European Banking Federation publishes tax policy paper urging EU simplification of bank taxation in five areas

The European Banking Federation has published a policy paper calling on EU institutions and Member States to simplify and modernise the tax framework for financial institutions and financial services. It argues that the next EU policy cycle should cut duplication, compliance complexity and legal uncertainty, with the stated aim of supporting Europe’s competitiveness and banks’ capacity to finance priorities including the green and digital transitions, defence, innovation, cross-border investment and the deepening of the Capital Markets Union. The paper sets out five reform priorities. It calls for the interaction between Pillar Two and the Anti-Tax Avoidance Directive (ATAD) to be streamlined through the 2026 Tax Omnibus, for the recast of the Directive on Administrative Cooperation (DAC) to recalibrate automatic exchange of information obligations around available factual data and avoid duplication and national gold-plating, and for the FASTER Directive to be reassessed because current provisions could create significant compliance burdens for Certified Financial Intermediaries and legal uncertainty. It also seeks a fundamental review of the value added tax exemption regime for financial services and argues that reform should not be used to introduce new sector-specific taxes or levies such as a Financial Activities Tax (FAT) or windfall taxes. The federation urged policymakers to embed these principles in the 2026 Tax Omnibus, the DAC recast and related EU tax initiatives.