ECOFIN summary to European Council on tax developments
On 10 December 2024, the six-monthly report on EU tax reform projects was approved at the monthly meeting of finance minister, ECOFIN. This covers the term of the Hungarian presidency of the Council. Major VAT on other tax matters are described below. The report will now be sent to the European Council on 19 December 2024.
Tax updates
- Agreement by ECOFIN on 5th November of the VAT in the Digital Age 3-pillar reforms.
- Progress on reforms of the Energy Taxation Directive towards political agreement
- Political agreement at ECOFIN on 10 December on the implementation of electronic VAT exemption certificate
- Progress on VAT rules for IOSS and imported goods
- Framework for Income Taxation, BEFIT proposal
- Proposals to prevent the misuse of shell entities for tax purposes
- An update to the EU list of non-cooperative jurisdictions for tax purposes
- Political agreement at ECOFIN on 10 December of FASTER, withholding taxes payments and relief
- Progress on HOT, a head office tax system for small and medium sized businesses
ECOFIN role in VAT and tax reforms
The Economic and Financial Affairs Council (ECOFIN) is a key decision-making body of the European Union (EU) responsible for economic policy, taxation, financial markets, and budgetary matters. It plays a central role in shaping the EU’s Value Added Tax (VAT) and tax policies, aiming to ensure the smooth functioning of the single market while safeguarding fair competition and fiscal neutrality among member states.
In the VAT domain, ECOFIN works to harmonize VAT rules across the EU, ensuring consistency in tax application and compliance. This includes setting minimum VAT rates and addressing cross-border tax challenges, such as fraud and evasion, through initiatives like the ViDA and the VAT One-Stop Shop (OSS).
Regarding broader tax policy, ECOFIN develops strategies to combat tax evasion and avoidance, enhance transparency, and address harmful tax practices. It oversees the implementation of anti-tax avoidance directives (ATAD) and supports the adoption of the global minimum corporate tax rate under the OECD/G20 framework.
ECOFIN’s decisions require unanimous approval on tax matters, reflecting the sovereignty of member states over taxation. By fostering collaboration and coordination, ECOFIN ensures that tax policies contribute to sustainable public finances and a competitive, equitable economic environment within the EU.
