Matthias Ecke MEP (S&D, German) argued that the EU should “move towards a modern, integrated and progressive tax framework for the financial sector” in his draft own-initiative report on a coherent tax framework for the financial sector on Wednesday 4 February.
He considered that this tax framework should be one that “matches the reality of cross-border finance, secures fair and predictable revenues, and supports long-term investment and stability”. Citing the Enrico Letta and Mario Draghi reports of 2024, he stressed that “tax fragmentation continues to hold back integration, growth and competitiveness across the Single Market. Fragmented national tax rules impose growing costs on financial institutions, hampering cross-border operations and distorting capital allocation”.
The rapporteur was critical of the European Commission’s decision to withdraw the proposal from its work programme for 2026. “Without a coherent alternative, the EU risks drifting further into regulatory inconsistency, missed revenue opportunities and declining public confidence in the fairness of the financial system”, he warned.
In particular, he deemed the exemption from value added tax (VAT) for financial services, introduced almost fifty years ago as a temporary technical measure (see EUROPE 13730/27), to be unsuited to today’s economic and technological realities. He maintains that the status quo is no longer tenable.
Mr Ecke therefore advocates modernising the VAT treatment of financial services in order to correct structural defects, remove hidden costs and distortions, level the playing field and boost the EU’s competitiveness and innovation in digital services and financial technologies. He calls for progress on coordinated EU-wide taxation where feasible, to reduce fragmentation and arbitrage, strengthen the Capital Markets Union and Savings and Investment Union and allow EU financial markets to scale across borders. He also advocates the development of common EU minimum standards for temporary windfall taxation, to ensure predictability and coordination and alignment of exceptional profits with long-term public investment priorities.
Read the draft report: https://aeur.eu/f/kni (Original version in French by Anne Damiani)