EU agrees on Customs Union reform and selects Lille as the seat of the new EU Customs Authority
On 26 March 2026, the Council and the European Parliament reached a political agreement on a major reform of the EU Customs Union, representing the most significant overhaul since 1968, which the European Commission subsequently welcomed. In parallel, on 25 March 2026, the co-legislators agreed to designate Lille (France) as the seat of the future EU Customs Authority (EUCA), a central component of the reform. The legislative package introduces a data-driven customs framework centred on a new EU Customs Data Hub, enabling businesses to submit customs information once via a single EU portal and allowing national authorities to access real-time data to strengthen controls and risk management. From a tax perspective, the reform aims to improve the collection of customs duties and enhance the detection of customs and VAT fraud, particularly amid rapidly growing e-commerce flows. The agreement removes the €150 duty exemption for imported goods. It introduces a temporary €3 duty on small consignments from 1 July 2026, alongside a new EU-wide handling fee to be set by delegated act and applied by 1 November 2026. It also shifts compliance obligations to e-commerce platforms, which will be treated as importers responsible for customs formalities and payments, with penalties foreseen for systematic non-compliance. In addition, a new “trust and check” trader category will grant highly compliant businesses simplified procedures and reduced administrative burdens. The EUCA will support cooperation between national customs authorities by coordinating EU-level risk management and analysing data generated through the EU Customs Data Hub, reflecting a move towards more integrated governance at EU level. The EU Customs Data Hub is expected to become operational for e-commerce in July 2028 and will be progressively extended to all goods by March 2034. The designation of Lille and the overall reform will be formally confirmed once the legislative act revising the Union Customs Code is formally adopted and enters into force.
EU-Australia trade agreement to reduce luxury car tax barriers and tariffs for EU exports
On 24 March 2026, the European Commission announced the conclusion of negotiations on an EU-Australia free trade agreement (FTA), aimed at strengthening trade and investment relations and reducing fiscal and regulatory barriers to market access. From a tax perspective, the agreement will remove over 99% of tariffs on EU exports to Australia, eliminating approximately €1 billion annually in duties and contributing to a level playing field for EU businesses. In addition to tariff liberalisation, the agreement addresses specific consumption tax measures affecting market access, notably Australia’s luxury car tax, which applies to vehicles exceeding a certain price threshold. According to the Commission’s Questions and Answers, Australia has committed to increasing the threshold for electric vehicles to AUD 120,000, below which the tax will not apply, a change expected to benefit EU manufacturers in particular, with estimates suggesting that around 75% of electric vehicles will be exempt under the revised threshold. More broadly, the agreement is expected to support increased EU exports, including in the automotive sector, while also improving access to services markets and public procurement, and strengthening supply chains, including for critical raw materials. The agreement also includes provisions facilitating digital trade and reducing non-tariff barriers, which, together with tariff and tax adjustments, are intended to enhance competitiveness and reduce compliance costs for EU businesses operating in the Australian market.
General Court of the European Union clarifies application of VAT standstill clause for travel agents’ services outside the EU
On 25 March 2026, in its judgment in Case T-221/25, the General Court of the European Union clarified the scope of the VAT standstill clause under article 28(3) of the Sixth Directive 77/388/EEC and article 370 of Directive 2006/112/EC in relation to travel agents’ services connected with travel outside the European Union. The case concerned Belgian legislation under which such services remained subject to VAT, despite a legislative amendment in 2000 removing an explicit provision excluding them from exemption. The Court held that EU law does not require Member States to maintain an express derogation from the VAT exemption in order to rely on the standstill clause, provided that the national legislation continues, in substance, to subject the transactions to VAT. It further found that a legislative amendment which removes an explicit derogation but maintains the taxation of the services implicitly does not necessarily constitute a change in the main approach of the legislation. According to the Court, such amendments may still fall within the scope of the standstill clause where the essential characteristics of the tax treatment remain unchanged. The judgment therefore confirms that Member States may continue to tax travel agents’ services relating to travel outside the EU under the standstill clause, even where the continued taxation results from implicit provisions in national law rather than an explicit exemption derogation.
European Commission publishes 2026 Management Plan outlining key tax and customs priorities
On 19 March 2026, the European Commission’s Directorate-General for Taxation and Customs Union (DG TAXUD) published its Management Plan for 2026, setting out the main policy, legislative and implementation priorities for the year ahead. The plan places a strong focus on simplification, implementation and enforcement, in line with the Commission’s broader competitiveness agenda. In the field of direct taxation, DG TAXUD intends to present a Taxation Simplification Omnibus package by mid-2026, alongside a recast of the Directive on Administrative Cooperation (DAC), aimed at reducing administrative burdens and clarifying reporting obligations. Work will also continue on major initiatives such as the BEFIT proposal and the implementation of the global minimum tax framework. In addition, DG TAXUD will launch work on addressing fossil fuel subsidies in taxation and continue interinstitutional discussions on the revision of the Tobacco Taxation Directive, while also exploring simplification of excise duty rules. In the area of VAT, priority will be given to the implementation of the VAT in the Digital Age (ViDA) package and the strengthening of administrative cooperation tools, including systems such as CESOP to combat e-commerce fraud. On customs, DG TAXUD will support interinstitutional negotiations on the EU Customs Reform, with the objective of reaching an agreement during 2026, while advancing key digital systems, including new releases of the Import Control System (ICS2) by Q4 2026 and the New Computerised Transit System (NCTS) in Q2 2026. The plan also highlights that the Carbon Border Adjustment Mechanism (CBAM) will enter its definitive phase in 2026, with further work on its implementation and possible extension, and foresees the completion of major analytical and risk management tools, such as the Safety and Security Analytics (SSA) tool by the end of 2026. In parallel, DG TAXUD will expand digitalisation and data-driven enforcement, including through the modernisation of its DataLab and the development of new analytics capabilities.
