Opinion of the European Economic and Social Committee – Assessing tax reporting obligations in the EU: costs, benefits and effective use of information by tax authorities (own-initiative opinion)
Date: 2025-06-18
Institutions: European Economic and Social Committee
Subjects: European tax cooperation, administrative cooperation, administrative formalities, disclosure of information, exchange of information, simplification of formalities, tax authorities, tax law, taxpayer








C_202504202EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2025/4202


20.8.2025






Opinion of the European Economic and Social Committee
Assessing tax reporting obligations in the EU: costs, benefits and effective use of information by tax authorities
(own-initiative opinion)
(C/2025/4202)


Rapporteur: 
Krister ANDERSSON






Advisor


Samuel CORNELLA




Plenary Assembly decision


23.1.2025




Legal basis


Rule 52(2) of the Rules of Procedure




Section responsible


Economic and Monetary Union and Economic and Social Cohesion




Adopted in section


5.6.2025




Adopted at plenary session


18.6.2025




Plenary session No


597




Outcome of vote
(for/against/abstentions)


197/1/1




1.   Conclusions and recommendations









1.1.


The EESC supports the Commission’s plans to achieve simplification, reduce the administrative burden and enhance the competitiveness of the European economy. Simplification review of the overall taxation legal framework as a way to improve the coherence of tax systems by removing outdated rules and, at the same time, streamlining the applicable ones, could substantially contribute to the stated objective of a reduced administrative burden.












1.2.


Tax simplification should promote giving cost-efficient information, improving the use of and exchange of information between tax authorities. It should not lead to unfair or unintended changes of tax liabilities or open up possibilities for tax evasion or harmful tax competition.












1.3.


The EESC highlights that substantial simplification could also be achieved by harmonising similar, but not fully aligned, legal concepts and terminology enshrined in various EU directives about indirect taxation, as for example in the case of excise duties, customs duties and VAT. This is an area where the Commission has considerable competences and where simplification is needed and would likely be achievable.












1.4.


The EESC points out that broad and general tax rules reduce administrative complexity and compliance costs by ensuring uniform application and predictability across sectors, thereby preventing fragmentation and complexity. By contrast, excessive flexibility and a multiplicity of sector-based exceptions might trigger discrepancies.












1.5.


An impact assessment should be undertaken for every proposal in order to properly assess the concrete implications for taxpayers and companies of new legislative initiatives. The EESC also recommends conducting competitiveness checks of new legislative initiatives in the field of taxation, including for SMEs, to ensure that the new rules actually support the planned objectives of the Commission in terms of simplification, decluttering and reduction of the administrative burden. The methodology and measurements of the administrative burden and competitiveness need to be thoroughly developed and communicated. The EESC encourages the Commission to provide and publish interpretative guidance on the most relevant definitions and concepts referred to in any proposal. It is not only a question of translating from one language into another, but also the use of technical terms that may have different scope and meaning in various jurisdictions, even if the term appears to be identical.












1.6.


Guidance from the Commission would be very helpful but it will not be enough to create clarity on complex tax rules and concepts. The EESC therefore proposes that a system of advance rulings at EU level be introduced. The establishment of a judicial body would provide clarity of interpretation for the directives and regulations implemented in Member States. To make the rulings binding, the European Court of Justice should be the body giving the final verdict if challenged by a Member State or the taxpayer.












1.7.


A new Joint Transfer Pricing Forum should be set up. It should consist of experts and be a rule-making body. If disputed, decisions should be settled in the established system of advance rulings which the EESC proposes be set up.












1.8.


The increasing number of cross-border workers, and teleworkers in particular, calls for Commission action to create clarity for employees regarding the country where wage withholding should be made and where income is taxable and what rights it entails. As a first step, a portal accessible to everyone should be set up, where an employee can report the number of days they work in various countries and for which employer.












1.9.


For many individuals investing in securities and stocks in another Member State results in a need to reclaim withholding taxes on dividends from the country in which the stock is listed. Here too, an EU portal would be very welcome, allowing individuals to claim refunds.












