Report on Tax Issues by the Council of the European Union (Month, Year)

List of Key Chapter Titles

1. Introduction
2. Legislative Activities: Direct Taxation and Tax Administrative Cooperation
3. BEFIT Directive
4. Revision of the Energy Taxation Directive
5. Revision of the Tobacco Taxation Directive
6. Incentives for the Import One-Stop Shop VAT Rules
7. Tax Clean-up and Simplification Agenda
8. Council Conclusions on Tax Incentives to Support the Clean Industrial Deal
9. OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting
10. Negotiations on the UN Framework Convention on International Tax Cooperation
11. Code of Conduct Group (Business Taxation)
12. Tax Enforcement and Restrictive Measures

Document Introduction

This report, issued by the General Secretariat of the Council of the European Union, provides a detailed record of key developments, ongoing legislative negotiations, and significant international tax cooperation dynamics in the field of taxation under the Economic and Financial Affairs Council during the 2025 Danish Presidency. It aims to provide Member State delegations with an authoritative overview of the current state of EU tax policy, based on discussions within the High-Level Working Party on Tax Questions.

The core content of the report covers a wide range of tax issues. Regarding legislative activities, it focuses on tracking progress in revising directives including the "Business in Europe: Framework for Income Taxation" (BEFIT) Directive, the Energy Taxation Directive (ETD), and the Tobacco Taxation Directive. The revision of the ETD, as part of the 'Fit for 55' package, aims to align energy taxation with EU climate goals, but as of November 2025, differing views persist among Member States. The report also notes the amended agreements between the EU and Switzerland, Liechtenstein, Andorra, Monaco, and San Marino on the automatic exchange of financial account information to improve international tax compliance, as well as the decision to authorize negotiations with Norway on administrative cooperation in direct taxation. Furthermore, the Council has adopted a directive on incentives for the use of the Import One-Stop Shop (IOSS).

The report delves into key horizontal issues for enhancing EU competitiveness. In March 2025, the Council approved conclusions on a Tax Clean-up and Simplification Agenda, establishing four core principles such as reducing administrative burdens and eliminating outdated rules. In response, the European Commission withdrew four outdated legislative proposals in the tax field in October 2025 and plans to introduce a comprehensive tax simplification legislative package in 2026. The report also details the Council's conclusions on tax incentives to support the Clean Industrial Deal (CID), emphasizing Member States' autonomy in designing such incentives while balancing flexibility and budgetary impact.

At the international level, the report closely monitors multilateral tax cooperation processes. This includes tracking the latest developments of the "Two-Pillar" solution under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), as well as a detailed analysis of the negotiations on the UN Framework Convention on International Tax Cooperation and its early protocols. The report also mentions the Council's update in October 2025 of the EU list of non-cooperative jurisdictions for tax purposes, aimed at combating harmful tax practices.

Furthermore, the report covers discussions in several specific areas. These include the use of tax cooperation tools to support the enforcement of EU sanctions against Russia and prevent circumvention in the context of the Russia-Ukraine conflict; ongoing engagements with the United States regarding "Accidental Americans" and Taxpayer Identification Number issues under the Foreign Account Tax Compliance Act (FATCA); and preliminary discussions on emerging policy topics such as personal tax-driven migration and behavioral taxation (e.g., the impact of excise duties on public health). The report concludes with an overview of the latest status of an informal early-warning mechanism designed to ensure Member States are timely informed about the impact of tax-related provisions in non-tax files.

This document synthesizes a vast amount of legislative detail, records of policy debates, and updates on international negotiations, providing indispensable primary material and in-depth insights for studying the internal dynamics of EU tax policy-making, future regulatory trends, and its interaction with global tax governance.