On the feasibility of a 28th tax regime and its potential to support EU competitiveness

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the feasibility of a 28th tax regime and its potential to support EU competitiveness

(2025/2211(INI))

The European Parliament,

– having regard to Articles 4(2)(a), 5, 6(g), 50, 113, 114(1), 115, 116 and 225 of the Treaty on the Functioning of the European Union,

– having regard to the Commission communication of 21 October 2025 entitled ‘Commission work programme 2026 – Europe’s Independence Moment’ (COM(2025)0870),

– having regard to the Commission communication of 19 March 2025 entitled ‘Savings and Investments Union – A Strategy to Foster Citizens’ Wealth and Economic Competitiveness in the EU’ (COM(2025)0124),

– having regard to the Commission communication of 29 January 2025 entitled ‘A Competitiveness Compass for the EU’(COM(2025)0030),

– having regard to the Commission communication of 28 May 2025 entitled ‘The EU Startup and Scaleup Strategy – Choose Europe to start and scale’ (COM(2025)270COM(2025)0270),

– having regard to the report of 9 September 2024 by Mario Draghi entitled ‘The future of European competitiveness’ (Draghi report),

– having regard to the report of 17 April 2024 by Enrico Letta entitled ‘Much more than a market’,

– having regard to its resolution of 20 January 2026 with recommendations to the Commission on the 28th Regime: a new legal framework for innovative companies1,

– having regard to the Commission proposal of 12 September 2023 for a Council Directive on Business in Europe: Framework for Income Taxation (BEFIT) (COM(2023)0532),

– having regard to its resolution of 13 November 2025 on the proposal for a Council directive on Business in Europe: Framework for Income Taxation (BEFIT)2,

– having regard to the Commission proposal of 12 September 2023 for a Council Directive on establishing a Head Office Tax system for micro, small and medium sized enterprises, and amending Directive 2011/16/EU (COM(2023)0528),

– having regard to its position of 10 April 2024 on the proposal for a Council directive establishing a Head Office Tax system for micro, small and medium sized enterprises, and amending Directive 2011/16/EU3,

– having regard to the Commission proposal of 25 October 2016 for a Council Directive on Common Consolidated Corporate Tax Base (CCCTB) (COM(2016) 683COM(2016)0683),

– having regard to the Commission proposal of 25 October 2016 for a Council Directive on a Common Corporate Tax Base (COM(2016) 685COM(2016)0685),

– having regard to the Commission proposal of 11 May 2022 for a Council Directive on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes (COM/2022/216)COM(2022)0216),

– having regard to Rule 55 of its Rules of Procedure,

– having regard to the report of the Committee on Economic and Monetary Affairs (A10-0000/2026),

A. whereas the EU, as the largest integrated market in the world, with more than 450 million consumers, is losing its economic competitive edge4;

B. whereas internal trade barriers in the EU’s single market are estimated to be the equivalent of a tariff rate of 44 % for goods and 110 % for services5;

C. whereas enterprises across the EU, specifically small and medium-sized enterprises (SMEs), start-ups and scale-ups, and their innovative potential are structurally stifled by the persistent fragmentation of regulatory frameworks between Member States; whereas regulatory diversity and the associated costs of navigating unfamiliar environments hinder the pan-European financing and scaling up of companies, and there is an urgent need to address this competitiveness gap6;

D. whereas for SMEs, start-ups and scale-ups the difficulties in understanding the different business environments in the EU, including due to language barriers, access to information or rules and requirements, taxation issues and business authorisation, represent the most significant barriers to their cross-border operations and to scaling up within the EU;

E. whereas a significant portion of fast-growing, innovative companies is leaving the EU to scale-up elsewhere, due to better access to large markets, a supportive business environment, better access to venture capital, heightened availability and mobility of talented and skilled workers, an unfragmented regulatory framework and a less complex tax environment, which would be conducive to cross-border investment7;

F. whereas the potential benefits of an optional pan-European business regime, vastly simplifying the whole process of future expansion to new markets, both within and outside of the EU, lie in enhanced legal certainty, lower compliance costs and simplified regulatory procedures; whereas it is necessary to ensure clarity and legal certainty for European and foreign investors by using simpler and better harmonised rules that enable them to invest cross-border;

G. whereas to address these policies and political goals, the EU and its Member States must act boldly and ambitiously;

General principles

1. Welcomes the Commission’s legislative proposal for a 28th regime for companies;

2. Reiterates that the 28th regime must be ambitious and comprehensive in its substance, including on taxation aspects, in order to allow SMEs and innovative companies to scale-up and operate seamlessly within the EU’s single market;

