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REPORT (2024/2117(INI))

On a coherent tax framework for the EU's financial sector

A-10-2026-0169

Committee on Economic and Monetary Affairs · Rapporteur: Matthias Ecke

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This resolution addresses the fragmented taxation of the EU's financial sector, calling for reforms to the VAT exemption for financial services and for more coordinated tax rules to support the single market and the Savings and Investments Union. It asks the Commission to review the VAT regime's impact, consider policy options including reforming the exemption, and assess replacing national insurance premium taxes with VAT. It also calls for strengthened coordination to reduce fragmentation, avoid double taxation, and ensure the financial sector contributes fairly to public revenues.

Committee position. The Committee on Economic and Monetary Affairs proposes a resolution calling for a coherent tax framework, including VAT reform and coordinated taxation, to reduce fragmentation and support the single market.

Key points

  1. Notes that the VAT exemption for financial services has led to a policy gap, with 91 sector-specific taxes across member states, creating fragmentation and costs.
  2. Calls for strengthened EU coordination to prevent regulatory arbitrage and profit shifting, including implementation of the Pillar 2 Directive and transparency requirements.
  3. Welcomes the FASTER Directive and calls for further progress on withholding tax coordination.
  4. Calls on the Council to decide on the Head Office Tax proposal for SMEs, considering Parliament's position.
  5. Calls on the Commission to assess how tax measures can encourage investment in the EU and discourage outflows to non-cooperative jurisdictions.
  6. Calls on the Commission to propose innovative solutions for taxing the financial sector that reduce fragmentation and support integration.
  7. Notes that the VAT exemption's original technical justification is outdated due to technological progress, and that it creates distortions and disadvantages.
  8. Calls on the Commission to encourage consistent VAT grouping and explore cross-border VAT grouping, with anti-abuse safeguards.
  9. Calls on the Commission to clarify VAT treatment for emerging financial services like crypto-assets and fintech to ensure technological neutrality.
  10. Calls on the Commission to review the VAT regime's impacts and consider policy options, including reforming the exemption, to reduce irrecoverable VAT and fragmentation.
  11. Calls on the Commission to assess replacing national insurance premium taxes with full VAT integration for insurance services.
  12. Recalls the EU's investment gap of EUR 750 to 800 billion annually and emphasizes that fair taxation of the financial sector could contribute to mobilizing capital.

Who is affected

  • Financial institutions in the EU, including banks, insurers, and fintech companies, may face changes to VAT rules and other taxes.
  • Consumers, particularly low- and middle-income households, are to be protected from extra costs from any VAT reform.
  • Member states are called on to coordinate tax policies and implement VAT grouping consistently.

Figures and deadlines

  • 91 sector-specific taxes have been introduced by member states to tax the financial sector.
  • The EU faces an investment gap of EUR 750 to 800 billion annually.

Legal basis: Articles 113, 114 and 115 of the Treaty on the Functioning of the European Union