU Council has proposed that the EC assess the environmental performance of energy products every three years.
If the assessment reveals that a product’s categorisation no longer aligns with its environmental impact, the EC would propose a targeted amendment to the Directive to change the energy product category. This amendment would require unanimous approval by the Council.
The Presidency also proposes maintaining the current exclusion from the Directive’s scope of electricity and energy products used in mineralogical processes, responding to requests from national delegations to support energy-intensive industries.
Additionally, the Polish Presidency recommends removing fossil waste oils from the Directive’s scope. As a result, all waste used for heating purposes would be exempt from the proposed taxation.
Read more (article by Agence Europe)
The OECD’s latest “Taxing wages” report shows that workers’ post-tax income increased in most OECD countries in 2024 as real wages before tax grew and effective tax rates on labour were broadly unchanged.
This marks a shift after two years of high inflation and fiscal drag, which had weighed on workers’ take-home pay in many OECD countries and stalled recovery following the COVID-19 shock.
Single-parent households with children remained a key focus for labour tax policy in 2024: as was also the case in 2023, they were the only household type to see a decline in the average tax wedge across the OECD and to remain below pre-pandemic level.
The OECD average tax wedge rose for seven of the eight household types analysed, though six cases the increase was minimal, no greater than 0.05 percentage points (p.p.). For a single worker earning the average wage, the tax wedge rose by 0.05 p.p. to 34.9%, the third consecutive annual increase after declines during the COVID-19 pandemic in 2020 and 2021.
The Belgian Data Protection Authority (DPA) has decided to prohibit the Federal Public Service Finance (FPS Finance) from transferring personal data to the US tax authorities (IRS) under the ‘Foreign Account Tax Compliance Act’ (FATCA) intergovernmental agreement aimed at combating tax evasion.
In December 2023, the Brussels Court of Appeal overturned the DPA’s decision to prohibit the transfer of the tax data to the US and remitted the case on the grounds that the DPA’s Litigation Chamber had not given sufficient grounds for not following the DPA’s inspection report, which had concluded that the data transfers were lawful. The DPA has thus once again confirmed that these transfers are in breach of the European General Data Protection Regulation (GDPR).
Read more (article by Agence Europe)
