The European Parliament’s Committee on Economic and Monetary Affairs released a draft report on 4 February 2026 urging the European Commission to overhaul the outdated 1977 VAT exemption for financial services. The report proposes taxing identifiable charges such as fees and commissions, introduces coordinated temporary windfall taxes on exceptional bank profits, and calls for an alternative to the withdrawn EU-wide Financial Transaction Tax.
The EU still applies a 1977 VAT exemption for financial services, meaning firms cannot charge VAT on their services or reclaim VAT paid.
The draft report was released on 4 February 2026 by the European Parliament’s Committee on Economic and Monetary Affairs.
The report proposes to tax identifiable charges such as fees and commissions, and to introduce coordinated temporary windfall taxes on exceptional bank profits.
The report urges the Commission to present a concrete alternative plan to replace the withdrawn EU-wide Financial Transaction Tax.
The proposal calls for time‑limited, transparent windfall taxes that apply only to profits arising from extraordinary circumstances such as rising interest rates.
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