This paper focuses on the proposed changes to CBAM issued by the European Commission on 17 December 2025. Read more.
We submitted our feedback and recommendations to AMLA in response to the public consultation on draft RTS. Read more.
EC publishes Call for Evidence on tax omnibus
The Call for Evidence was launched on 16 February and stakeholders have until 30 March to provide their feedback. In the document, the European Commission (EC) outlines the policy options and potential measures it is considering to reduce taxpayers’ administrative burdens through its so-called tax omnibus proposal, expected in the summer. For example, EC is considering ways to address possible duplications between Pillar 2 and ATAD’s CFC rules, and looking at the ATAD’s interest limitation rules to potentially address changing economic circumstances from rising interest rates and inflation. Additional measures are also under consideration, including in other pieces of legislation such as the Interest and Royalties, Parent-Subsidiary and Tax Dispute Resolution Mechanism Directives.
Accountancy Europe is currently consulting its experts to develop a response.
Commission takes Spain to court for failing to transpose VAT measures
In its March infringements package, the EC announced that it has decided to refer Spain to the Court of Justice of the European Union (CJEU) for failing to transpose two separate Directives related to VAT measures into national law. The Directives in question are the Council Directive (EU) 2020/285 of 18 February 2020 on the special scheme for Small and medium-sized enterprises (SMEs), and the Council Directive (EU) 2022/542 of 5 April 2022 on VAT rates. EC requests the CJEU to impose financial sanctions on Spain as a result.
In another case in the March infringements package, EC calls on France to remove a restriction in breach with the Parent-Subsidiary Directive and has sent the country a letter of formal notice. France now has two months to respond and address the shortcomings raised by the EC, lest face further consequences.
EP publishes draft report on VAT data sharing
MEP Michalis Hadjipantela (EPP/Cyprus) has published his draft report on the EC proposal for a regulation to grant the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) access to VAT information. In his report, Mr. Hadjipantela proposes amendments to the original EC proposal that focus on data protection considerations. This includes proposals to introduce specific safeguards to ensure full compliance with the principles of purpose limitation and data minimisation. He also calls for adequate financial resources for both EPPO and OLAF.
European Parliament Plenary is currently scheduled to vote on Mr. Hadjipantela’s report on 6 July. The European Parliament (EP) can only provide its non-binding opinion to EC’s tax proposals.
FISC organises public hearing on the 28th regime and taxation
The Subcommittee on Tax Matters (FISC) convened on 24 February with a panel of experts to discuss the tax related elements of the soon to be proposed 28th regime (probably 18 March), an optional EU-wide legal framework designed to allow businesses, particularly innovative startups and scale-ups, to operate across all 27 Member States under a single set of company law rules. For further details on the 28th regime, see Accountancy Europe’s February 2026 Tax Policy Update.
Reinhilde Veugelers from Bruegel stressed that the regime should focus narrowly on innovative startups with credible cross-border growth plans rather than apply to all companies. She also proposed a fully digital incorporation system via a central “Hub 0”, ensuring automatic EU-wide recognition, standardised contracts and legal clarity. Equity compensation was identified by Veugelers as the most critical tax-related element, with stock options to be taxed at sale rather than issuance to help attract and retain talent.
Apostolos Thomadakis from the Centre for European Policy Studies (CEPS) advocated for a layered and modular approach, starting with corporate law and adding elements such as taxation only where necessary and politically feasible. He emphasised tax neutrality for firms opting in, cross-border loss relief, and simplification of VAT and withholding tax procedures as minimum practical steps. Michael Schick from the European Tax Adviser Federation (ETAF) warned against creating a parallel rulebook on top of national systems and stressed the importance of simplification, coherence with initiatives such as BEFIT, and legal certainty.
MEP Luděk Niedermayer (EPP/Czechia) supported a narrow-and-deep approach and questioned what minimum functionality would be required to strengthen European capital markets and scale-up financing. MEP Ľudovít Ódor (RE/Slovakia) stressed that firms cited legal barriers and taxation as the main obstacles to scaling, calling for a coherent package including limited tax elements such as stock options and simplified compliance.
FISC organises public hearing on debt-equity bias
On the same day (24 February), FISC MEPs organised a separate hearing about debt-equity bias and the Debt-Equity Bias Reduction Allowance (DEBRA) proposal that has been withdrawn by the EC. MEPs heard from three experts on how to address the bias in corporate taxation which favours debt over equity, and the impact of this bias on investment decisions, capital allocation, competitiveness and economic resilience.
