Agenda of ECOFIN meeting on 12 June 2026
On 12 June 2026, EU Finance Ministers will hold a meeting of the Economic and Financial Affairs Council (ECOFIN) in Luxembourg. Based on the provisional agenda, the Council is expected to seek a general approach on the Commission’s tobacco taxation package, including proposals revising the structure and rates of excise duties on tobacco products and the general arrangements for tobacco excise duties. According to media reports, a vote on the tobacco taxation package is no longer expected at the 12 June ECOFIN meeting, as Member States reportedly failed to agree on the Cypriot Presidency’s latest compromise proposal, with Sweden opposing the proposed treatment of nicotine pouches. Ministers are also expected to reach a general approach on the proposal strengthening the Carbon Border Adjustment Mechanism (CBAM) through the extension of its scope to downstream products and the introduction of new anti-circumvention measures. In addition, the Council will hold a policy debate on the market integration and supervision package, a key component of the Savings and Investment Union, and exchange views on the Commission’s 2026 European Semester Spring Package and the implementation of the revised economic governance framework. As an item without discussion, the Council is expected to approve the bi-annual ECOFIN report to the European Council on tax issues and adopt conclusions on progress achieved by the Code of Conduct Group on Business Taxation during the previous six months.
European Commission presents 2026 European Semester Spring Package
On 4 June 2026, the European Commission adopted the 2026 European Semester Spring Package, setting out economic, fiscal and policy guidance for Member States. As part of its fiscal surveillance under the revised EU economic governance framework, the Commission assessed Member States’ compliance with the EU’s deficit and debt rules and published an Article 126(3) report under the Treaty on the Functioning of the European Union (TFEU). Based on this assessment, the Commission concluded that an excessive deficit procedure should be opened for Bulgaria, while recommending the closure of Malta’s excessive deficit procedure. The Commission also found that Austria, Belgium, Finland, France, Hungary, Italy, Poland, Romania and Slovakia had taken effective action towards correcting their excessive deficits. The Package further assesses the implementation of national medium-term fiscal-structural plans and concludes that Member States benefiting from extended fiscal adjustment periods have generally complied with the related reform and investment commitments. The Commission highlights the need to safeguard fiscal sustainability, rebuild fiscal buffers and ensure debt sustainability, while continuing to support investment, competitiveness and economic resilience across the European Union.
General Court of the European Union upholds limits on VAT adjustments after closed tax inspections
On 3 June 2026, the General Court of the European Union clarified in its judgement in Case T-198/25 that Directive 2006/112/EC (VAT Directive) and the principles of effectiveness, fiscal neutrality and proportionality do not preclude national legislation that makes the adjustment of VAT improperly invoiced in respect of a period already closed by a tax inspection subject to the existence of a new fact capable of altering the findings of that inspection. The case concerned Hungarian rules under which a taxable person may request a new tax inspection only where previously unknown facts or circumstances come to light. The Court held that such procedural requirements are compatible with EU law, even where there is no risk of loss of tax revenue, provided that the taxable person has had a reasonable opportunity to exercise the right to adjustment. In the circumstances of the case, the Court noted that the taxpayer had been able to seek adjustment of the VAT improperly invoiced before the inspection, during the inspection, or through a complaint against the decision closing the inspection. The Court therefore concluded that the national rules did not render the exercise of EU law rights virtually impossible or excessively difficult.
European Commission’s June tax infringement decisions
On 4 June 2026, the European Commission published its monthly package of infringement decisions. In the area of taxation, the Commission opened an infringement procedure against Germany for allegedly breaching the freedom of establishment under Article 49 TFEU and Article 31 of the European Economic Area (EEA) Agreement. According to the Commission, Germany’s investment deduction allowance for SMEs discriminates against cross-border investments by retroactively withdrawing the tax benefit when qualifying assets are transferred to establishments in other EU or EEA countries. The Commission also sent a letter of formal notice to Poland for the incorrect transposition of Directive (EU) 2021/514 (DAC7). In particular, the Commission considers that Poland improperly exempts certain foreign digital platform operators from EU reporting obligations where an agreement has been concluded only with Poland, rather than with all relevant Member States as required under the Directive. In addition, the Commission sent an additional letter of formal notice to Spain concerning the tax treatment of rental income from residential property. The Commission argues that non-resident taxpayers remain excluded from tax base reductions available to residents, despite legislative amendments adopted in 2025, thereby restricting the free movement of capital under Article 63 of the Treaty on the Functioning of the European Union (TFEU). Germany, Poland and Spain now have two months to respond to the Commission’s concerns.