1.10.


A single harmonised standard for public country-by-country reporting is needed. At the same time, the proportionality of ATAD should be assessed in light of the Pillar 2 framework.












1.11.


The existence of several anti-avoidance rules, in various directives in combination with national rules and general anti-avoidance rules, often creates an unpredictable tax situation. A review of the effectiveness and consistency of such rules falls not only on the Commission, but also on Member States.












1.12.


It is important that tax authorities use the information taxpayers provide and information obtained from tax authorities in other jurisdictions. The ongoing review of the different DAC-directives will hopefully result in a thorough overview of how the information is used in the Member States.












1.13.


The EESC believes that modern IT solutions are crucial to help tax authorities manage large volumes of data, while reducing workloads for taxpayers, especially SMEs, as well as for taxation authorities in line with the aforementioned Commission objectives of simplification and enhanced competitiveness. The EESC therefore urges the Commission to use and strengthen, as a fundamental step towards simplifying and streamlining processes, the digitalisation of processes in public administrations, public procedures and also for taxpayers.




2.   Introduction and background









2.1.


The European Commission has placed a strong emphasis on enhancing the EU competitiveness agenda. More specifically, the Commission has set a general objective to decrease the administrative burden by 25 %, and by 35 % for SMEs by the end of its mandate in 2029 (1). Streamlined reporting is seen as a direct way to lower compliance costs and encourage investments (2).












2.2.


Major global players, including the OECD and the EU, are currently discussing ‘decluttering’ tax systems, even though the scope of the initiatives planned by the Commission in this respect is not yet clear (3). In particular, repealing or modifying country-level anti-abuse rules that may have become obsolete or been duplicated due to recent global agreements, such as Pillar 2 (the global corporate minimum tax), need to be reviewed.












2.3.


All Commission Directorates-General (DGs) are working towards enhancing competitiveness and decreasing the administrative burden. The DG for Taxation and Customs Union (TAXUD) aims to declutter and simplify taxation rules with the aim of achieving a more efficient, more transparent and fairer tax system. While reducing the administrative burden and compliance costs, robust compliance and enforcement mechanisms need to remain in place.












2.4.


The EESC supports plans for simplification as a way to improve the coherence of tax systems by removing outdated rules and, at the same time, streamlining the applicable ones. The objective of this opinion is primarily to assess the impact of some taxation rules on businesses adopted in recent years, affecting the economy and tax administrations, in order to put forward some suggestions to enhance simplification across the single market. Another objective would be to continuously re-assess the objectives of previous rules in light of proposed rules. The ongoing review should promote an effective use of information by tax authorities. Some tax issues for individuals are also addressed.




3.   General and specific remarks









3.1.


The EESC points out that broad and general tax rules reduce administrative complexity and compliance costs by ensuring uniform application and predictability across sectors, thereby preventing fragmentation and complexity. By contrast, excessive flexibility and a multiplicity of sector-based exceptions might trigger discrepancies.












3.2.


Ensuring in advance that rules are fit for purpose requires comprehensive and sound impact assessments, which are crucial for verifying that proposed rules entail proportionate administrative burdens rather than adding excessively to them. Beyond descriptive analysis, impact assessments should rely on quantitative data and economic modelling methods to ascertain how each planned change actually contributes to stated objectives.












3.3.


An impact assessment and evaluation of the impact in terms of the administrative burden should be undertaken for every proposal (4). It should specify and quantify the impact for each proposal and quantify to what extent the stated objective of a reduction of the administrative burden of 25 % (35 % for SMEs) is achieved. The Commission should present how the measurements are made. The impact assessment should then be revised if the European Parliament or the Council proposes changes able to substantially modify the initial proposal. In such cases, a final decision should ideally be made only when an updated impact assessment has been completed.












3.4.


Ex post impact assessments could also be useful after a significant period has passed since the rule entered into force. It would give an indication of whether the rules need to be changed.












3.5.


