Ursula von der Leyen to deliver State of the Union address on 16 September
From 9.00 on 16 September, European Commission President Ursula von der Leyen will deliver her annual State of the European Union (SOTEU) speech, in the European Parliament Plenary session in Strasbourg. This year’s speech is expected to outline the impact of the Commission's work over the past year and its plans for the future, with a focus on European defence and security, the EU's continued support for Ukraine in the face of Russia's war of aggression, the situation in the Middle East, competitiveness, jobs and sustainable prosperity, the fight against climate change, the EU's next long-term budget post-2027, democratic resilience, migration management and how to protect core EU values. Canada's Prime Minister Mark Carney will attend the debate as a guest of honour and MEPs will react by assessing the Commission's work and plans for the year ahead while presenting their own priorities. The debate can be followed live here.
Public consultation on the Tax simplification omnibus now open
The European Commission opened on 10 September a public consultation on its Tax Simplification Omnibus proposal, which proposes targeted amendments to six existing EU direct tax directives. It would notably remove minimum holding requirements for withholding tax exemptions under the Parent-Subsidiary Directive and the Interest and Royalties Directive, introduce a new EU-wide R&D allowance under ATAD, delete the imported hybrid mismatch rule, introduce a Pillar Two carve-out and an SME exemption from controlled foreign company rules, and make the 30% EBITDA cap mandatory for the interest limitation rule. Feedback can be submitted in all EU languages via the Commission’s Have Your Say portal until 5 November 2026 at midnight (Brussels time).
European Commission consults on VAT and the circular economy
The European Commission opened on 9 September a public consultation on its upcoming Circular VAT initiative, due for adoption in Q2 2027, which will amend the VAT Directive on three fronts: second-hand goods, donation versus destruction of viable goods, and VAT deduction rules for passenger cars. The initiative aims to correct tax-driven distortions such as the denial of VAT deduction on resold second-hand, refurbished or remanufactured goods, the current incentive to destroy rather than donate viable goods, and the lack of incentive for businesses to choose less-polluting cars. Policy options under consideration include making the current margin scheme mandatory, digitalising record-keeping and reporting, removing the right to deduct VAT on viable goods that are intentionally destroyed, expanding the scope of the small gifts' exception, harmonising VAT relief for donations made to officially recognised charities and full VAT deductions for non-polluting vehicles. To prepare its proposal, the Commission will run an evaluation and an impact assessment from Q3 2026 to Q1 2027, in parallel with this public consultation, which includes both an open feedback submission and a targeted questionnaire, with responses due by 4 November 2026.
ETAF at AMLA hearing on the draft RTS on risk assessment for the non-financial sector
On 10 September, ETAF joined the public hearing organised by the Anti-Money Laundering Authority (AMLA) as part of the ongoing public consultation on draft Regulatory Technical Standards under Article 40(2) of Directive (EU) 2024/1640 (AMLD6), which will determine how supervisors across the EU assess the money laundering risk of obliged entities in the non-financial sector, including tax advisers, on a harmonised basis. In his intervention, ETAF Head of Office Michael Schick focused on three points: the definition of "small obliged entity", arguing that the proposed thresholds of fewer than 5 staff and €600 000 turnover are too low, noting that the turnover criterion already excludes firms that would otherwise qualify as small and that ongoing consolidation in the tax advisory market will push more firms above the thresholds, and calling instead for a threshold of fewer than 10 staff and turnover below €1.5 million. He also explained that completing the initial assessment by 31 December 2029 and subsequently reassessing entities annually, or every three years for low-risk entities, is not feasible given the lack of necessary IT infrastructure and human resources of most national supervisors, proposing that at least five to seven years be allowed for the initial assessment, with at least five years between periodic follow-ups. On the data points required under Annex I and Annex II, he further argued that many are not relevant to how tax advisory firms actually work, already covered by other rules, or too vague to answer consistently. The consultation runs until 27 September 2026.
