The European Commission’s October 2026 Infringements Package addresses DAC penalty rules, discriminatory taxation of cross-border investment income and capital gains, VAT exemptions, and incomplete implementation of Pillar Two information exchange rules across nine EU Member States.
The European Commission has published its October 2026 Infringements Package, which includes several tax-related infringement proceedings concerning EU Member States.
Commission calls on Germany, Estonia, Latvia, Lithuania and Hungary to enact effective, proportionate and dissuasive penalties applicable to violations of rules set by the Directive on Administrative Cooperation in tax matters
The European Commission has opened infringement procedures against Germany, Estonia, Latvia, Lithuania and Hungary for failing to establish effective, proportionate and dissuasive penalties for violations of the Directive on Administrative Cooperation in tax matters (DAC). The Commission considers the existing penalties too low to deter non-compliance and notes that the frameworks often do not adequately reflect the severity or repetition of violations, the offender’s financial capacity, or the economic incentives for non-compliance. The Commission has sent letters of formal notice, giving the five countries two months to respond; otherwise, it may issue reasoned opinions.
Commission calls on Hungary to end discriminatory tax treatment of interest income on EU and EEA government bonds
The Commission has opened an infringement procedure against Hungary over the tax treatment of government bond interest. Interest from qualifying Hungarian government bonds is exempt from income tax and social contribution tax, while comparable income from bonds issued or guaranteed by other EU Member States and EEA countries is taxed normally. The Commission considers this discriminatory treatment contrary to the free movement of capital under Article 63 TFEU and Article 40 of the EEA Agreement. Hungary has two months to respond before the Commission may issue a reasoned opinion.
Commission calls on Romania to end discriminatory tax treatment of capital gains derived from the transfer of securities and other financial instruments where the financial intermediary is not established in Romania
The Commission has opened an infringement procedure against Romania concerning higher tax rates on capital gains from securities and other financial instruments when the intermediary handling the transaction is established outside Romania. The Commission considers that this treatment makes services provided by financial intermediaries in other EU Member States and EEA countries less attractive and may breach the freedom to provide services under Article 56 TFEU and Article 36 of the EEA Agreement. Romania has two months to respond to the formal notice, after which a reasoned opinion may follow.
Commission calls on Italy to end discriminatory tax treatment of interest and other income from Italian bonds for certain non-resident investors
The Commission has opened an infringement procedure against Italy over conditions attached to tax exemptions on interest and other income from Italian government and corporate bonds. Certain non-resident investors can receive an exemption only where the bonds are held through an Italian-resident financial intermediary, an Italian permanent establishment, or, in some cases, a non-resident intermediary with an Italian tax representative. The Commission considers that these conditions disadvantage intermediaries established in other EU/EEA countries and may breach Article 56 TFEU and Article 36 of the EEA Agreement. Italy has two months to respond before a reasoned opinion may be issued.
Commission calls on Ireland to end discriminatory tax treatment of capital gains on EU and EEA government bonds
The Commission has opened an infringement procedure against Ireland concerning the tax treatment of capital gains from government bonds. Capital gains on bonds issued or guaranteed by the Irish Government and certain Irish governmental entities are exempt from capital gains tax, while gains on comparable bonds from other EU Member States and EEA countries are subject to the standard 33% capital gains tax rate. The Commission considers this difference inconsistent with the free movement of capital under Article 63 TFEU and Article 40 of the EEA Agreement. Ireland has two months to respond before the Commission may issue a reasoned opinion.
Commission calls on Germany to correctly transpose and apply the VAT exemption for credit management and credit guarantee management services
The Commission has opened an infringement procedure against Germany for failing to correctly transpose and apply the VAT exemption under Article 135(1)(b) and (c) of the VAT Directive for credit management and credit guarantee management services. The Commission considers that German VAT rules do not fully cover these services, resulting in VAT being charged on certain activities, including services provided by syndicate leaders in open syndicated loans, contrary to EU law. Germany has two months to respond before the Commission may issue a reasoned opinion.
Commission calls on Czech Republic to finalise the implementation of the information exchange rules on administrative cooperation in the field of taxation (DAC9)
The Commission has issued a reasoned opinion to the Czech Republic for failing to fully transpose Directive (EU) 2025/872, which amends the DAC rules on the collection and automatic exchange of top-up tax information returns under the Pillar 2 Directive. The Czech Republic has not yet adopted or notified all required national transposition measures, despite EU tax authorities being expected to exchange information on multinational groups within the Pillar 2 scope from June 2026. Czech Republic now has two months to comply; otherwise, the Commission may refer the case to the Court of Justice of the European Union and seek financial sanctions.