The EESC recommends conducting competitiveness checks of new legislative initiatives in the field of taxation, including for SMEs, in order to evaluate – through an analytical and dedicated tool – whether the new rules actually support the stated objectives of economic growth, competitiveness and innovation, while minimising unnecessary burdens and compliance costs. The concrete method for competitiveness checks needs to be defined but several Commission documents have partly developed the methodology (5). Enhancing Have Your Say portals to serve as a single point of feedback for businesses and civil society could prove useful by integrating general feedback on issues where the Commission will need to focus its attention and efforts in the future.












3.6.


The EESC notes that consistent definitions and cross-referencing of concepts among the different European directives and regulations on tax policies might help both tax authorities and taxpayers to apply rules more uniformly, avoiding fragmentation.












3.7.


The EESC encourages the Commission to provide and publish interpretative guidance on the most relevant definitions and concepts referred to in any proposal. It is not only a question of translating from one language into another, but also using technical terms that may have different scope and meaning in various jurisdictions, even if the term appears to be identical. It is not uncommon at present for rules in directives to lead to varying definitions with an unclear scope, resulting in fragmented application across Member States. Interpretative guidance would therefore be beneficial for both taxpayers and tax authorities, particularly with regard to cross-border activities (6).












3.8.


The EESC acknowledges that the Commission has so far been cautious in issuing official guidance for tax directives, as it is concerned about creating potentially legally binding interpretations. However, there is currently a strong and urgent need for publicly accessible Q&A documents and official guidelines, especially in cases where consistent cross-border application is critical (7). Disclaimers could underscore the non-binding nature of such Q&As and guidelines, while still providing useful clarity. If challenged, it is of course up to the courts to determine and interpret terms and conditions.












3.9.


Guidance from the Commission would be very helpful but it will not be enough to create clarity on complex tax rules and concepts. The EESC therefore proposes that a system of advance rulings at EU level be introduced. A court should be established with the right/obligation to offer rulings on interpretation of a Directive, preferably within a reasonably short time frame after having been asked/instructed to do so of, say, within 3-6 months. Only the rules of the Directive – and its transposition into national law – should be addressed, not other national tax rules. The purpose is to provide clarity on the exact content of a Directive, avoiding different interpretations and implementations in Member States, due to different definitions of concepts or terminology used (8).












3.10.


In this respect, the EESC would like to flag up the positive experience in some Member States, such as Sweden, which has had a system of advance rulings in tax matters since 1951 (9). Any taxpayer or the tax administration may turn to an independent judicial body, explaining why the tax rules are difficult to apply and interpret in a specific situation (unclear concepts or rules in a proposed line of transactions). The judicial body assigned to provide interpretation should do so within a short period of time (in Sweden a decision is normally given within three months). The question and the reply is anonymised and published for everyone to read. The outcome can be challenged directly in the highest administrative court and its ruling will be binding on the taxpayer and tax administration alike (10).












3.11.


Such a judicial mechanism for taxpayers and tax administrations would provide clarity of interpretation for the directives and regulations implemented in Member States. To make the rulings binding, the European Court of Justice should be the body giving the final verdict if challenged by a Member State or the taxpayer. The number of tax disputes between Member States would likely be reduced. The increasing number of disputes need to be reversed (11).












3.12.


Such a new judicial European institution could be set up in a two-step approach. Initially, questions responded to may be limited to the interpretation of the fulfilment of a reporting requirement. In case of conflicting and fragmented implementation for reporting, a ruling will be obtained on the compliance of the reporting system at the European level.












3.13.


In a second step, rulings on specific planned transactions applying directives, regulations and EU law should be given. The clarifications obtained should be published and would provide clarity and therefore promote more uniform implementation of directives in Member States. Taxation of cross-border workers should also be addressed in the second step, making it possible for employees working in several Member States to obtain clarity on their tax obligations (12).












3.14.


However, as a very first step for facilitating compliance with reporting requirements and procedures for taxpayers, the EESC deems it important to improve and harmonise forms and formats for tax reporting in order to avoid confusion and disproportionate compliance costs across Member States. Unified reporting requirements (13) and forms, in combination with timely exchanges between Member States, would simplify cross-border compliance delivering efficiency gains. It would also contribute to an effective exchange of information among tax authorities.












