ECJ finds Belgium in breach of its obligations under ATAD for failure to transpose CFC deduction rules
On 26 February 2026, in its judgement in Case C-524/23, the European Court of Justice (ECJ) upheld the European Commission’s infringement action under Article 258 TFEU and found that Belgium had failed to transpose Article 8(7) of Directive (EU) 2016/1164 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (ATAD). The case concerned the Controlled Foreign Corporation (CFC) regime and, specifically, the obligation for the Member State of the taxpayer to allow a deduction from the taxpayer’s tax liability for tax paid by the controlled foreign company (or permanent establishment) in its residence state. The ECJ held that Article 8(7) of the ATAD is drafted in mandatory terms, contains no derogation, and must be implemented in national law, with Member States having discretion only over the method for calculating the deduction. The Court further ruled that this obligation applies regardless of which CFC inclusion option a Member State applies under Article 7(2) of the ATAD (including the “non-genuine arrangements” options in Article 7(2)(b)). The Court rejected arguments that minimum harmonisation under Article 3 ATAD or deterrence considerations could justify non-transposition, emphasising ATAD’s objective of combating tax avoidance while also preventing double taxation as an obstacle within the internal market. Belgium’s later legislative changes (reported to have entered into force on 1 January 2024) were not considered relevant for assessing the infringement, which is determined by the position at the end of the period set in the Commission’s reasoned opinion.
General Court of the European Union rules on the VAT treatment of intra-Community acquisitions where VAT was incorrectly invoiced
On 25 February 2026, in its judgement in Case T‑638/24, the General Court of the European Union interpreted Articles 40, 41 and 203 of Directive 2006/112/EC on the common system of value added tax (VAT Directive). The case arose from Austrian proceedings concerning a company that acquired goods dispatched from Austria to other Member States using its Austrian VAT identification number, while the corresponding intra-Community supplies were treated as exempt, but Austrian VAT had been incorrectly entered on the invoices, triggering a tax liability for the suppliers under Article 203. The referring court asked whether Austria could also tax the intra-Community acquisitions under Article 41, given that VAT was already payable in Austria on the supplies due to incorrect invoicing. The General Court held that EU law does not preclude such taxation. It clarified that Article 41, which determines the place of intra-Community acquisitions where a VAT identification number is used, and Article 203, which makes VAT payable where it is incorrectly stated on an invoice, pursue distinct objectives and may apply simultaneously. The Court further found that this parallel application does not infringe the principles of neutrality and proportionality, particularly where national law allows the correction of VAT that was incorrectly invoiced.
General Court of the European Union rules that the Belgian intermunicipal IT services association is liable to VAT
On 25 February 2026, in its judgement in Case T-575/24, the General Court of the European Union interpreted Articles 2, 9 and 13 of Directive 2006/112/EC on the common system of value added tax (VAT Directive). The case concerned Digipolis, a Belgian public-law commissioning association created under intermunicipal cooperation rules, which supplied telematics (IT/telecommunications) services and related computer equipment to its members, including founding municipalities and later-joining autonomous municipal entities. The dispute focused on a Belgian administrative practice (“emanation theory”) treating services supplied by such an association to its members, in the context of a conferral of management, as “self-supplies” and therefore outside the scope of VAT, and whether VAT treatment should differ depending on a member’s VAT status. The Court held that, where the association supplies services for consideration and independently carries out an economic activity, it must be regarded as a taxable person, and its supplies to members are, in principle, subject to VAT, without distinguishing between members based on their VAT status. It further found that the Belgian tax practice deeming those supplies to be self-supplies cannot override the VAT Directive so as to remove those transactions from VAT.