European Commission clarifies treatment of Cyprus under Pillar Two Directive
On 29 May 2026, the European Commission published a new frequently asked question (FAQ) clarifying the treatment of Cyprus’ Income Inclusion Rule (IIR) under Directive (EU) 2022/2523 ( the EU Pillar Two Directive). The clarification addresses the fact that Cyprus does not currently appear on the OECD Central Record of legislation granted transitional qualified status or on the OECD list of jurisdictions participating in the central filing and exchange framework for the 2024 reporting fiscal year. According to the Commission, the qualified status of the Cypriot IIR derives directly from Article 3(18) of the Pillar Two Directive for fiscal years commencing on or after 31 December 2023. As a result, all EU Member States should treat Cyprus as having a qualified IIR in effect. The Commission also confirmed that Cyprus can receive top-up tax information returns as of 31 May 2026 and is required to exchange information with other Member States under Directive (EU) 2025/872 (DAC9). Consequently, where a multinational enterprise group opts to file its top-up tax information return centrally in Cyprus, other Member States should not require an additional domestic filing in accordance with DAC9.
MEPs discuss the future of the VAT reverse-charge mechanism
On 2 June 2026, the European Parliament’s Subcommittee on Tax Matters (FISC) held a public hearing to examine the effectiveness of the reverse charge mechanism (RCM) in combating VAT fraud and its role within the future EU VAT framework. The discussion took place against the backdrop of the expiry on 31 December 2026 of the temporary reverse-charge measures provided for in Articles 199a and 199b of Directive 2006/112/EC (VAT Directive). These provisions allow Member States to apply sector-specific reverse charges and, in exceptional cases, a quick reaction mechanism to address sudden and massive VAT fraud. Experts agreed that the RCM has helped reduce fraud in certain sectors, particularly cases involving missing traders, but cautioned that it should remain a targeted and temporary measure rather than a long-term solution. Several speakers highlighted the risk that extensive use of reverse charges could fragment the EU VAT system, increase compliance costs and shift fraudulent activities to other sectors or Member States. The discussion also focused on the potential of digital reporting requirements under the VAT in the Digital Age (ViDA) package, with participants noting that near real-time reporting could strengthen fraud detection while preserving the integrity of the VAT system. FISC Chair Pasquale Tridico (The Left, Italy) noted that the hearing would contribute to the Subcommittee’s ongoing own-initiative report on the impact and future of the reverse charge mechanism.
OCC Portugal becomes a member of ETAF
On 1 June 2026, the Order of Certified Accountants of Portugal (OCC) officially became a full member of the European Tax Adviser Federation (ETAF). The decision was taken unanimously by the ETAF General Assembly during its meeting in Brussels on 7 May 2026. Founded in 1995, OCC is the public professional body representing certified accountants in Portugal and is responsible for regulating, supervising and promoting the profession. With approximately 70,000 members and 19 regional delegations across mainland Portugal, the Azores and Madeira, OCC is one of the country’s largest professional organisations. OCC’s accession further strengthens the Federation’s representation of regulated tax professionals across the European Union and reflects its continued efforts to promote high professional standards in the field of taxation and accounting.
OECD launches consultation on revised transfer pricing guidance for intra-group services
On 1 June 2026, the OECD launched a public consultation on proposed revisions to Chapter VII of the OECD Transfer Pricing Guidelines (TPG), which sets out the OECD’s guidance on the transfer pricing treatment of intra-group services. The discussion draft aims to modernise the existing guidance and improve its alignment with the OECD’s broader transfer pricing framework. Proposed revisions cover the accurate delineation of intra-group services, the application of the benefit test, shareholder activities, duplicative services and incidental benefits, as well as charging mechanisms, cost allocation methods and the application of transfer pricing methods to service transactions. The draft also includes additional guidance on documentation requirements, retains the simplified approach for low value-adding intra-group services and introduces 21 new practical examples. The OECD is seeking stakeholder input on a number of issues, including the treatment of shareholder activities, the use of allocation keys for indirect charging mechanisms and the treatment of stock- or share-based compensation in the context of intra-group services. Comments may be submitted until 22 July 2026.
OECD working paper examines impact of population ageing on tax revenues
On 2 June 2026, the OECD published a new Taxation Working Paper examining how population ageing may affect tax revenues across OECD countries. The study finds that ageing populations are likely to place increasing pressure on public finances as the share of working-age individuals declines while demand for age-related expenditure, including pensions, healthcare and long-term care, continues to rise. According to the OECD, labour income tax revenues are expected to face the greatest pressure, reflecting the shrinking share of the population in employment. By contrast, revenues linked to consumption, capital income and wealth may prove more resilient as older individuals tend to hold greater assets and continue to consume throughout retirement. The paper also highlights that the vulnerability of tax systems to demographic change depends not only on population trends but also on tax design, including the structure of labour, consumption and capital taxation. Simulations presented in the study suggest that, under a no-policy-change scenario, population ageing could reduce the tax-to-GDP ratio by around one percentage point on average across the OECD by 2060, although impacts vary significantly between countries.
