The ECOFIN report on tax issues, endorsed on 12 December 2025, provides a comprehensive snapshot of EU tax policy developments under the Danish Presidency, with several files of direct relevance for excise duties, VAT administration, and customs–tax interaction.
1. Excise Duties: key files and outlook
Energy Taxation Directive (ETD – Recast)
The revision of the Energy Taxation Directive, part of the Fit for 55 package, remains the most structurally significant excise file.
For excise professionals, the proposal’s core features are unchanged:
- A shift from volume-based to energy-content-based taxation.
- Minimum rates ranked by environmental performance, rather than product category alone.
- A substantial reduction of fossil fuel-related exemptions and reductions.
Despite intense technical work, political divergence between Member States persists, and no agreement was reached in 2025. This confirms that:
- National excise structures remain unchanged for now.
- However, future compliance and pricing models must anticipate a fundamentally different rate architecture.
Professional takeaway: continue scenario modelling; ETD reform is delayed, not abandoned.
Tobacco Taxation Directive (Recast)
The recast of the Tobacco Excise Directive entered detailed technical discussions in late 2025.
Key excise-relevant elements include:
- Extension of scope to new tobacco-related products and raw tobacco.
- Significant increases in minimum excise duty levels.
- A new mechanism for periodic rate adjustments, partly linked to inflation and purchasing power parity.
While Member States broadly support harmonization and public health objectives, concerns were raised regarding:
- The magnitude rate increases;
- Short transitional periods;
- The automatic nature of future adjustments.
Professional takeaway: expect intense negotiations in 2026; implementation timelines and flexibility mechanisms will be decisive for industry impact.
2. VAT & Customs: e-commerce and importation
Incentivisation of the Import One-Stop Shop (IOSS)
A concrete legislative success for VAT practitioners is the adoption of the Directive incentivising the use of the IOSS, effective from July 2025.
Key operational implications include:
- Strengthened incentives for platforms and intermediaries to use the IOSS.
- Improved VAT collection on low-value imported goods.
- Reinforced link between VAT compliance and customs procedures.
Professional takeaway: IOSS remains voluntary but is now clearly the preferred compliance route for e-commerce imports.
Abolition of the EUR 150 Threshold – Still Pending
The removal of the EUR 150 exemption threshold for customs and VAT purposes remains unresolved.
For VAT and excise professionals, this file raises several concerns:
- Exposure of the IOSS to higher-value consignments.
- Increased fraud and control risks.
- Complex interaction with the ongoing Union Customs Code (UCC) reform.
Discussions were paused pending the outcome of UCC trilogues.
Professional takeaway: no immediate change, but this reform could fundamentally reshape VAT-on-import compliance.
3. VAT & Excise Administration: Simplification Agenda
Tax Decluttering and Simplification
The Council endorsed a structured tax simplification agenda, highly relevant for both administrations and compliance teams.
Key signals include:
- Withdrawal of several long-standing tax proposals.
- Commitment to reduce administrative and reporting burdens by 25% (35% for SMEs).
- Announcement of a taxation omnibus package in Q2 2026.
Professional takeaway: expect targeted amendments to DAC, VAT, and excise-related reporting obligations rather than new standalone directives.
4. Clean industrial deal: tax incentives & excise design
Council conclusions on tax incentives supporting the Clean Industrial Deal underline:
- The importance of simple and administrable tax incentives.
- Full Member State competence in the absence of binding EU rules.
- The relevance of tax instruments (including excise differentiation) as part of broader decarbonisation policies.
Professional takeaway: excise duties remain a key behavioural tool, but harmonization will be cautious and flexible.
5. Horizontal issues of interest to Excise/VAT experts
The report also addresses :
- Behavioural taxation, including the use of excise duties to influence consumption patterns.
- Enhanced administrative cooperation and data exchange, including crypto-assets.
- Suspension of tax information exchange with Russia and Belarus and enforcement support measures.
Bottom Line for Excise & VAT Professionals
- No immediate legislative shock, but major structural reforms (ETD, Tobacco) remain on the horizon.
- VAT on imports and e-commerce continues to move toward tighter integration with customs systems.
- Simplification and burden reduction are now explicit political priorities, likely shaping future VAT and excise amendments.
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