OECD/G20 Inclusive Framework approves Pillar Two side-by-side system and simplification package
On 5 January 2026, the 147 members of the OECD/G20 Inclusive Framework on BEPS approved a package establishing a “side‑by‑side system” (SbS Regime) and a set of Pillar Two simplifications, building on the G7 statement from June 2025 that outlined how the US minimum tax system could operate in parallel with the global minimum tax (GloBE). Under the SbS Regime, multinational groups headquartered in jurisdictions recognised as having a “Qualified SbS Regime” may elect, for fiscal years starting on or after 1 January 2026, to apply specific safe harbours that limit overlaps between the GloBE Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR), while Qualified Domestic Minimum Top‑up Taxes (QDMTTs) remain fully applicable. The Inclusive Framework will maintain a central list of approved regimes, with the United States currently the only jurisdiction confirmed as qualifying. The package also introduces simplification measures, including a Simplified Effective Tax Rate safe harbour from 2027, a one‑year extension of the Transitional Country‑by‑Country Reporting safe harbour and technical adjustments to reduce compliance complexity and better align the treatment of substance‑based tax incentives by bringing non‑refundable credits closer to refundable ones. The European Commission has welcomed the agreement and confirmed that no amendment to the EU Pillar Two Directive is required, as the SbS arrangements can be implemented under existing safe-harbour provisions. Having received approval from Cyprus, which is not part of the OECD Inclusive Framework, the Commission has published an information notice in the EU’s Official Journal to acknowledge this agreement. The OECD will present the package in more detail during an online webinar on 13 January 2026 (16:00–17:00 CET), with registration required.
Tax priorities of the Cyprus Presidency of the Council of the EU
Under the motto “An Autonomous Union. Open to the World.”, Cyprus took over the Presidency of the Council of the European Union on 1 January 2026. Over the next six months, in the area of taxation, the Cyprus Presidency will focus on “promoting the EU tax decluttering and simplification agenda, as part of the broader efforts to strengthen competitiveness”, according to its programme. In particular, it will launch work on the recast of the Directive on administrative cooperation (DAC) in taxation and is prepared to open discussions on the upcoming omnibus package to streamline direct tax rules. The reform of the EU Customs Union constitutes a priority for the Cyprus Presidency, where it will aim to reach a political agreement on the Regulation establishing the Union Customs Code and the European Union Customs Authority at the 12 June Ecofin meeting, according to a draft agenda. Efforts will also be undertaken to continue and possibly conclude work on the revision of the Tobacco Taxation Directive and to conclude the technical work regarding the revision of the proposal for the VAT rules on distance sales of imported goods and import VAT.
European Commission launches public consultation on the DAC recast
On 16 December 2025, the European Commission launched a call for evidence asking for feedback on the recast of the Directive on Administrative Cooperation in tax matters (DAC), scheduled for publication in Q2 2026, with the aim of clarifying, simplifying and improving EU tax cooperation rules in response to issues identified in the recent DAC evaluation and recommendations from the European Court of Auditors. In particular, the Commission will assess whether consolidating the DAC and all its amendments (DAC1–DAC9) into a single legal instrument would enhance clarity and readability, while also examining options to streamline reporting obligations, eliminate duplications, address inconsistencies or inefficiencies and consider possible amendments to DAC6 reporting hallmarks. In parallel, a public consultation in form of an online questionnaire has also been launched to collect the views of stakeholders on the main policy options and their possible cost savings.Both the call for evidence and the public consultation are open until 10 February 2026.
ECOFIN agreement on temporary customs duty on low-value e-commerce parcels
During the ECOFIN meeting on 12 December 2025, EU Member States agreed to introduce a temporary fixed 3 € customs duty on e-commerce parcels below 150 € entering the European Union and sent directly to consumers from third countries. The measure will apply from July 2026 and aims to address the rapid increase in low-value imports, while bridging the gap until the EU Customs Data Hub becomes operational in 2028 as part of the Customs Reform Package. The temporary customs duty is distinct from ongoing discussions on a potential EU handling fee, which remains under negotiation and has not been adopted. The measure follows the earlier ECOFIN commitment of 13 November 2025 to move towards the abolition of the 150 € customs duty relief threshold and aims to address distortions arising from the customs duty exemption applicable to parcels below that threshold, which has allowed third-country sellers to be more competitive than EU-based businesses. The Commission is pursuing formal adoption and implementation details, as work on longer-term customs reform continues.
EDPS opinion on VAT data access for EPPO and OLAF
On 7 January 2026, the European Data Protection Supervisor (EDPS) published its opinion on the European Commission’s proposal to amend Regulation (EU) No 904/2010. The proposal would allow the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) targeted and centralised access to VAT information to combat intra-Community VAT fraud, in particular Missing Trader Intra-Community (MTIC) schemes. The EDPS notes the urgency of tackling cross-border fraud causing significant losses to EU public finances and welcomes the limited scope of the proposal, covering VAT identification numbers and B2B transaction data. It underlines that administrative VAT cooperation and criminal law enforcement follow different legal regimes and that access to administrative databases should remain exceptional. The EDPS calls for clearer legislative provisions on the exceptional nature of such access and robust safeguards under Regulation (EU) 2018/1725, including purpose limitation, data minimisation and accountability.
Save the date: EU Tax Symposium on 16 and 17 March 2026
The European Parliament and the European Commission will co-host the fourth edition of the EU Tax Symposium on 16 and 17 March 2026 at Parc du Cinquantenaire and the Hemicycle of the European Parliament in Brussels, with the participation of National Parliaments. Held under the theme, “The Future of taxation: Inequality and growth in the global economy”, the symposium will bring together policymakers, academics and stakeholders to discuss the role of taxation in addressing inequality and supporting sustainable growth. Confirmed speakers include Nobel Prize laureates Prof. Joseph Stiglitz and Prof. Philippe Aghion. Registrations will open in January, with further details to follow.
