Changes from report parliamentary committee draft to plenary report

Added33. Takes note of the work on the Business in Europe: Framework for Income Taxation (BEFIT) proposal; recalls the Commission’s objectives, in proposing BEFIT, to reduce the complexity of tax rules and the compliance costs for EU businesses with cross-border operations; takes note of its potential to reduce fragmentation and create a level playing field for businesses within the internal market; emphasises that any EU initiative must deliver added value both in the legal and economic sense, and calls for an effective and balanced approach that benefits all of the Member States, respects the principle of subsidiarity and aligns coherently with the implementation of the OECD’s Pillar Two rules;

AddedOECD Pillars One and Two, and international taxation

Added34. Reiterates the EU’s strong commitment to the implementation of the OECD/G20 Inclusive Framework’s two-pillar approach, while taking into account the current situation regarding Pillar Two rules, including the recent Executive Order issued by the US President on 20 January 2025 declaring that the OECD Global Tax Deal has no force and effect in the United States; urges the Commission to prioritise work that maintains and protects the agreement, so as to prevent a return to harmful tax competition at the cost of public revenue and EU interests; urges the Commission to inform Parliament of contingency plans and take prompt, targeted action to safeguard the integrity and effectiveness of the Pillar Two Directive, protect EU interests and prevent retaliatory measures; notes the possibility of administrative simplification in the implementation of the Pillar Two Directive;

Added35. Stresses that Pillar Two should ensure a global minimum level of taxation for multinational and large-scale domestic groups in the EU; welcomes its transposition into national law; calls for legal clarity, taking into account differences between OECD Pillar Two rules and their implementation by the Member States, specifically in relation to shipping activities, to avoid creating conflicting taxation regimes which can lead to confusion; expects the process of negotiating and publishing the administrative guidance to be finalised soon and provide companies falling under the scope of Pillar Two with the necessary certainty; expects further developments with regard to existing safe harbours to ease compliance, such as the development of a permanent safe harbour;

Added36. Highlights the impactful role that the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) have had in identifying and investigating tax fraud and evasion, and stresses the need for effective collaboration between these bodies and with the national tax authorities;

Added37. Acknowledges the publication by the OECD of the Multilateral Convention in October 2023, laying down the technical rules to implement Amount A of Pillar One and the ongoing negotiations; calls on the Commission to assess the potential effects of a Digital Services Tax;

Tax barriers in the single market

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Changed15.38. NotesTakes note of the Letta report and the reference to a voluntary 28th regime, which aims to attract and retain innovative start-ups in the EU; notes that the fragmented EU tax landscape creates complexity, uncertainty and high compliance costs for EU businesses, especially SMEs;SMEs, and invites the Commission to explore and assess the benefits and drawbacks of the option of a 28th regime; underlines the need to address tax obstacles to cross-border investment to decrease over-reliance on debt and to increase equity in business financing; recalls, in this regard, the Draghi report, highlighting the fact that EU citizens should be able to invest in other Member States without complex taxation procedures, effectively resulting in double taxation; emphasises that adherence to these principles is essential to making the EU a competitive and innovation-driven investment hub; underlines the importance of exploring avenues for simplifying and standardising transfer pricing documentation rules across the EU, including a careful and balanced assessment of existing thresholds and materiality criteria while accounting for Member State specificities, with the aim of reducing compliance costs for transactions, without compromising transparency standards and without facilitating aggressive tax planning and tax evasion;

Change 12

RemovedCombating tax evasion and aggressive tax planning

Added39. Regrets that the Commission’s Competitiveness Compass lacks concrete guidance on removing taxation barriers to cross-border investments; calls on the Commission to conduct targeted studies assessing the economic and competitive effects of this fragmentation, with a focus on identifying the most affected sectors and proposing concrete measures to simplify tax systems and strengthen mutual trust between the Member States, particularly to support SMEs;

Removed16. Commits to fighting aggressive tax planning for a fair Europe, taking into account the specific situation and interests of SMEs, and of lower and middle class households; recognises the substantial revenue implications of aggressive tax planning, which tilts the playing field for actors in the economy and threatens to undermine tax morale; urges the Commission to improve cooperation between Member States in addressing aggressive tax planning, particularly through enhanced information exchange, coordinated audits and improved enforcement;

Added40. Welcomes the recent entry into force of the FASTER Directive on withholding tax as an important first step towards modernising and streamlining cross-border tax procedures within the EU; notes the recommendations of the Draghi report and recalls Parliament’s recommendations in its resolution on a withholding tax framework, the establishment of which is essential to reduce complexity, increase legal certainty for investors, and stem the practice of treaty shopping; additionally points out that tax policy reform could also facilitate the further integration of EU capital markets, in the context of the savings and investments union;