3.15.


The EESC believes that enhancing joint audits and simultaneous controls by two or more tax authorities based on agreements between Member States could prevent multiple separate audits of the same taxpayer, thus reducing burdens for both taxpayers and tax authorities. Since the audit culture in tax administrations varies across Member States, exchanges between tax administrations should be expanded within a suitable framework, possibly the Fiscalis programme (14). This would promote an audit culture based on working together (15).












3.16.


Transactions between multinational corporations, or within a group, may create complicated tax issues as several countries may claim the right to tax the value added of a transaction. The EESC considers it important that taxpayers and tax administrations have a dedicated technical fora for discussions on transfer pricing matters to create agreement and clarity of taxation liabilities for the companies and taxation rights for Member States. The Joint Transfer Pricing Forum, served such a purpose. It should be reinstated as a forum for transfer pricing tax experts from businesses and tax authorities (16). The reformed Forum should be able to agree on substance, having an impact on rule-making in the EU. The advance ruling system could be a point of reference should the decision from the Forum not provide clarity.












3.17.


The increasing number of cross-border workers, and especially teleworkers, calls for Commission action to create clarity for employees regarding in which country they are taxable and to what extent. As a first step, a portal accessible to everyone should be set up, where an employee can report the number of days they work in various countries and for which employer. It is a complex undertaking but perhaps it could also serve as an illustration to Member States of how tax rules interact for cross-border workers and hopefully a considerably less fragmented system can be agreed upon. The employer country could have the obligation to withhold wage withholding taxes, eliminating a situation where both countries withhold taxes on the same income.












3.18.


For many individuals, investing in securities and stocks in another Member State result in a need to reclaim withholding taxes on dividends from the country in which the stock is listed. Also here would an EU portal be very welcome, allowing individuals to claim refunds (17).












3.19.


The EESC calls on the Commission and Member States to identify areas where simplification is needed for individuals and households. Clarity is also needed for very common situations for ordinary households engaging in any cross-border activity in the EU.












3.20.


The EESC points out that substantial simplification could also be achieved by harmonising similar, but not fully aligned, legal concepts and terminology enshrined in various EU directives about indirect taxation, as for example in the case of excise duties, customs duties and VAT. This is an area where the Commission has considerable competences and where simplification is needed and would likely be achievable.




4.   Simplification of tax rules as a means to enhance information exchanges









4.1.


The EESC points out that a major challenge in simplifying taxation is that several European directives are actually transpositions of OECD agreements into the EU legal system. Future modifications of such directives could hence result in dual standards, potentially making taxation more complex rather than simplifying it. The EU must therefore be an active partner in the OECD’s work and increasingly also in any standard-setting agreements made within the UN.












4.2.


Public country-by-country reporting (CBCR) follows different standards and definitions of concepts, generating additional compliance burdens and multiple layers of reporting. A single harmonised standard is needed, but changes should be coordinated with OECD initiatives and measures in order to avoid unintended fragmentation and misalignments.












4.3.


The EESC cautions that Pillar 2 may overlap with certain provisions in the Anti-Tax Avoidance Directives (ATAD), particularly with regard to Controlled Foreign Company (CFC) rules. Member States should review existing CFC rules and consider repealing or modifying those that have become unnecessary.












4.4.


A general review is needed to assess whether ATAD measures are still necessary or whether targeted adjustments could reduce administrative complexity. The proportionality of ATAD in light of the Pillar 2 framework should be assessed and residual different standards should be streamlined (18). A review should also include an assessment of the extent tax authorities make use of provided information from taxpayers. The existence of several case-law anti-avoidance rules as well as general anti-avoidance rules in directives and in combination with national rules, often creates an unclear tax situation. Carrying out a review of such rules falls not only to the Commission but also to Member States.












4.5.


