The EU is working on changes in the European tax system, ‘to boost competitiveness of the EU’. Of course, the main reason for the changes is that the revenues of the Member States and the EU need to be increased [1].
A resolution of 9 October 2025 [2] of the European Parliament (EP) contains a number of proposals. Among other things the EP calls for setting up a European tax data platform (EU Tax Data Hub) to improve the automatic exchange of tax information [3], that also should include direct taxation (income tax and corporate tax). Electronic invoicing is also welcomed, as it enables tax authorities to receive real-time information on financial relationships and use it for their analyses [4]. Digitalisation will play an important role in increasing the revenues of the Member States, including the use of artificial intelligence (without footnotes):
23. Underlines the potential of digitalisation, especially artificial intelligence (AI), as a tool for reducing administrative burdens and compliance costs for companies, particularly SMEs, and for supporting VAT fraud detection, while still maintaining a human element for quality checks and to ensure safeguards against risks of discrimination; notes that digitalisation can also enhance public tax administration, provided that transparency and sufficient oversight of automated tax-related decision-making are guaranteed; urges the Commission and the Member States to advance digitalisation and simplification of tax administration, while enhancing cooperation, coordination and the exchange of best practices and know-how among national authorities, with the Commission acting as a facilitator;
In the area of VAT real-time information will be very important (without footnotes):
25. (…) takes note of the VAT in the Digital Age (ViDA) package and calls on the Commission to issue clear and consistent guidelines to support the smooth implementation of Directive (EU) 2025/516, specifically regarding the EU Digital Reporting Requirement; highlights that the VAT compliance gap varies significantly between the Member States and welcomes the ViDA package as a tool to enhance transparency and reduce fraud; urges coordinated implementation at national level to ensure coherence and that the VAT One Stop Shop model is efficient and user-friendly, particularly for SMEs; calls for further reforms to facilitate electronic VAT registration for small businesses and to increase the digitalisation of VAT collection; calls on the Commission to build on and expand the VAT One Stop Shop for cross-border business-to-consumer e-commerce, with the aim of reducing administrative burden and compliance costs;
According to the proposals more exchange of financial data within the European instutions and with the Member States has to take place, to prevent tax fraud and aggressive tax planning [5].
The financial surveillance society is rapidly approaching.
Notes:
[1] E.g. in the resolution of 9 October 2025 [2] (without footnotes):
B. whereas EU Member States collected EUR 6 712 billion in taxes in 2023 (including compulsory actual social contributions), which represents 4,7 % more than in 2022; (…)
D. whereas in 2023 the tax burden (i.e. overall tax revenues as a share of GDP) in the EU stood at 39,0 % of GDP, a slight decrease compared with 2022, but still a significantly high ratio;
E. whereas estimates suggest that global uncollected tax revenue amounts to approximately EUR 500 billion, of which an estimated EUR 100 billion is uncollected from the EU area; whereas additional revenue is impacted by instances of tax non-compliance and aggressive tax planning strategies; whereas these losses deprive Member States of essential public funding;
F. whereas in 2023 the VAT revenue-to-GDP ratio amounted to 7,1 % of EU GDP and 18,3 % of total government revenue;
G. whereas according to the Commission, in 2022 the EU VAT compliance gap alone amounted to EUR 89,3 billion, or around 7 % of the total expected VAT revenue; whereas according to estimates, one quarter of the VAT compliance gap is directly linked to criminal VAT fraud; (…)
J. whereas according to estimates, the total tax compliance costs in the 27 EU Member States plus the UK are estimated at EUR 204 billion, equating to 1,3 % of their combined GDP; whereas micro-enterprises bear the overwhelming majority of these costs (87 %), followed by small businesses (10 %), placing a disproportionate administrative burden on smaller companies; (…)
M. whereas growing capital mobility, along with the broader trends of globalisation and digitalisation over recent decades, has had the unintentional impact of progressively diminishing the capacity of individual countries to ensure the effectiveness of their tax policies;
Although the EU talks a lot about SMEs, in practice not much is being done to improve their position.
[2] Resolution ‘The role of simple tax rules and tax fragmentation in European competitiveness‘.
[3] “17. Calls for the establishment of an EU Tax Data Hub to improve the automatic exchange of tax information and reduce administrative burdens; encourages the Commission and the Member States to build on existing tools, such as the VAT Information Exchange System (VIES) and the Excise Movement and Control System (EMCS), and explore extending their application to areas such as direct taxation; emphasises that such a hub should enable joint analysis of information relevant to the control process of taxation with a cross-border component, prevent duplication and serve as a single access point for tax administrations across the EU;” (without footnotes).
[4] “18. Highlights the key role electronic invoicing can play in enhancing transparency, reducing administrative burdens, and enabling the practical and efficient use of reported data;” and “49. (…) 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;“.
[5] As expected the Pandora Papers are mentioned: “having regard to its resolution of 15 June 2023 on lessons learnt from the Pandora Papers and other revelations, also calling for the improvement of reporting and information sharing,” (without footnotes). See paragraph 45 and further on ‘Combating tax evasion and avoidance, and aggressive tax planning‘.
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