Prof. Michael Devereux argued the debt–equity bias is long-standing and widely viewed by economists as harmful. He recommended reform that improves the tax treatment of equity rather than further restricting debt. He favoured an Allowance for Corporate Equity (ACE), saying it can reduce investment distortions by moving taxation toward economic rents, while warning that DEBRA-style add-ons dilute the benefits of a clean ACE model.
Paolo Ludovici from Invest Europe stressed that financing choices are often driven by commercial, legal and governance realities, not only tax, especially for third-party bank debt. He urged separating intragroup “own funds” dynamics from external borrowing, and noted private firms face major valuation, governance and exit barriers when opening equity to outsiders. Ludovici questioned whether the bias is already significantly constrained by existing EU rules – notably the 30% interest limitation in the EU Anti-Tax Avoidance Directive (ATAD), which limits deductible interest to 30% of a company’s Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA); transfer pricing re-characterisation; and anti-hybrid rules.
Tove Maria Ryding from the NGO Eurodad argued that the quickest fix is tighter interest deductibility limits, arguing BEPS and the EU’s ATAD implementation were too weak and that equity allowances risk accelerating a corporate “race to the bottom”. She called for longer-term replacement of transfer pricing with formulary apportionment and urged close attention to UN Tax Convention negotiations.
Across the discussion, there was broad agreement that the debt–equity bias has been a real structural distortion in corporate taxation, but no clear example of a Member State that has definitively “solved” it. Additionally, the speakers noted that notional interest deduction systems are conceptually attractive but difficult to administer clearly and consistently, particularly in cross-border contexts where debt shifting between Member States could undermine their effectiveness.
The future of the DEBRA proposal remains uncertain, with some MEPs expressing frustration over its political stagnation and potential withdrawal.
ECON hearing on financial services taxation
The Committee on Economic and Monetary Affairs (ECON) convened on 24 February for an exchange of views on MEP Matthias Ecke’s (S&D/Germany) draft report on a coherent tax framework for the EU financial sector (see February Tax Policy Update for more details on the draft report).
Mr. Ecke focused his intervention on the VAT exemption of the financial sector, which created a policy gap in the EU and at the same time fragmented the taxation framework in the Union. He urged both the EC and the banking industry to look for solutions to this structural problem. In his view, the fragmented financial system has led to the capital outflow.
MEP Regina Doherty (EPP/Ireland) remained broadly against the introduction of additional taxes in the financial industry that could undermine competitiveness and strongly supported the sharing of best practices. MEP Gilles Boyer (RE/France) expressed reservations about sectoral taxes, specifically for temporary exemptions on windfall profits, mentioned that retail participants pay a heavy price but also specified that it could be counter-productive introducing additional burdens to investors.
ECON Committee is currently scheduled to vote on this non-binding draft report on 5 May.
EC provides overview of recently withdrawn tax proposals and the tax omnibus
EC elaborates on the mandate of DG TAXUD’s behavioural taxation Unit
EC says study on wealth-related taxes to be completed in first half of 2026
EU finance ministers amend list of non-cooperative jurisdictions for tax purposes
On 17 February, the EU finance ministers convening for the Economic and Financial Affairs Council (ECOFIN) meeting updated the list of non-cooperative jurisdictions for tax purposes. The ministers decided to remove Fiji, Samoa and Trinidad and Tobago from Annex I (list of non-cooperative jurisdictions) after they successfully addressed long lasting deficiencies.
The Council also decided to add Viet Nam and the Turks and Caicos Islands to Annex I (list of non-cooperative jurisdictions) due to failure to comply with internationally agreed standards on tax transparency and fair taxation. The Council has invited both jurisdictions to engage with the EU’s Code of Conduct Group and other competent international fora to resolve these issues.
Following these changes, the list of non-cooperative jurisdictions comprises 10 territories: American Samoa, Anguilla, Guam, Palau, Panama, the Russian Federation, Turks and Caicos, US Virgin Islands, Vanuatu and Viet Nam.
Additionally, changes were also made to the state of play document (Annex II), which reflects the ongoing EU cooperation with its international partners and lists pending commitments. Antigua and Barbuda and The Seychelles are being removed from Annex II after taking the necessary steps to ensure compliance with the international standard on exchange of information on request. In view of the steps already taken, Brunei Darussalam has been granted additional time to deliver on its commitment to amend its harmful preferential tax regime.
The EU list is updated twice a year, to reflect changes in jurisdictions’ tax policies and cooperation levels.
