Main outcomes of the ECOFIN meeting on 10 March 2026
On 10 March 2026, the EU Finance Ministers exchanged views on the market integration and supervision package, a central element of the EU’s Savings and Investments Union aimed at deepening EU capital markets, removing barriers to cross-border investment services and strengthening supervisory convergence, including through a reinforced role for the European Securities Markets Authority (ESMA). Member States broadly supported advancing technical work on the package, while highlighting the importance of avoiding additional administrative burdens and considering the impact on smaller national markets. Under “other business”, the Council also discussed the impact of the Carbon Border Adjustment Mechanism (CBAM) on the EU’s outermost regions following information provided by France, which proposed a targeted adaptation under article 349 TFEU for products such as cement, steel, aluminium and fertilisers imported for local use in those territories. While several Member States recognised the challenges faced by these regions, others cautioned that introducing exemptions could create issues related to tax control, monitoring, and the risk of tax avoidance, suggesting that alternative measures, such as targeted support schemes, could be explored. The Council ultimately took note of the information and the interventions by delegations and agreed that technical discussions should continue to assess possible solutions. The Cyprus Presidency reiterated its objective of reaching a Council general approach on the CBAM file by June 2026, while underlining the need to avoid loopholes that could undermine the mechanism’s environmental objectives.
European Commission’s March tax infringement decisions
On 11 March 2026, the European Commission published its monthly package of infringement decisions, while also closing 44 cases where compliance issues had been resolved. In the area of taxation, the Commission opened an infringement procedure against France for the incorrect implementation of Directive 2011/96/EU (the Parent-Subsidiary Directive- PSD). According to the Commission, France restricts the exemption from withholding tax on profit distributions from a French subsidiary to a parent company in another Member State by requiring the parent company’s “place of effective management” to be located in the EU, whereas the PSD only requires the parent company to be considered tax resident in a Member State under national law. France now has two months to respond to the Commission’s concerns. In addition, the Commission decided to refer Spain to the European Court of Justice (ECJ) for failing to transpose two VAT directives into national law by the 31 December 2024 deadline: Directive (EU) 2020/285 on the special scheme for small enterprises and Directive (EU) 2022/542 amending the rules on VAT rates. The Commission is requesting the ECJ to impose financial sanctions due to the continued failure to notify the required national measures.
ECJ rules that bilateral tax treaties must not result in loss of personal and family tax deductions
On 12 March 2026, in its judgment in Case C-150/25, the European Court of Justice (ECJ) clarified the scope of article 45 TFEU on the freedom of movement of workers in relation to cross-border income taxation and personal and family tax deductions. The case concerned a Belgian resident who received employment income in Belgium, Luxembourg and France and who, in Belgium, was allowed to deduct maintenance payments only in proportion to his Belgian-source income, while the corresponding part linked to his French-source income was not effectively taken into account in France. The Court held that article 45 TFEU precludes such a result where resident taxpayers with no foreign-source income benefit fully from the deduction and where, under the applicable bilateral tax convention, the loss of the deduction in the State of residence should have been offset by a corresponding tax advantage in the State of employment. According to the ECJ, a Member State of residence may be relieved of its obligation to take full account of a taxpayer’s personal and family circumstances only where those circumstances are in fact fully taken into account overall. If that is not the case, the taxpayer is placed in a less favourable position than a purely domestic worker, which constitutes a restriction on the freedom of movement for workers, unless justified by overriding reasons in the public interest. The judgment therefore confirms that the practical application of bilateral tax conventions must not result in a cross-border loss of personal and family tax advantages protected by article 45 TFEU.
ECJ rules on VAT deduction rights for entertainment expenses, late invoices and technical transmission faults
On 12 March 2026, the European Court of Justice (ECJ) delivered several judgments clarifying the scope of VAT deduction rights and refund entitlements under Directive 2006/112/EC (VAT Directive). In Case C-515/24, the Court ruled in its judgment that EU law does not preclude national legislation excluding the deduction of input VAT on entertainment-related expenses where such exclusions fall within the standstill clause in article 176 of the VAT Directive. The Court recalled that while the right to deduct VAT is a fundamental element of the VAT system, article 176 of the VAT Directive permits Member States to retain pre-existing limitations under a standstill clause. It found that the Spanish provisions at issue had been adopted prior to Spain's accession and entered into force on the date of accession in 1986, without extending the scope of the exclusion. The Court therefore concluded that Member States may maintain rules denying deduction for expenditure related to leisure events or client hospitality provided free of charge. In its judgment in Case C-521/24, the ECJ held that Member States may not refuse VAT deduction for intra-Community acquisitions solely because the taxable person exercised that right in the period during which it actually received the relevant invoices rather than in the fiscal period in which the acquisitions were made. The Court found that, where the substantive conditions for deduction are met and the taxable person acted in good faith within the applicable limitation period, refusing the deduction on that purely formal ground would make the exercise of the right excessively difficult in practice, contrary to articles 168, 178, 179, 180 and 182 of the VAT Directive. In Case C-527/24, the Court confirmed in its judgment that a technical fault in the electronic transmission of a VAT refund application cannot deprive a taxable person of its refund rights or access to an effective judicial remedy. The Court found that where an application had been duly submitted and received but could not be processed owing to an unreadable electronic file, the tax authorities were required under articles 170 and 171 of the VAT Directive read together with Directive 2008/9/EC to treat the application as submitted, notify the applicant of the fault and, where appropriate, request a corrected file.