The EESC believes that some flexibility may be required to address the abovementioned issues regarding Pillar 2, especially considering the uncertain and evolving geopolitical landscape characterised by growing tensions between major trading blocs. The EU and Member States should ensure that no retaliatory measures are introduced in response to the tax framework in general and Pillar 2 in particular. Some Member States have raised concerns about the Under-Taxed Profits Rule (UTPR), viewing it as potentially problematic due to its extraterritorial features. Any revision must ensure a level playing field for European businesses so that investments and jobs in Europe are not jeopardized (19).












4.6.


As a fundamental principle, the EESC underlines that the exchange of information among tax authorities should always be compliant with the GDPR (20) and the ‘minimisation of processing principle’, fully respecting the fundamental rights of taxpayers. Taxpayers should especially be informed and made aware of the possibility that their data are being exchanged among taxation authorities or, in some cases, even with third-country authorities.




5.   Improved administrative cooperation









5.1.


The EESC believes that the information obtained by tax administrations should be used in a cost-efficient manner. The cooperation between tax administrations is a key factor in achieving a fair tax outcome.












5.2.


The EESC supports synergies in terms of enhanced administrative cooperation across different tax areas, insofar as they foster efficiency by aligning reporting obligations in several parts of the taxation system, such as direct taxes, VAT and customs. Extending centralised ‘data hub’ approaches, already used in customs, can reduce fragmentation and improve information-sharing.












5.3.


It is important that tax authorities use the information taxpayers provide and information obtained from tax authorities in other jurisdictions. The ongoing review of the different DAC-directives will hopefully result in a thorough overview of how the information is used in the Member States. Today, there is not enough reliable data on the use of reporting obligations by tax authorities (21).












5.4.


Digitalisation is a powerful tool for reducing administrative burdens and red tape, opening up new possibilities for real-time information exchange, with the potential to cut compliance costs for companies and ensuring more efficient reporting channels. The expansion of online-based exchanges, such as digital platforms under DAC7, has shown that data transmission and streamlined IT processes can bring about significant benefits. Member States should prevent duplicated data entries and ensure faster and more accurate information-sharing.












5.5.


The EESC believes that modern IT solutions are crucial to help tax authorities manage large volumes of data, while reducing workloads for taxpayers, especially SMEs. It is important to promote a common EU-wide approach to data exchange and IT infrastructures in order to ensure transparent, timely and secure communication. In this respect, the EESC welcomes the development of a single centralised database for crypto-assets as a step forward to streamlining reporting obligations, improving oversight and reducing duplicated compliance efforts.












5.6.


The EESC notes that, while the standardisation of business data such as e-invoices and e-orders can enhance data quality and data processing, Member States still differ largely in their levels of digitalisation and IT advancement. It is important to ensure adequate IT investments in order to achieve an efficient and standardised degree of digitalisation based on EU-wide standards. The EESC therefore urges the Commission to use and strengthen, as a fundamental step towards simplifying and streamlining processes, the digitalisation of processes in public administrations, public procedures and also for taxpayers.






Brussels, 18 June 2025.


The President


of the European Economic and Social Committee

Oliver RÖPKE
               





(1)  In its work programme for 2025, the Commission announced a series of measures to address overlapping, unnecessary or disproportionate rules that create barriers for EU companies. Overall, the Commission wants to reduce administrative burdens by 25 %, and by 35 % for small and medium-sized businesses, by the end of its mandate in 2029. https://commission.europa.eu/news/commission-proposes-cut-red-tape-and-simplify-business-environment-2025-02-26_en. The objective is restated in the Competitiveness Compass, https://ec.europa.eu/commission/presscorner/detail/en/ip_25_339.

(2)  
            European Commission Factsheet Reducing burdens and rationalising reporting requirements.

(3)  See Council Conclusions on a tax decluttering and simplification agenda which contributes to the EU’s competitiveness - Council conclusions (11 March 2025), https://data.consilium.europa.eu/doc/document/ST-6748-2025-INIT/en/pdf.

(4)  At present, the Commission impact assessment becomes final before adopting a proposal but the European Parliament and the Council may also decide to carry out their own impact assessments. The Commission only carries out an impact assessment if a tax proposal presents alternative approaches. In order not to delay legislation, and if the regulatory body considers the changes small, a revised impact assessment may not be called for.

