Regulatory updates - European Union

The European Commission has opened a public consultation to review and update the EU rules for electronic invoicing in public procurement. This review focuses on the eInvoicing Directive (Directive 2014/55/EU) and is an important step in shaping the future of digital invoicing across EU. 

Why does this matter? 

The current eInvoicing Directive was introduced in 2014 and helped create a common European standard for electronic invoices in public sector procurement and later in 2017 the creation of the well-known standard EN 16931 was developed in response to Directive 2014/55/EU. However, the Commission’s evaluation today shows that in practice, many businesses still face: 

• Different national approaches 

• Limited interoperability between systems 

• Extra complexity when operating across borders 

As a result, the full benefits of eInvoicing are not yet being realized. 

Therefore, the EU commission aim for a futureproof eInvoicing framework that works smoothly for both public authorities and businesses operating across the EU. 

How does this link to ViDA? 

This initiative is closely connected to the VAT in the Digital Age (ViDA) reform. ViDA plans to introduce mandatory electronic invoicing for crossborder transactions by 2030, making today’s consultation an early but important milestone on the road to wider digital reporting. 

Next steps and timelines  

The Commission encourages feedback from all interested stakeholders, including businesses of every size, especially SMEs, public authorities, civil society organisations, and eInvoicing service and solution providers. Contributions can be made through the EU’s “Have Your Say” portal by completing an online questionnaire. This is a great chance for businesses to influence the future shape of the E-Invoicing framework in the EU. More updates will follow, so stay tuned! 

The introduction of the EUCA is intended to strengthen the ability of EU customs authorities to safeguard the EU's external borders, particularly against challenges such as rising e-commerce and evolving global trade dynamics. Updating the EU customs system is expected to support the economy, enhance security, and benefit consumers by establishing a more straightforward and efficient digital framework for international trade within the EU. 

A key element of the reform is a data-driven approach to EU customs, led by the EUCA. The Authority will reinforce the Customs Union, become the core of the future Customs Data Hub, manage risks, and ensure compliance with e-commerce duties. Additionally, it will strengthen coordination among national customs authorities and enhance their capacity to address high-risk trade flows. 

The regulation that creates the new Union Customs Code, along with the EUCA, will now specify where the seat is located. Until the Authority is operational, the Commission will handle all procedures related to the setup and launch of the EUCA. 

The European Parliament's Committee on Economic and Monetary Affairs (ECON)  has released a draft report on February 4, 2026, calling for urgent reform of how the EU taxes its financial sector, with a particular focus on fixing an outdated tax system that has created a fragmented and complex tax landscape across Member States.

The VAT problem

The VAT exemption for financial services dates back to 1977, when technical constraints made taxation impractical. Those constraints have since been resolved, but the rule has not changed.

The report outlines that this outdated rule causes problems as financial firms cannot charge VAT on their services or reclaim the VAT they pay. The exemption is especially harmful for digital and fintech companies, which face different pressures than traditional banks. It also pushes firms to keep services in‑house instead of outsourcing them, not because it is more efficient, but simply to avoid VAT issues.

A fragmented tax system 

Because there are no clear EU‑wide VAT rules for financial services, Member States have made their own fixes. Over time, this has led to a patchwork of 91 different taxes aimed at the financial sector across the EU.

This lack of coordination makes it costly and complicated for financial firms to operate in more than one country.

For businesses and consumers, costs are higher, choices are more limited, and investment is harder. According to the report, around one‑third of EU household savings are invested outside the EU, reflecting shortcomings in the EU’s financial and tax framework.

Proposed tax reforms

ECON is calling on the European Commission to publish a proposal reforming VAT rules for financial services. Specifically, they want to start taxing clearly identifiable charges, for instance, fees and commissions, which are easy to measure and tax.

Beyond VAT, the report also addresses other tax issues. The Parliament regrets the Commission's decision to withdraw its proposal for an EU-wide Financial Transaction Tax (FTT), which could have generated between 3.5 billion EUR and 75 billion EUR annually, depending on participation. They're urging the Commission to present a concrete alternative plan.

The report also proposes coordinated temporary "windfall taxes" on exceptional bank profits, such as those seen in recent years due to rising interest rates rather than improved services or innovation. These would be time-limited, transparent, and only apply to profits from extraordinary circumstances.

The draft report now adds pressure on the Commission to bring forward proposals on VAT reform and other measures for taxing the financial sector. Further developments will be closely monitored.