EU Council gives final approval to a 3€ customs duty on small parcels
On 11 February 2026, the EU Council formally approved new customs duty rules for small e-commerce parcels valued under 150 € entering the EU, abolishing their duty-free exemption to address unfair competition faced by EU sellers amid booming imports. From 1 July 2026 to 1 July 2028, an interim flat-rate 3 € duty applies to each distinct item category based on tariff sub-headings. For example, a parcel with one silk blouse and two wool blouses counts as two categories, incurring 6 € total. In response to 4.6 billion such parcels entering the EU in 2024 (91% originating from China, with volumes doubling annually since 2022), the measure is expected to strengthen both EU and national budgets as a traditional own resource. It is separate from the proposed handling fees currently under discussion as part of the broader customs reform. Cyprus Finance Minister Makis Keravnos praised it for supporting EU business, security, and competitiveness through the 2028 rollout of the customs data hub.
General Court of the European Union clarifies the timing of the right to deduct input VAT
On 11 February 2026, in its judgment in Case T-689/24, the General Court of the European Union interpreted Articles 167, 168(a) and 178(a) of Council Directive 2006/112/EC on the common system of value added tax, as well as the principles of VAT neutrality and proportionality. The case arose from national proceedings concerning legislation which prevented a taxable person from deducting input VAT in the return for the period in which the substantive conditions for deduction were met if the corresponding invoice had not yet been received during that period, even though it was received before submission of the return. The Court held that such legislation is precluded by EU law. It confirmed that the right to deduct arises when the substantive conditions are satisfied and that national rules may not defer the exercise of that right solely on the ground that the invoice was received after the relevant tax period but before the return was filed, as this would undermine VAT neutrality and proportionality.
General Court of the European Union rules on the VAT treatment of unlicensed communication of works
On 11 February 2026, in its judgment in Case T-643/24, the General Court of the European Union interpreted Articles 2(1)(c), 24(1), 25(a) and (c), 73 and 78(a) of Council Directive 2006/112/EC on the common system of value added tax. The case concerned remuneration claimed by a collective management organisation for the unlicensed communication of protected works by a guest-house operator. The Court held that holders of related rights supply services for consideration when their protected works are communicated to the public without a licence, notwithstanding the fact that they cannot oppose such communication and that their remuneration is determined by national law. It further ruled that VAT applies to the total remuneration due, including any portion exceeding the fee that would have been payable under a licence.
ECON/FISC discuss pending EU tax proposals with Commissioner Hoekstra
On 9 February 2026, members of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) and Subcommittee on Tax Matters (FISC) held a structured dialogue with Commissioner Wopke Hoekstra on the taxation elements of the 2026 Commission Work Programme. The discussion focused on the possible withdrawal of five pending proposals: the financial transaction tax, transfer pricing rules, the Unshell directive, qualified majority voting for technical VAT matters and the Debt-Equity Bias Reduction Allowance (DEBRA). Commissioner Hoekstra stated that, while the economic rationale of these files remained valid, they lacked realistic prospects of adoption in the Council due to sustained Member State opposition and limited progress. He indicated that elements of certain proposals could be taken forward through alternative initiatives, including the forthcoming taxation omnibus and work on the Directive on Administrative Cooperation. For 2026, he identified tobacco taxation, simplification, DAC-related work and the Energy Taxation Directive as priority areas. MEPs, including the chairs of ECON and FISC, expressed concern about the proposed withdrawals and called for greater clarity on the Commission’s longer-term tax strategy.
Agenda of ECOFIN meeting on 17 February
On 17 February 2026, the EU Finance Ministers will hold their second meeting of the year. Based on the agenda, the Council will exchange views on the supplementary pensions package under the Savings and Investments Union and is expected to adopt a recommendation on the discharge to be granted to the Commission for the implementation of the 2024 EU general budget, as well as approve conclusions on the guidelines for the 2027 EU budget. Under the European Semester 2026, the Council is expected to approve the recommendation on the economic policy of the euro area and to adopt an implementing decision approving a modified national recovery and resilience plan under the Recovery and Resilience Facility. As a recurring item, they will also exchange views on the economic and financial impact of Russia’s aggression against Ukraine. From a taxation perspective, the Council is expected to approve conclusions on the biannual revision of the EU list of non-cooperative jurisdictions for tax purposes. It has been reported that American Samoa, Guam and the U.S. Virgin Islands are on the path to be removed from the list following enhanced cooperation and additional information provided by the U.S. Treasury.