European Parliament releases draft report outlining the potential design of a 28th tax regime
On 19 March 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) published a draft report by Ľudovít Ódor (Renew, Slovakia) assessing the feasibility of introducing a 28th tax regime to support EU competitiveness, particularly for innovative companies, start-ups and scale-ups. The report considers an optional EU-wide framework under which participating companies would be subject to a single set of tax rules recognised across Member States, with the aim of reducing fragmentation and compliance costs. From a tax perspective, it proposes the development of a consolidated corporate tax base, allocated between Member States using a formula based on real economic activity, alongside automatic cross-border loss relief and mechanisms to prevent double taxation. The draft also suggests significant simplification of transfer pricing rules, a more uniform treatment of capital gains, and harmonised approaches to withholding taxes and employee stock options. In addition, it envisages a centralised VAT compliance model based on a single EU VAT number and one-stop-shop procedures, as well as the introduction of an EU-wide investor passport to facilitate access to capital. The deadline for amendments is set for 17 April 2026, with a plenary vote currently expected in July 2026.
European Parliament discusses proposal to enhance EPPO and OLAF access to VAT data to combat fraud
On 24 March 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) discussed its draft report on the Commission proposal to amend Regulation (EU) No 904/2010, aimed at granting the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) access to VAT information at Union level. The debate indicated broad support for strengthening administrative cooperation to tackle intra-Community VAT fraud, which continues to result in significant revenue losses. The rapporteur, Michalis Hadjipantela (EPP, Cyprus), emphasised the need to improve information exchange while ensuring a strict balance with data protection requirements. Proposed amendments focus on limiting access to VAT data to specific criminal investigations, aligning with the principles of necessity and data minimisation, and introducing safeguards such as user-level access logging and the prohibition of untargeted searches. Members also highlighted the importance of adequate resources for EPPO and OLAF and the need to avoid excessive administrative burdens for Member States. The deadline for amendments is set for 9 April 2026, with a committee vote envisaged for 3 June and a plenary debate expected in July 2026. In parallel, the file will be discussed at a technical level by the Council’s Working Party on Tax Questions (Indirect Taxation - VAT) on 31 March 2026. Based on the preliminary agenda, delegations are expected to examine the compromise text and exchange views on the proposal.
European Commission registers European Citizens’ Initiative proposing aviation tax and VAT changes
On 25 March 2026, the European Commission registered a European Citizens’ Initiative (ECI) entitled ‘Fast, convenient, affordable, and above all climate-friendly transportation for all Europeans’, which calls for measures to promote rail transport as an alternative to aviation. From a tax perspective, the initiative proposes introducing an EU-wide aviation fuel tax, removing existing VAT exemptions in the aviation sector, and applying fair pricing mechanisms, with revenues potentially allocated to support a European rail network. The Commission considered the initiative legally admissible under Regulation (EU) 2019/788, noting that registration does not imply endorsement of its content or any future legislative action. The organisers now have six months to begin collecting signatures, followed by a 12-month period to gather at least one million statements of support across a minimum of seven Member States. If this threshold is reached, the Commission will be required to examine the initiative and decide on any possible follow-up measures.
OECD report reveals integrity gaps and implications for tax compliance
On 24 March 2026, the OECD published its Anti-Corruption and Integrity Outlook 2026 report, finding that corruption, fraud and weak integrity systems continue to impose significant fiscal costs and undermine fair competition, investment and public trust. From a tax perspective, the report notes that corruption affects both expenditure and revenue, citing estimates from the International Monetary Fund (IMF) suggesting that countries with lower levels of corruption may collect around 4% more of GDP in tax than comparable economies. Across 37 OECD members and 25 partner countries, an average implementation gap of 19 percentage points persists between integrity rules (63%) and their practical enforcement (44%), pointing to weaknesses that may facilitate tax evasion and VAT fraud. The report also highlights fraud as a rapidly growing risk, including in areas such as public procurement and cross-border transactions, and notes that only around 44% of OECD countries use digital systems to support the submission and verification of key financial and integrity-related data, while around half of tax administrations make use of advanced tools such as artificial intelligence for compliance and fraud detection. Overall, the OECD calls for stronger enforcement, improved data use, and a more risk-based approach to safeguard tax revenues and public finances more efficiently.
