Skip to content
Adopted text

The EU’s approach to corporate tax policy in a changing international environment

TA-10-2026-0327 · P10_TA(2026)0327 · PE781.467

Official HTML ↗ PDF DOCX
✦ In shortFull text
✦ In short · AI summary of this text, generated 7 Oct 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 the EU's approach to corporate tax policy in a changing international environment sets out its position on Pillar Two, the OECD side-by-side agreement and tax simplification. It regrets incomplete global implementation of Pillar Two and warns that the side-by-side approach exempts US-headquartered multinationals from most Pillar Two obligations, disadvantaging EU companies. It calls on the Commission to analyse the impact of the side-by-side approach, including revenue losses, and to propose solutions to correct structural imbalances. It asks for simplification of EU tax rules, re-examination of the BEFIT proposal, full transposition of the Pillar Two Directive and stronger action against harmful tax practices and tax havens. It supports continued international cooperation at the OECD and United Nations, and says unilateral measures such as digital services taxes remain a legitimate instrument for member states.

Key points

  1. Stresses that EU competitiveness requires a stable, predictable and transparent tax environment with proportionate administrative burden, while respecting member states' flexibility over their domestic tax systems.
  2. Finds that divergences and fragmentation in corporate tax rules, especially on withholding taxes and loss offsets, raise costs for firms expanding across borders, and that common definitions and standards could help.
  3. Welcomes OECD efforts to establish a global floor for multinationals' tax obligations, but regrets that Pillar Two implementation remains incomplete, with China and India not having implemented it.
  4. Expresses concern that the side-by-side agreement risks harming the level playing field and reigniting harmful corporate tax practices, and calls on the OECD to trace any backsliding.
  5. Notes that US-headquartered multinationals are technically exempted from most Pillar Two obligations under the side-by-side approach, putting European companies at a competitive disadvantage.
  6. Calls on the Commission to urgently analyse and report on the impact of the side-by-side approach, including potential revenue losses, and propose solutions to correct structural imbalances.
  7. Calls on the Commission to deploy State aid and anti-subsidy measures against anti-competitive tax advantages, and urges EU State-aid-compliant tax tools to attract high-value-added activities.
  8. Recommends making access to European funding, research and innovation programmes and public procurement conditional on having a substantive tax presence.
  9. Calls on the Commission to draw up an annual report on differences in effective tax rates between EU and non-EU multinationals operating in the single market.
  10. Welcomes the Commission's tax simplification package and calls on member states to progress swiftly on simplification without reducing tax transparency or weakening anti-tax-avoidance rules.
  11. Calls on the Commission to re-examine and adjust the BEFIT proposal to tackle inconsistencies with Pillar Two and avoid an overlapping parallel tax framework, and to consider a narrower step-by-step proposal.
  12. Calls on member states to ensure full transposition of the Pillar Two Directive, and on the Commission and member states to strengthen measures against tax havens and non-cooperative jurisdictions.

Who is affected

  • EU-headquartered multinationals, which face higher compliance costs and a competitive disadvantage under the side-by-side approach.
  • US-headquartered multinationals, which are exempted from most Pillar Two obligations under the side-by-side approach.
  • Small and medium-sized enterprises, which may face a competitive disadvantage and should not have large-company reporting extended to them.
  • Member states, which retain competence over direct taxation and are asked to ensure full transposition of the Pillar Two Directive.
  • The Commission, which is asked to analyse the side-by-side approach, report annually on effective tax rates and adjust the BEFIT proposal.

Figures and deadlines

  • Annual global revenue losses from BEPS estimated at between USD 100 billion and 240 billion, about 4 to 10 % of global corporate income tax revenues.
  • Effective tax rate of multinational companies declined by 2,7 percentage points in the EU between 2014 and 2022.
  • Global minimum effective corporate tax rate of 15 % under Pillar Two.
  • Pillar Two fully or partially implemented by around one third of the 148 jurisdictions participating in the OECD/G20 Inclusive Framework.
  • US net controlled foreign corporation tested income system renamed for tax years beginning after 31 December 2025.
  • OECD peer-review process expected to start in the second half of 2026; formal stocktake and review of the Pillar Two package scheduled to conclude by 2029.
  • UN Framework Convention on International Tax Cooperation and two protocols expected to be concluded by 2027.

Legal basis: Article 4 and Articles 63 to 66, and Articles 113, 114 and 115 of the Treaty on the Functioning of the European Union.