Removed17. Notes the role of the Directive on Administrative Cooperation (DAC) in reducing tax evasion and increasing transparency, while also highlighting the complexity and administrative burden, especially under DAC 6;

Added41. Calls on the Commission to survey the existing taxation-based obstacles to single market integration, and produce an action plan for tackling them;

Removed18. Calls for enhanced collaboration between the European Public Prosecutor’s Office and Eurofisc to strengthen intelligence-sharing, coordinated enforcement efforts and cross-border investigations in the fight against VAT fraud and other forms of tax evasion;

Added42. Calls for guiding principles on taxpayers’ rights to pinpoint lingering tax barriers within the single market and recommend best practices drawn from across the EU to enhance taxpayers’ experiences, while ensuring that such guiding principles do not limit the ability of the Member States to have in place anti-abuse measures to ensure proper enforcement of their tax laws; acknowledges the Commission’s reluctance to present the planned communication on citizens’ rights as taxpayers that was announced in its action plan for 2021;

Added43. Welcomes the Commission communication on the savings and investments union, and in particular the willingness to remove the differences in national taxation procedures that create administrative burden and barriers to cross-border investment, and also to support Member State action for this purpose;

Added44. Notes that disparities in the tax treatment of capital income can create complexity and legal uncertainty for cross-border investors; highlights that Draghi’s comprehensive report acknowledges the need to ‘eliminate any taxation obstacles to cross-border investing in the EU’ to reduce capital market fragmentation; underlines the importance of a more balanced tax mix for economic resilience, and invites the Commission and the Member States to assess the merits of further coordination and simplification in this field, in order to foster cross-border investment;

AddedCombating tax evasion and avoidance, and aggressive tax planning

Added45. Recalls that, as the Pillar Two rules are implemented, it is important to monitor new forms of harmful tax competition that may develop;

Added46. Commits to fighting aggressive tax planning, by both companies and individuals, for a fair European economy, taking into account the specific situation and interests of SMEs, and of low- and middle-income households; recognises the substantial revenue implications of aggressive tax planning, which tilts the playing field for economic actors, threatens to undermine tax morale and erodes the tax base of the Member States; urges the Commission and the Member States to improve cooperation between the Member States in addressing aggressive tax planning, particularly through enhanced information exchange, coordinated audits and improved enforcement; recalls its resolutions on the implementation of the EU requirements for exchange of tax information, on reforming the EU list of tax havens and on reforming the EU policy on harmful tax practices; highlights that increasing the complexity of tax regimes can create perverse incentives for aggressive tax planning and evasion, which may be opaque; calls for the Member States and the Commission to apply a risk-based and appropriate approach to fighting tax fraud and aggressive tax planning;

Added47. Stresses the importance of existing mechanisms under the Directive on Administrative Cooperation (DAC), the Anti-Tax Avoidance Directive (ATAD) and the Multilateral Competent Authority Agreement (MCAA), which have significantly improved transparency and cross-border cooperation between tax authorities, enabling a more effective response to aggressive tax planning; underlines the increasing administrative burden and compliance costs on tax administrations and taxpayers under the DAC and ATAD, and welcomes their review and simplification while still maintaining current standards;

Added48. Highlights the need to address inconsistencies between the ATAD and the OECD’s Pillar Two approach to ensure coherence and legal certainty across the EU, including considering the streamlining of options and exceptions granted to Member States; takes note of the Commission’s announcement that it will evaluate the ATAD in the light of Pillar Two and present a comprehensive report on the measures in Q3 2025, in accordance with the Pillar Two agreement; calls on the Commission to provide guidance to the Member States on the interpretation of the general anti-abuse rule laid down in the ATAD and calls for a revision to make the ATAD simpler to implement and increase its effectiveness;

Added49. Notes the role of the DAC in reducing tax evasion and avoidance, and aggressive tax planning, and in increasing transparency, while also highlighting the complexity and administrative burden, especially under DAC 6; stresses the need for the revision of DAC 6 and calls on the Commission to conduct an assessment of compliance costs under this Directive, as well as to strengthen guidance, enhance risk analysis, and leverage technology for better data collection so as to ensure effectiveness in promoting tax transparency, and prevent disproportionate costs and administrative burdens; states that this reassessment should consider shielding SMEs from unnecessary reporting obligations and provide more clarity regarding the benchmarks for reportable cross-border arrangements; suggests an assessment for a possible review of DAC 7 to consider whether the exchange of information can be reduced with the introduction of real-time reporting under the ViDA package;

Added50. Notes, in particular, the need to take advantage of the review process to address current overlapping rules, and to streamline and simplify the application of common rules and concepts; points out that standardisation of terms and concepts is crucial to simplify compliance, since various domestic interpretations may give rise to fragmentation and complexity;