3. Stresses that the 28th regime must embrace all relevant aspects of corporate, insolvency, labour and tax law, must cover the whole life cycle of companies, and must be continuously evaluated against international benchmarks; considers that its potential benefits are substantial in terms of lower compliance costs, simplified regulatory procedures, enhanced legal certainty or smoother access to cross-border markets;

4. Notes that for a 28th tax regime to be attainable under the existing Treaty framework, it may take the form of enhanced cooperation, either within an opt-in or opt-out structure of the relevant directive in the field of taxation, or by including a ‘sunset clause’, or through a combination of these approaches;

5. Stresses that the 28th regime must effectively reduce compliance complexity for participating companies and must not create a parallel rule book that is layered on top of national legal systems;

6. Emphasises that in order to avoid further complexity, the provisions of the 28th regime should be in line with any other major proposals of the Commission in the field of taxation;

7. Calls for a layered, modular and pilot-based approach with corporate law in the forefront; yet insists on a roadmap, of what should be added and when, to be known from the outset and continuously adjusted as a result of a periodic review process;

8. Emphasises that the scope of the 28th regime, notably in the area of taxation, should be limited to, as a starting point, a restricted category of companies, such as innovative firms or cross-border growth-oriented start-ups, being defined by the criteria such as their R&D expenditure, size, qualification of their workforce, ownership of intellectual property rights or defined by the forthcoming European innovation act;

The principles of taxation under the 28th regime

9. Reiterates that companies which voluntarily opt into the 28th regime should be bound by its rules and that their choice to opt into the 28th regime must be automatically recognised in the Member States’ legal frameworks; recalls that an exit from the regime must be mandatory upon the achievement of an initial public offering or after the specified period has elapsed;

10. Is of the opinion that in the early stages of a company’s life cycle, speed and simplicity, without the need to establish separate legal forms in each Member State, are crucial in transforming an innovative concept into a viable entity; stresses that for the 28th regime a single, fully digital registration at the One-Stop Shop, along with the provision of a single tax number, including fully standardised documentation, templates and a single tax-filing interface, and respect for the English-first principle, must be set by default;

11. Highlights that the single accounting standards must be applied by default;

Taxing corporate income

12. Proposes that the 28th regime must aim for a single consolidated corporate tax base for participating companies across the EU; recalls earlier initiatives, such as the Common Corporate Tax Base, the CCCTB, BEFIT, and the Head Office Tax System for SMEs model, and proposes that the 28th regime should provide a uniform method for determining taxable income, thereby eliminating fragmentation in tax base calculation and reducing cross-border uncertainty; notes that, drawing from the debt-equity bias reduction allowance proposal, the regime should ensure neutrality between debt and equity financing;

13. Proposes that, even in the absence of a single consolidated corporate tax base, losses incurred in one Member State must be recognised throughout the regime and should be permitted to be carried forward or offset against profits generated elsewhere within the system, and that automatic cross-border loss relief should be considered essential for innovative and high-growth firms; acknowledges that in the absence of a harmonised definition of losses, tax deferral represents an option;

14. Proposes that the consolidated tax base be appropriated among the Member States using a pre-agreed formula reflecting real economic activity, such as sales, labour and tangible assets, replacing complex intra-group transfer pricing disputes within the regime with a transparent allocation method;

15. Stresses that double taxation must be prevented through, for instance, the uniform classification of capital gains and intra-regime payments, the automatic mutual recognition of tax status and a binding EU-level fast-track arbitration mechanism for dispute resolution;

Value added tax

16. Emphasises that to reduce compliance burdens, regime participants must operate under a centralised VAT framework, where a single EU VAT number and digital One-Stop Shop8 portal must cover declarations and refunds across the Member States; recalls that the objective should be procedural simplification rather than the harmonisation of VAT rates, enabling companies to expand without multiplying administrative interfaces;

Withholding tax

17. Highlights that cross-border capital flows must benefit from harmonised treatment, whereby dividends, interest and royalties between participating entities and their associated investment vehicles should be exempt from withholding tax; proposes that immediate recognition of tax residence must be achieved through a centralised EU digital registry, enabling streamlined digital clearance and eliminating manual refund delays9;

18. Calls for the development of a clear and effective definition of beneficial ownership;

Employee taxation

19. Proposes that EU employee stock options respect two principles, firstly that taxation should occur at disposal and secondly that gains should be treated as capital income rather than employment income, therefore aligning employee incentives with long-term company growth and removing the distorting effect of upfront taxation;