EU Inc. tax provisions remain highly contested
The Council’s Company Law Working Party met on 10 September to examine a second compromise text on the EU 28th regime proposal, prepared by the Irish Presidency, with a special technical discussion on the EU Employee Stock Options (EU-ESO) with fiscal attachés. Key changes in the text include clarifying that the Regulation does not touch employment, tax, social security or insolvency law, which remain under national law; narrowing and clarifying the "digital-only," online payment and "once-only submission" rules; strengthening oversight at company formation and throughout its life; narrowing the non-discrimination principle to cross-border cases only; introducing a new anti-abuse clause targeting artificial arrangements; extending the implementation deadline from 12 to 27 months. The EU-ESO tax provisions remain highly contested, with some countries valuing them, particularly for avoiding tax on unrealised gains, and others questioning whether tax measures belong in such legislation not requiring unanimity. In its compromise text, the Presidency proposed to adjust eligibility thresholds excluding companies exceeding €450 million or 1,000 employees, to add an anti-fraud safeguard for undervalued share disposals, and to add stronger language confirming Member States keep control over tax residency rules and how gains are taxed. The Presidency views the question of whether to keep tax provisions as political and best addressed at Coreper level, while asking the Working Party to focus on technical questions only, notably whether the scope of the EU-ESO scheme’s taxation provisions should be further narrowed. However, during the 10 September meeting, around 19 Member States reportedly expressed concerns on the tax provisions. The next Company Law Working Party meeting will take place on 17 September 2026.
Informal ECOFIN meeting in Dublin to focus on technology's impact on the EU economy
EU economic and financial affairs ministers will meet informally on 18-19 September in Dublin under the theme "Europe's digital moment", focusing on technology's impact on the EU economy and competitiveness. Day one will open with a working lunch on the Commission's recent report on banking sector competitiveness, examining how a resilient banking sector can channel savings into productive investment and support growth, followed by a working session on how technological change is reshaping global finance, featuring presentations from Stripe CEO Patrick Collison and Bank for International Settlements General Manager Pablo Hernández de Cos. Day two's working session will cover AI's economic impact in Europe, with the IMF setting out structural considerations anchored by a presentation from IMF Managing Director Kristalina Georgieva.
ECON committee adopts its recommendations on EU corporate tax policy
MEPs from the European Parliament's Economic and Monetary Affairs (ECON) committee adopted on 10 September recommendations on how the EU should approach corporate tax policy in light of the situation at the global level. The report, drafted by MEP Kinga Kollár (EPP, Hungary), regrets that the coexistence of Pillar II with other concurrent domestic minimum tax regimes, as foreseen by the Side-by-Side (SbS) agreement with the US, weakens the reform and creates further fragmentation, and therefore asks the Commission to analyse and publish an impact assessment of the SbS, including potential revenue losses for Member States. It also asks the Commission to explore further simplification opportunities within the OECD, calls on Member States to advance speedily on the EU's tax simplification agenda, and asks the Commission to re-examine its BEFIT proposal to address potential inconsistencies with the new Pillar II rules, and to consider a new, narrower proposal following a step-by-step approach. The report will be submitted for a final vote at the October Plenary Session.
MEPs and tax experts discuss how to improve tax compliance in the EU
On 7 September, the European Parliament’s Subcommittee on tax matters (FISC) held a public hearing on taxation trends in EU Member States, covering the interplay between tax design, incentives and policy goals. Speaking for the Commission, Lotte Taylor presented the latest Annual Taxation Report, highlighting continued heavy reliance on labour taxation and arguing that competitiveness should focus on "taxing better" rather than simply taxing less, with simplification and stronger compliance as key priorities. Michael Jäger of the Taxpayers Association of Europe stressed that compliance cannot be improved through audits and penalties alone, calling for simpler, more predictable rules for SMEs while warning against excessive tax pressure. For his part, Bruegel’s Pascal Saint-Amans argued that EU tax policy is shifting from combating evasion towards competitiveness and growth, calling for better coordination on tax incentives, capital taxation and Pillar II, and noting that digitalisation and AI create new tax challenges. MEPs focused on the tax burden on labour and the need to address wealth and capital taxation, while also questioning whether the tax omnibus could facilitate avoidance, the treatment of digital multinationals, and the impact of tax simplification on SMEs and fairness. All the presentations can be found here.