MEPs quiz stakeholders on potential tax elements in the 28th regime for EU companies
On 24 February 2026, the European Parliament’s Subcommittee on Tax Matters (FISC) held a public hearing on the feasibility of a “28th tax regime” and how tax-policy elements might support EU competitiveness, in the context of an expected Commission proposal on a 28th regime for EU companies in Q1 2026. In the discussion, Reinhilde Veugelers (Bruegel) argued for a targeted, “narrow-and-deep” approach (“Regime 0”) focused on innovative scale-ups, including more favourable timing for employee equity compensation (e.g., taxation at sale rather than grant) and a highly digitalised, EU-wide recognised incorporation process. Apostolos Thomadakis (CEPS) emphasised that an optional 28th framework should aim at reducing fragmentation through a modular design (starting with corporate-law elements), while any tax layer should prioritise neutrality and practical simplification (e.g., smoother VAT/withholding tax procedures) rather than full tax harmonisation. Michael Schick (ETAF) underlined the day-to-day compliance burdens arising from divergent national rules and warned against creating an additional “parallel” rulebook; he stressed the need for simplification, legal certainty and coherence with existing initiatives, while recalling the Treaty constraints and unanimity requirement for meaningful tax provisions.
FISC debates the future direction of financial sector tax policy
On 24 February 2026, the European Parliament’s Subcommittee on Tax Matters (FISC), following a public hearing on the topic, discussed the draft own-initiative report by Matthias Ecke (S&D, Germany) on a coherent tax framework for the EU’s financial sector, under the lead of the ECON Committee. The rapporteur focused on the long-standing VAT exemption for financial services, arguing that it has created structural fragmentation and prompted Member States to introduce numerous sector-specific taxes, thereby distorting competition and hindering capital market integration. He stressed that the report aims to provide an analytical basis rather than prescribe specific solutions, pending the outcome of the Commission’s ongoing study on the exemption. Political groups expressed differing views: Regina Doherty (EPP, Ireland) warned against additional sectoral taxation that could undermine competitiveness and supported sharing best practices, particularly in relation to savings and investment accounts; Gilles Boyer (Renew, France) called for simplification and predictability while expressing reservations about windfall or sectoral taxes; and Jussi Saramo (The Left, Finland) advocated reconsidering an EU-wide Financial Transaction Tax (FTT) as a tool to raise revenue and address market distortions. The rapporteur concluded that there was broad recognition of fragmentation in financial sector taxation, while acknowledging divergent views on the appropriate policy response. The deadline for amendments was set for 18 March 2026, with consideration scheduled for 16 April 2026, and a vote in ECON planned for 5 May 2026.
Public hearing addresses options to address the debt-equity bias and the future of DEBRA
On 24 February 2026, the European Parliament’s Subcommittee on Tax Matters (FISC) held a public hearing on how to address the long-standing debt-equity bias in corporate taxation, in light of the Commission’s intention to withdraw the debt-equity bias reduction allowance (DEBRA) proposal. Experts broadly agreed that the preferential tax treatment of debt over equity creates structural distortions, encouraging higher corporate leverage and increasing complexity. Prof. Michael Devereux (Oxford University Centre for Business Taxation) argued in favour of improving the tax treatment of equity through an Allowance for Corporate Equity (ACE), rather than further restricting interest deductibility, noting that equalising treatment could reduce leverage and compliance burdens. Paolo Ludovici (Invest Europe) questioned whether existing EU rules, including ATAD’s interest limitation and anti-hybrid provisions, already constrain the bias and warned against overregulation, suggesting investor-side incentives as an alternative. Tove Maria Ryding (Eurodad) called instead for stricter limits on interest deductibility and broader international reform, cautioning that equity allowances risk fuelling a “race to the bottom”. While there was consensus that the bias remains a real issue, views diverged sharply on the appropriate policy response and the future of DEBRA.