UN to hold Special Meeting on International Cooperation in Tax Matters on 27 March 2026
On 27 March 2026, the United Nations Economic and Social Council (ECOSOC) will hold a Special Meeting on International Cooperation in Tax Matters at the UN Headquarters in New York. Against the background of increasing fiscal pressures and significant revenue losses caused by policy gaps, revenue leakage and illicit financial flows, the meeting will examine how countries can strengthen domestic resource mobilisation to support the delivery of the 2030 Agenda for Sustainable Development. Building on the Sevilla Commitment adopted at the Fourth International Conference on Financing for Development, the programme will include discussions on the implementation of international tax cooperation commitments and practical measures to improve domestic revenue mobilisation. A dedicated panel will focus on the modernisation of international tax nexus rules, examining the limitations of the traditional permanent establishment concept in a digitalised economy and the potential role of significant economic presence rules in allowing source jurisdictions to tax digital and remote business activities. Participants will discuss key technical challenges related to implementing such rules, including income attribution, enforcement difficulties, treaty conflicts, and the risk of double taxation. Another session will address the increasing use of artificial intelligence in tax administration, exploring its potential to enhance compliance management, fraud detection and risk assessment, while also examining governance concerns such as data protection, algorithmic bias and safeguards to protect taxpayer rights. Based on a provisional agenda, the upcoming meeting is also expected to be discussed by EU Member States in the Council Working Party on Tax Questions on 18 March 2026.
European Commission highlights the role of energy taxation in lowering electricity bills in its Citizens Energy Package
On 10 March 2026, the European Commission published a Communication on the Citizens Energy Package, aimed at improving energy affordability for households, strengthening consumer protection and addressing energy poverty. The package outlines a series of policy actions focused on lowering energy bills, empowering consumers and improving the implementation of existing EU energy legislation. From a tax perspective, the communication highlights that national taxes and levies account for on average for around 25% of household electricity prices and notes that Member States have flexibility under Directive 2003/96/EC (Energy Taxation Directive) and Directive 2006/112/EC (VAT Directive) to reduce electricity taxation. The Commission therefore encourages Member States to review national energy taxes and levies and consider targeted reductions of excise duty rates on electricity, particularly for vulnerable and energy-poor households. According to the Commission, lowering electricity taxation to the EU minimum could reduce consumer bills by around 14% (approximately € 200 per year). The Communication does not introduce new EU tax legislation but emphasises that Member States can use existing fiscal instruments to support electrification and improve energy affordability. In addition, the package includes measures related to network charges, supplier switching, energy communities and consumer protection, while calling for improved implementation of existing EU energy rules.
European Parliament adopts recommendations on tax incentives and regulatory simplification to address the EU housing crisis
On 10 March 2026, the European Parliament adopted a resolution setting out recommendations to address the EU’s housing crisis, following the final report of the Special Committee on the Housing Crisis, which was approved by 367 votes in favour, 166 against and 84 abstentions. The report highlights growing concerns over housing affordability and shortages across the EU and calls for coordinated action to support construction and renovation. Among the measures proposed, MEPs advocate for incentive-based tax systems to support low- and middle-income households, the removal of tax barriers, such as high registration fees for first-time buyers, and tax conditions that encourage long-term rentals. The resolution also calls for increased investment in social and affordable housing, improved energy efficiency of residential buildings, and the reallocation of unused Recovery and Resilience Facility resources to housing projects. In addition, Parliament urges the European Commission to reduce administrative burdens through a simplification package for the housing sector, including faster permitting procedures with a proposed maximum processing time of 60 days. The recommendations also highlight the need to balance the growth of short-term rentals with access to affordable housing and to strengthen the EU’s construction and renovation sector.
AMLA to hold public hearings on draft technical standards for customer due diligence and transaction criteria on 24 March 2026
On 24 March 2026, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) will hold a public hearing on two draft Regulatory Technical Standards (RTS) under Regulation (EU) 2024/1624. The hearing will take place in two sessions and is open to registered participants. The morning session (10:00-12:00 CET) will address the draft RTS developed under article 19(9), which establishes criteria for identifying business relationships, occasional and linked transactions, and applicable lower thresholds. The afternoon session (13:30-15:30 CET) will focus on the draft RTS under article 28(1), specifying how obliged entities should apply customer due diligence (CDD) requirements in practice, including the information and documentation to be collected. Both the draft RTS under article 19(9) and article 28(1) are currently subject to public consultations, which will remain open until 8 May 2026. Prior registration is required to participate in both the morning and the afternoon sessions.
