EU: EC publishes ATAD evaluation report and study examining possible reforms to taxation of financial sector

The European Commission (EC) on June 25, 2026, published a staff working document evaluating the implementation and impact of the ATAD from the entry into force of the first provisions (January 1, 2019) to mid-2025.

The report—which reflects findings from a study conducted by a third party in 2025, the results of the public consultations undertaken by the EC, as well as feedback provided by member states—concludes that:

While the ATAD has established a common minimum standard against corporate tax avoidance across the EU, the implementation options available to member states created differing national approaches and interpretations, which has resulted in fragmentation, complexity, and legal uncertainty.

The ATAD provisions appear to apply to a very modest share of EU corporations.

While ATAD remains a key element of the EU's anti-avoidance framework, simplification of the framework and greater consistency in implementation across member states could help reduce compliance burdens and support competitiveness, particularly in light of developments such as the Pillar Two global minimum tax rules.

Several of the concerns raised by stakeholders during the evaluation process have already been taken into account by the EC in developing the Tax Omnibus proposal published on June 24, 2026.
 

Study examining possible reforms to taxation of financial sector

The EC in June 2026 published a study on the taxation of the financial sector which was conducted by an external service provider and provides a comprehensive review of the tax framework, with a focus on the VAT exemption for financial services and national sectoral taxes.

The study outlines three possible reform paths:

• Retain the current VAT exemption while modernizing and simplifying the VAT rules
• Reduce hidden VAT while preserving the exemption
• Far-reaching reforms, including: (1) full or partial removal of the VAT exemption for financial services, and (2) introduction of a financial activities tax (FAT) for all financial services, combined with VAT zero-rating and the removal of existing sectoral taxes

While the study does not recommend a specific course of action, it suggests that more fundamental reforms of the current framework may be technically feasible and could better support broader EU policy objectives, including the Savings and Investment Union. 

Read a July 2026 report prepared by KPMG’s EU Tax Centre