UN tax negotiations continue at the fourth INC session in New York
From 5 to 13 February 2026, the fourth session of the United Nations Intergovernmental Negotiating Committee (INC) on the Framework Convention for International Tax Cooperation continued at UN Headquarters in New York, with discussions continuing into the week of 9 February. Negotiations advanced drafting work on the framework convention as well as the two early protocols: Protocol 1 on cross-border services taxation and Protocol 2 on dispute prevention and resolution mechanisms. As the second week opened, delegates began detailed discussions on Protocol 1, moving from broad options towards more concrete approaches on scope, nexus and methods of taxation, including debates on allocating taxing rights between residence and source jurisdictions in an increasingly digitalised services economy. Later in the session, attention turned to Protocol 2, with discussions covering the design of dispute prevention tools and resolution mechanisms. The session concluded on 13 February 2026, with work continuing towards revised and consolidated draft texts.
ECON publishes draft own-initiative report on EU financial sector tax framework
On 4 February 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) published a draft own-initiative (INI) report on a coherent tax framework for the EU’s financial sector, prepared by Rapporteur Matthias Ecke (S&D, Germany). The draft argues that fragmented national tax rules continue to hamper cross-border financial activity, distort capital allocation and weaken the Single Market, particularly in the context of completing the Banking Union, Capital Markets Union and Savings and Investment Union. It highlights concerns regarding the VAT exemption for financial services, describing it as outdated and misaligned with current market and technological developments, and points to the proliferation of uncoordinated national measures such as financial transaction taxes, bank levies and windfall taxes. The report calls for modernisation of VAT rules for financial services, greater coordination of EU-wide taxation where feasible, and the development of common minimum standards for temporary windfall taxation. The indicative plenary sitting is scheduled for 15 June 2026. The report was subsequently discussed in a FISC Subcommittee public hearing on 6 February 2026, where invited experts examined innovative approaches to the taxation of the financial sector, including existing transaction and windfall taxes and the challenges linked to the VAT exemption, with a view to informing Parliament’s recommendations to the Commission.
FISC Subcommittee to hold a meeting on 24 February
On 24 February 2026, the Subcommittee on Tax Matters (FISC) of the European Parliament will hold a meeting. According to the draft agenda published on 12 February 2026, the session will include a public hearing on “How to address the Equity-Debt Bias in Taxation?” and an exchange of views on a coherent tax framework for the EU’s financial sector. The meeting will also feature a public hearing held in the context of the preparation of FISC’s forthcoming own-initiative report on the “Feasibility of a 28th tax regime and its potential to support EU competitiveness”. As the European Commission is expected to present a proposal on a 28th regime for EU companies in the first quarter of 2026, invited experts will provide input to inform Parliament’s position. Discussions will focus on whether and how tax policy elements could be incorporated into such a regime to support competitiveness and strengthen the Single Market, including through tax incentives and the removal of tax barriers. Among the invited experts is Michael Schick, Head of Office of ETAF.
ETAF provides feedback on the DAC recast public consultation
On 10 February 2026, the European Tax Adviser Federation (ETAF) submitted its feedback to the European Commission’s consultation on a possible recast of the Directive on administrative cooperation in tax matters (DAC). ETAF supports the consolidation of the Directive and identifies the DAC6 reporting regime as the most problematic element of the current framework. It considers the removal of DAC6 the most coherent solution given legal uncertainty, divergent national implementations, and significant compliance burdens. Alternatively, ETAF outlines targeted reform options, including narrowing the scope of reportable arrangements, clarifying key concepts such as the main benefit test, extending the 30-day reporting deadline, designating the taxpayer as the sole reporting party to avoid duplicate filings, strengthening the protection of professional secrecy, and refraining from introducing new UNSHELL-related reporting obligations.
Save the date: Virtual ETAF Conference on 7 May 2026