Joint EP hearing examines how organised crime exploits VAT and customs loopholes
At a joint CONT/IMCO/FISC hearing on 7 September on countering VAT and customs fraud as part of the Anti-Fraud Architecture revision, speakers examined how organised crime exploits VAT and customs loopholes across the Single Market. Marie Lamensch (UCLouvain) argued that decades-old fraud patterns show the rules themselves create opportunities for crime, calling for genuine fraud-proofing of EU legislation, a reconsideration of mechanisms such as reverse-charge, and legally interoperable VAT and law-enforcement data, while warning against reflexively adding bureaucracy. Pablo Tedo Murua (OLAF) described organised networks exploiting the Single Market's openness and speed via shell companies and transit fraud, calling for closer administrative-criminal cooperation and EU-wide visibility. Klemen Oven (DG TAXUD) put the EU VAT compliance gap at €128 billion in 2023, noted that Eurofisc has uncovered €13.8 billion in fraudulent or suspicious activity since 2019, and flagged that certain customs data-sharing between Member States remains largely voluntary pending the ongoing customs reform. Several MEPs pressed panellists on port shopping under customs procedure, the case for higher sanctions, the impact of the new €3 customs duty on low-value consignments, and OLAF's access to and readiness for the future EU customs data hub.
OECD Inclusive Framework releases new Global Minimum Tax implementation package
The OECD/G20 Inclusive Framework on BEPS (Inclusive Framework) released on 11 September a package of documents to support the consistent implementation and application of the Global Minimum Tax. The terms of reference and methodology for the full legislative review set out the framework that Inclusive Framework members will use to assess the consistency of domestic rules implementing the Global Minimum Tax (GMT), as part of the peer review process. The Inclusive Framework has also released an update to the GloBE Information Return (GIR), which incorporates the simplifications included in the Side-by-Side package agreed by the Inclusive Framework in January 2026. These revisions to the GIR will apply only to GIRs filed in respect of fiscal years commencing on or after 31 December 2025. A revised XML schema is now being developed to incorporate these agreed changes and should be released shortly, allowing tax administrations and MNEs ample time to update their information collection, reporting, GIR filing and exchange systems. In addition, further administrative guidance has been published to address the treatment of explicitly conditional taxes and the use of local financial accounting standards under a Qualified Domestic Minimum Top-up Tax (QDMTT).
OECD Tax Policy Reforms 2026 report shows modest revenue-raising despite fiscal pressure
Governments introduced tax reforms in 2025 to support growth and investment, but revenue-raising responses to mounting pressure on public finances generally remained modest, according to the OECD Tax Policy Reforms 2026, published on 8 September, which compares reforms introduced or announced across 92 jurisdictions. Personal income tax reforms generally aimed to make systems more progressive, through higher top rates and changes to capital income taxation, alongside continued targeted relief for households facing cost-of-living pressures and measures to attract high-skilled workers, wealthy individuals and nationals living abroad. Corporate income tax measures remained focused on investment and competitiveness, and continued targeted incentives for R&D, AI, defence and other strategic sectors, alongside more frequent higher taxes on financial institutions and other highly profitable sectors. VAT reforms focused on the digital economy, including extending obligations to non-resident suppliers and online platforms, while health-related taxes, particularly on cigarettes and new tobacco and nicotine products, were among the most common revenue-increasing measures, alongside increased or expanded carbon pricing and reduced fuel or electricity taxes.