Added51. Calls for enhanced collaboration between the EPPO and Eurofisc to strengthen intelligence-sharing, coordinated enforcement efforts and cross-border investigations in the fight against VAT fraud and other forms of tax evasion and avoidance; stresses the need for streamlined cooperation between these bodies to ensure a more effective and unified EU response to cross-border tax fraud, leveraging their respective mandates and expertise; urges the Commission and the Member States to facilitate this cooperation by improving data exchange mechanisms, ensuring adequate resourcing and fostering joint investigative efforts; stresses that further tax coordination between the Member States in tackling tax evasion and avoidance is necessary for facilitating cross-border economic activity; notes that the EU must ensure that all imported products are properly subject to adequate customs duties;

Cross-border taxation and labour mobility

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Changed19.52. Calls on the Commission to present a study and, if necessary, a package of measures on how to simplify tax rules and address tax fragmentation for cross-border workers and the self-employedself-employed, to boost competitiveness;competitiveness by deepening the internal market and to protect tax revenues by creating a level playing field; notes that divergent national tax systems create significant hurdles, administrative burdens, legal uncertainty and double taxation, hindering labour mobility and cross-border entrepreneurship;

Change 14

Added53. Notes that the mobility of individuals across borders is increasing at an unprecedented rate and that such a high level of global mobility has a substantial impact on tax systems; stresses that such mobility and its impact on tax systems must be carefully considered in policymaking, while not discouraging mobility and employment opportunities in the EU; notes, in this respect, that Member States use tax incentives to foster labour mobility and cross-border entrepreneurship; stresses, however, that Member States must also prevent harmful tax practices attracting individual taxpayers and the distortion of competition by having clear caveats and safeguards;

Added54. Acknowledges the increasing cross-border mobility of highly skilled workers and other individuals driven by freedom of movement and preferential tax regimes in some of the Member States; underlines the importance of ensuring that tax policy in the internal market remains fair, transparent and compatible with the sustainability of public finances across the EU; reiterates its call for the Council to revise the mandate of the Code of Conduct Group on Business Taxation;

Added55. Recalls that tax implications arise from the risk of a taxable presence, or of permanent establishment, when cross-border workers engage in activities such as business trips or teleworking; notes that a safe harbour rule for teleworking coordinated between the Member States could provide tax certainty for employers and reduce administrative burdens, simplifying individual taxation;

Taxation and innovation

Change 15

Changed20.56. CallsHighlights onthat theinnovation Commissionis toa conductkey furtherdriver studiesof oneconomic thegrowth, effectsglobal ofcompetitiveness, welfare and that, according to the OECD, tax incentives for researchare anda developmentwidely (R&D)used and innovationeconomically insignificant enhancinginnovation-support Europeanpolicy competitivenessinstrument; ontakes the globalview stagethat ingovernments lineshould withensure thethat proposalsresearch ofand thedevelopment Draghi(R&D) report;tax callsincentive schemes provide value for strengthenedmoney, cooperationthrough regular evaluation and trustthe betweenadoption Memberof States,targeted promotingincentives athat leveldrive playinginvestment fieldand forgrowth, e‑commerce,and digitalenhance servicesEU andcompetitiveness otheron rapidlythe growingglobal sectors;stage, in line with the proposals of the Draghi report;

Change 16

Added57. Calls on the Commission to conduct further studies on the cost-effectiveness of the different kinds of tax incentives for R&D and innovation, in enhancing EU competitiveness on the global stage, in line with the proposals of the Draghi report, ensuring that these incentives are well designed to achieve set policy objectives, without eroding tax revenues and contributing to the risk of tax avoidance; invites the Commission to explore different solutions and mechanisms in supporting R&D for start-ups, including, among other things, transferable tax credits, in a coordinated approach with the Member States and based on common criteria, to improve the accessibility and effectiveness of such measures; calls on the Commission to further assess the cross-border effects of such incentives in other Member States, including risks of tax avoidance; stresses the need for wider availability of tax incentives, including tax breaks, credits, accelerated depreciation and super deductions; in this respect, calls for the Commission to issue recommendations and properly integrate tax incentives, specifically related to R&D where appropriate, without exacerbating economic asymmetries in the EU; stresses that it would be prudent to align incentives for innovation and R&D with tailored incentives for investment; calls for strengthened cooperation and trust between the Member States, promoting a level playing field for e‑commerce, digital services and other rapidly growing sectors;

Added58. Stresses the importance of ensuring that tax incentives remain fully consistent with the current EU State aid framework; highlights the value of the EU State aid framework in preserving fair competition within the internal market and ensuring legal certainty and a level playing field for all Member States;

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

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