20. Calls for a standardised EU valuation method providing safe harbour rules to determine share value in non-listed companies, preventing retroactive reassessments and reducing legal uncertainty;

21. Recalls the option that social security contributions and pension income taxes applicable to employees of the company participating in the 28th regime be determined according to the rules of the company’s head-office jurisdiction, thereby enhancing legal certainty and reducing cross-border administrative burdens;

Transfer pricing

22. Stresses that transfer pricing complexity, in the absence of formulary apportionment, must be substantially reduced – safe harbours should apply to routine intra-group services and low-risk transactions, harmonised approaches should apply to intellectual property licensing and cost allocation should limit disputes;

Access to capital

23. Calls for uniform capital gains treatment and automatic double taxation relief to reduce cross-border uncertainty; calls for the establishment of a genuine EU-wide investor passport to eliminate the duplication of national supervisory requirements; stresses that this passport must serve as a single, digitally verified status that ensures an investor’s eligibility is automatically recognised across all Member States; is of the opinion that standardised investment instruments, including harmonised, convertible financing templates and model shareholder agreements, must be introduced to reduce transaction costs;

Tax incentives

24. Stresses that the 28th regime must introduce coordinated tax incentives focused on research, development and reinvestment; notes that a harmonised baseline for R&D incentives should establish common eligibility definitions and minimum standards across Member States;

25. Recalls that in addition to input-based incentives, the regime must incorporate output-based mechanisms, such as an innovation income regime aligned with OECD standards;

26. Calls for a strong stimulation of scale-up activities, where reinvested profits used for R&D, digitalisation or green innovation receive temporary additional deductions or tax deferrals;

Impact assessment, review and evaluation

27. Calls on the Commission to ensure a comprehensive review and, where necessary, revisions of tax aspects of the 28th regime at regular intervals;

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28. Instructs its President to forward this resolution to the Council and the Commission.

EXPLANATORY STATEMENT

The main rationale for establishing the 28th regime, a new corporate legal framework for emerging and existing innovative companies, start-ups and scale-ups including tax provisions, is to bolster competitiveness, resilience and strategic autonomy of the European Union in a radically changing global market. This new regime aims to strengthen the EU’s competitiveness through supporting innovative companies and closing existing innovation gaps particularly vis-à-vis the United States, China and other fast-growing markets, thereby, ultimately, enhancing prosperity and improving living conditions of EU’s citizens.

Its intention is not to harmonise the existing legal and regulatory frameworks for companies between Member States, which have evolved over time and continue to do so. Instead, it aims at complementing them by providing an optional framework for a specific group of companies responding to the rapidly shifting dynamics of economic competition, thus addressing their specific needs – including on tax matters.

The 28th regime shall be one of the resourceful tools for achieving the goals set out in the Savings and Investment Union, because in its very nature it shall:

• simplify access to higher-risk capital for SMEs, start-ups, and scale-ups and, at the same time, increase investors’ confidence by creating a more predictable environment, thereby enhancing investment protection and providing mechanisms to deal with potential losses;

• stimulate private investment into R&D, particularly in those sectors, that are crucial for future growth (e.g. digital services and AI);

• eliminate major existing barriers to scaling up fast-growing innovative companies, which due to current regulatory hurdles, might otherwise relocate to other regions of the world offering a more suitable regulatory environment for their growth; and

• remove the fragmented regulatory and tax framework, which currently represents one of the most significant and often impassable (cost-ineffectiveness) burdens for fast-growing companies.

The Subcommittee on Tax Matters, being aware of the role of taxation in fostering more integrated financial markets within the European Union, recognises that the current fragmentation of tax systems among Member States places a burden on SMEs, start-ups and scale-ups, particularly for their growth and cross-border operations. At the same time, being conscious of the political sensitivity of taxation at both European and national levels, the Subcommittee aims to describe the major obstacles in the field of taxation, and outline viable options on how to overcome them, by proposing the possible design of a 28th tax regime for a particular subset of, or eventually, all companies, with the aim of strengthening the European Union’s competitiveness.

ANNEX: DECLARATION OF INPUT

The rapporteur declares under his exclusive responsibility that he did not include in his report input from interest representatives falling within the scope of the Interinstitutional Agreement on a mandatory transparency register1, or from representatives of public authorities of third countries, including their diplomatic missions and embassies, to be listed in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.