(5)  See Better regulation’ toolbox 2023, https://commission.europa.eu/document/download/bab4c97d-c400-473f-a646-0a9c712a354d_en?filename=BRT-2023-Appendix-Competitveness%20check.pdf and A Competitiveness Compass for the EU, COM(2025) 30 final.

(6)  The OECD often publishes detailed examples to guide taxpayers and tax authorities alike.

(7)  After the Pillar 2 Directive was adopted in Council, the Commission offered significant transposition help to Member States through Working Party IV meetings. The Commission is not entitled to issue legally binding interpretations.

(8)  Even translations are sometimes a problem. The Council has published linguistic corrections to French, Spanish, and other official translations of the Pillar 2 Directive. See 7426/25, FISC 81, ECOFIN 336, JUR 190, Brussels 16 April 2025.

(9)  
            How To Apply for an Advance Tax Ruling in Sweden. Other Member States, such as Italy, limit such an opportunity to official preliminary inquiries to tax authorities, which only clarifies the position of the tax administration.

(10)  In Sweden, a decision by the highest court is normally given within a year.

(11)  The EESC commented on the Directive on the mechanism for dispute resolution (
OJ C 173, 31.5.2017, p. 29).

(12)  The EESC has addressed the tax situation for cross-border teleworkers in two opinions:






—




OJ C 443, 22.11.2022, p. 15











—



OJ C, C/2024/2479, 23.4.2024, ELI: https://eur-lex.europa.eu/eli/C/2024/2479/oj.





(13)  Currently the reporting format – XML schema, is mandatory only for the exchange between Member States, except for DAC9 where the schema should be used by the MNEs for reporting.

(14)  The EESC welcomed the Commission proposal for a regulation on a new Fiscalis programme and noted that national tax authorities still suffered from insufficient capacity and insufficient cooperation and it agreed that there is an urgent need to improve the operation of tax policy, including administrative cooperation and support to the tax authorities (
OJ C 62, 15.2.2019, p. 118).

(15)  There is a Fiscalis Group (EU AIAC) of which the function is to coordinate joint, multilateral controls and similar activities. DAC7 as well as ongoing projects under the Fiscalis program are examples of ongoing cooperation in this field.

(16)  In the EU, transfer pricing is not harmonised through legislative acts. The JTPF was thus set up in 2002 to support the European Commission by proposing pragmatic, non-legislative solutions to practical problems posed by transfer pricing practices in the EU.

(17)  This issue has been partly addressed by Council Directive (EU) 2025/50 of 10 December 2024 on faster and safer relief of excess withholding taxes (FASTER) (OJ L, 2025/50, 10.1.2025, ELI: http://data.europa.eu/eli/dir/2025/50/oj).

(18)  The Commission has launched an in-depth review of ATAD, including asking for public feedback.

(19)  Reforming or repealing the UTPR provision may not necessarily lead to tax simplification. It is important that OECD rules and rules in the EU are equivalent. Otherwise, we end up with several systems to be applied. An abolishment of the UTPR would likely call for additional tax provisions to be introduced to maintain a level-playing field between EU Member States and the US. The global intangible low-taxed income (GILTI), or US minimum tax is between 10,5 % and 13,125 %, i.e. lower than the agreed rate at the OECD and EU.

(20)  
            Article 25/4 of the DAC specifies that each Member State must ensure each reporting financial institution or intermediary or reporting platform operator which is under its jurisdiction:






(a)


informs each individual concerned that information relating to that individual will be collected and transferred in accordance with the Directive; and










(b)


provides to each individual concerned all information that the individual is entitled to from the data controller in sufficient time for that individual to exercise his/her data protection rights and, in any case, before the information is reported.





(21)  Despite existing reports Member States should raise awareness on the role and outcome of administrative cooperation, in order for taxpayers and reporting parties to be aware of the use of data.


ELI: http://data.europa.eu/eli/C/2025/4202/oj
ISSN 1977-091X (electronic edition)