European Parliament resolution TA-10-2026-0270 of 9 July 2026 proposes a voluntary "EU Inc." framework to reduce administrative costs by EUR 328–440 million over 10 years, alongside centralised VAT registration, simplified transfer pricing formulas, and harmonised R&D tax incentives.
Members of the European Parliament have adopted a resolution (TA-10-2026-0270) outlining tax measures aimed at enhancing the EU’s competitiveness on 9 July 2026. The proposals include simplifying VAT procedures, introducing coordinated and targeted tax incentives for research and development, and reducing the complexity of transfer pricing rules.
This legislative resolution explores the creation of a “28th regime,” a voluntary legal and tax framework designed to bypass the fragmentation of 27 different national systems. By establishing a harmonised corporate identity known as “EU Inc.,” the proposal aims to bolster European competitiveness and stop the relocation of innovative startups to foreign markets like the US.
The key tax proposals and frameworks introduced in the resolution to boost the bloc’s competitiveness are:
The “EU, Inc.” Framework (The 28th Regime)
Currently, startups, scale-ups, and small-to-medium enterprises (SMEs) face immense hurdles scaling across the EU due to the costs of navigating 27 different national tax and regulatory environments. EU Inc. acts as an optional, pan-European business regime that sits alongside national laws, designed to lower compliance costs and simplify cross-border expansion.
- It proposes a digital One-Stop Shop where companies can achieve a single digital registration, acquire a single tax number, and use fully standardised documentation (defaulting to an English-first communication principle).
- The overall reduction in administrative burdens for companies operating under EU Inc. is estimated to be between EUR 328 million and 440 million over 10 years.
Simplifying VAT procedures
SMEs frequently cite VAT fragmentation as the most prevalent barrier to scaling up within the EU. To resolve this, the resolution demands a centralised VAT framework.
- Participating businesses would operate using a single EU VAT number.
- A digital portal would consolidate all VAT declarations and refunds across all Member States, heavily reducing the need for multiple national registrations.
- The system pushes for interoperable digital solutions like e-invoicing to cut administrative costs, focusing heavily on procedural simplification rather than forcing all member states to harmonise their actual VAT rates.
Reducing the complexity of transfer pricing
Transfer pricing—how companies price transactions between their own subsidiaries in different countries—currently relies on OECD guidelines that Member States apply very differently, leading to costly disputes.
- The resolution proposes allocating a consolidated corporate tax base using a pre-agreed formula based on real economic activity (such as a company’s sales, labour, tangible assets, and digital presence). This transparent allocation method is intended to directly replace complex intra-group transfer pricing disputes.
- For companies opting into the 28th regime, the Commission is urged to create coordinated “safe harbours” for routine, low-risk intra-group services and harmonise the approaches used for intellectual property licensing to proactively prevent legal conflicts.
Tax incentives for research and development (R&D)
To stimulate innovation, the resolution calls for a harmonised baseline for R&D incentives across the bloc. These incentives must be “appropriate, coordinated and strictly conditioned” to ensure they are cost-effective and do not spark harmful tax competition between Member States.
- The framework requires these incentives to include common eligibility definitions and strict social conditionality, along with regular monitoring.
- A major component is rewarding reinvestment: profits that are reinvested into R&D, digitalisation, or green innovation should be eligible for temporary additional tax deductions or tax deferrals.
- These R&D incentives must also be carefully calibrated to align with the OECD Pillar Two global minimum tax framework, ensuring that innovative firms (which may not yet be turning a profit) can still access these benefits without facing disproportionate administrative burdens.
