Skip to content
Adopted text

The role of simple tax rules and tax fragmentation in European competitiveness

TA-10-2025-0227 · P10_TA(2025)0227 · PE770.261

Official HTML ↗ PDF DOCX
✦ In shortFull text
✦ In short · AI summary of this text, generated 4 Sept 2026

Written by a language model from the full text only; every figure comes from the text. The paragraph links open the paragraph a statement rests on — check the text itself before relying on it.

Parliament's resolution on simple tax rules and tax fragmentation calls for reducing compliance costs, simplifying VAT, and improving cooperation to boost EU competitiveness. It urges the Commission to assess tax fragmentation's impact, streamline reporting, and support SMEs with simpler procedures and digital tools. It stresses commitment to OECD Pillar Two, calls for legal clarity, and asks for studies on tax incentives for R&D and innovation.

Key points

  1. Calls for simple, predictable tax rules to ease compliance and avoid deterring investment, while respecting national competences and subsidiarity.
  2. Urges the Commission to assess SME impact of tax proposals and develop a toolkit with guidelines and automated filing options.
  3. Calls for coordinated action on tax expenditure transparency and for tax incentives to align with EU goals without fragmenting the market.
  4. Demands reduction of reporting requirements by at least 25% (35% for SMEs) and ex ante impact assessments for new tax legislation.
  5. Urges elimination of duplicate reporting and establishment of an EU Tax Data Hub for efficient data-sharing between tax administrations.
  6. Calls for simplifying VAT, including expanding exemptions for defence procurement and improving cross-border refunds via One Stop Shop.
  7. Reiterates support for OECD Pillar Two and urges the Commission to protect the agreement and prevent harmful tax competition.
  8. Calls for addressing tax barriers to cross-border investment, including exploring a 28th regime and simplifying transfer pricing rules.
  9. Welcomes FASTER Directive and calls for further action on withholding tax to reduce complexity and increase legal certainty.
  10. Calls for enhanced cooperation to combat aggressive tax planning, including revision of DAC 6 and alignment of ATAD with Pillar Two.
  11. Calls for study on simplifying tax rules for cross-border workers and self-employed to reduce double taxation and administrative burdens.
  12. Calls for studies on R&D tax incentives' cost-effectiveness and for wider availability of such incentives, aligned with State aid rules.

Who is affected

  • SMEs and start-ups: benefit from simplified tax procedures, reduced reporting, and a user-friendly toolkit.
  • Cross-border workers and self-employed: face reduced tax complexity and administrative burdens.
  • Tax administrations: gain from EU Tax Data Hub and enhanced cooperation, requiring investment in capacity.
  • Defence industry: benefits from expanded VAT exemptions for joint EU initiatives.

Figures and deadlines

  • EUR 6 712 billion in taxes collected by EU Member States in 2023.
  • Tax burden at 39.0% of GDP in 2023.
  • EUR 89.3 billion EU VAT compliance gap in 2022.
  • EUR 204 billion total tax compliance costs in EU27 plus UK.
  • SME compliance costs estimated at around 30% of taxes paid, compared with about 2% for large companies.
  • Reporting requirements reduction target of at least 25% (35% for SMEs).

Legal basis: Articles 4, 63-66, 113, 114, 115 of the Treaty on the Functioning of the European Union