The article discusses the EU’s longstanding VAT exemption for financial services, noting that the exemption was introduced in 1977 and remains in place across EU member states, Iceland, and the UK. It reviews the European Parliament’s February 2026 draft report, which calls for modernising the tax framework, highlights the 91 sector‑specific taxes that have emerged, and explores options such as abolishing the exemption for B2B services or differentiating between B2B and B2C. The piece underscores the hidden costs, market distortions, and competitiveness concerns that the current exemption creates.
It proposes abolishing the exemption for services supplied to taxable businesses (B2B) to allow input VAT deduction and reduce hidden costs, while retaining some protection for consumers.
The report identifies 91 sector‑specific taxes, including financial transaction taxes and bank levies.
The exemption was introduced in 1977 as a practical workaround.
The withdrawal left a clear policy gap, prompting the report to call for coordinated reforms with existing financial transaction taxes and bank levies.
The exemption remains in place in EU member states, Iceland, and the UK.
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The Invoicing Hub · 1 day ago
EN 16931‑1, the EU e‑invoicing standard, is being updated to a mid‑2026 release that expands B2B functionality and aligns with the ViDA initiative. The revision is not backward compatible, requiring migration for existing version 3 implementations, and will be formally approved in late January 2026 with publication concluding within six months. Key national roll‑outs include Germany’s XRechnung 4.0 and France’s CTC extensions.
Bloomberg Tax · 6 days ago
Bloomberg Tax’s commentary examines the European Commission’s proposal to grant EU anti‑fraud bodies access to national VAT data, a move aimed at closing the €128 billion annual VAT gap. The article highlights the debate over jurisdiction and the balance between cross‑border enforcement and national sovereignty.
LinkedIn Article by Raoul Ramautarsing · 8 days ago
The EU is set to overhaul its e‑commerce customs regime, abolishing the <EUR 150 exemption on July 1 2026 and replacing it with a flat EUR 3 fee per product. From November 1 2026 a EUR 2 handling fee will apply to all distance‑sale goods, while platforms will become deemed importers responsible for duties, VAT and compliance. A new customs data hub is slated for 2028 and dedicated e‑commerce warehouses are encouraged to mitigate the impact.
Baker McKenzie · 9 days ago
The CJEU reaffirmed that substantive VAT exemption conditions prevail over formalities, with three 2025 judgments clarifying that missing Article 45a documents, incomplete export paperwork, or absent customs steps do not automatically deny exemptions if fraud is absent. The rulings reinforce fiscal neutrality and outline narrow exceptions where formal non‑compliance can defeat an exemption.
Pagero · 12 days ago
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 Invoicing Hub · 12 days ago
The Peppol network will enforce a mandatory switch from G2 to G3 digital certificates on 1 April 2026. Failure to migrate will revoke the G2 trust chain and disconnect Access Points from the network. OpenPeppol has issued detailed guidelines to help providers become dual‑capable during the transition.