EESC supports the proposal granting EPPO and OLAF access to EU-level VAT data
On 18 February 2026, the European Economic and Social Committee (EESC) adopted its opinion on the Commission’s proposal to amend Regulation (EU) No 904/2010 to grant the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) access to VAT information exchanged at the EU level. The Committee expressed full support for the initiative, considering it a necessary step to strengthen the fight against VAT fraud, particularly given the significant annual losses from Missing Trader Intra-Community fraud. The EESC highlighted that enabling swift access to centrally managed VAT data would improve coordination, reduce delays in investigations and reinforce cooperation through existing mechanisms such as Eurofisc. It noted that the proposal is based on an ex-post evaluation and does not introduce new reporting obligations for businesses, thereby respecting the principles of subsidiarity and proportionality. At the same time, the Committee stressed the importance of strict compliance with data protection rules, including the GDPR and the specific regime under the EPPO Regulation. The EESC also underlined that improved VAT fraud enforcement contributes to fair competition in the internal market and supports the protection of the EU’s financial interests and own resources. However, it has been reported that during the 19 February meeting of the Council Working Party on Tax Questions (Indirect Taxation-VAT), several Member States questioned the inclusion of OLAF within the scope of the proposal and the absence of an impact assessment, raising concerns about its mandate and operational capacity. According to the provisional agenda, EPPO and OLAF are expected to present the proposal at a forthcoming meeting of the same Working Party on 4 March 2026. Furthermore, based on the draft agenda, the ECOFIN Council aims to reach a political agreement on the proposal by 10 March 2026.
ECA adopts Opinion on proposed Single Market and Customs Programme
On 27 February 2026, the European Court of Auditors (ECA) published an Opinion on the European Commission’s proposal of 3 September 2025 for a unified Single Market and Customs Programme, which is part of the Commission’s legislative package for the EU’s next long-term budget: the 2028-2034 Multiannual Financial Framework (MFF). Although the auditors welcome the consolidation of five existing instruments (the Customs Programme, the Fiscalis Programme for taxation cooperation, the Single Market Programme, the EU Anti-Fraud Programme and OLAF-related investigative IT systems), the ECA emphasises the need for clearer objectives, governance and performance indicators for tax-related components, notably EU funding for VAT cooperation, tax IT systems and data-exchange tools supporting cross-border enforcement. The ECA further cautions that the draft regulation does not sufficiently demonstrate how resources allocated to taxation and customs digitalisation will align with EU strategic priorities or deliver measurable results, stressing the importance of transparency, accountability and sound financial management in areas critical to combating VAT fraud and protecting the EU’s financial interests.
European Commission launches workshop on simplifying EU excise procedures
On 23 March 2026 (10:00-12:30 CET), the European Commission will host an online workshop for stakeholders titled “Reality check on simplifying excise procedures”, as part of its broader “Reality Check” series, which aims to identify simplification measures to support EU competitiveness. The event will gather industry representatives to share practical experiences with excise duties under the framework of Council Directive (EU) 2020/262, which governs the movement of energy products and electricity, alcohol and alcoholic beverages, and manufactured tobacco within the internal market. Discussions will focus on operational challenges linked to cross-border sales, import/export logistics, intra-EU movements, authorisation requirements (e.g. warehouse keepers and certified consignors), and divergent national administrative practices. Participants will also be invited to highlight good practices, propose simplification measures and explore potential digital solutions. Prior registration is required and is open until 18 March 2026 (13:00 CET).
OECD announces new Head of Secretariat for Global Forum
On 27 February 2026, the Global Forum on Transparency and Exchange of Information for Tax Purposes announced the appointment of a new Head of Secretariat at the OECD Centre for Tax Policy and Administration in Paris, with the mandate commencing on 23 March 2026. The Head of Secretariat will oversee the work supporting the Forum’s 172 members in advancing tax transparency and the effective exchange of information worldwide. The Global Forum monitors the implementation of international standards on the exchange of information on request (EOIR) and the automatic exchange of information (AEOI), including the Common Reporting Standard and the Crypto-Asset Reporting Framework, through peer reviews and capacity-building initiatives. The appointee brings more than 25 years of experience in international taxation, having previously served as Director General of Taxation at Spain’s Ministry of Finance, Deputy Chair of the OECD Committee on Fiscal Affairs, and Chair of the Global Forum from 2017 to 2022. The OECD indicated that this appointment will support ongoing efforts to strengthen international tax co-operation and combat tax evasion and avoidance.
