The 2026 Work Programme contains detailed plans to boost the EU’s competitiveness, security, and resilience under its 2024–2029 strategic agenda.

The European Commission announced its 2026 Commission Work Programme on 21 October 2025, in which it outlined key initiatives and signals important strategic shifts in the realm of corporate taxes, value-added tax (VAT), and international profit allocation rules, particularly those related to transfer pricing aimed at enhancing Europe’s competitiveness, security, and social resilience while advancing strategic autonomy.

The programme is built around the Commission’s strategic priorities for the 2024–2029 mandate.

The key initiatives are:

Corporate tax modernisation

Two significant proposals currently pending for adoption aim to reshape income taxation for businesses:

  1. Business in Europe: Framework for Income Taxation (BEFIT): This proposal aims to provide a unified income taxation framework across the EU. This is a fundamental step toward streamlining rules for companies operating across borders, enhancing competitiveness by making business operations and finance easier for innovative companies, startups, and SMEs.
  2. Head Office Tax System for SMEs (HOT): Specifically targeting smaller enterprises, a Council Directive is pending that seeks to establish a Head Office Tax system for micro, small, and medium-sized enterprises. This measure is intended to simplify tax compliance for SMEs by allowing them to follow a single set of rules based on their head office location, and it includes an amendment to Directive 2011/16/EU.

New legislative initiative (Tax omnibus)

The Commission also plans to introduce an Omnibus on taxation as a legislative initiative, further demonstrating the ongoing commitment to update and simplify tax rules.

Digital levies

A Council Directive is proposed regarding the common system of an EU digital services tax, specifically on revenues generated from providing certain digital services.

Withdrawals in international taxation

The following proposals concerning advanced corporate taxation and anti-avoidance measures are slated for withdrawal:

  1. Transfer Pricing: The EU may replace the proposed common transfer pricing rules with a new platform to develop consensus-based, non-binding solutions to practical transfer pricing challenges.
  2. Anti-Tax Avoidance (Shell Entities): The proposal for a Council Directive laying down rules to prevent the misuse of shell entities for tax purposes is also listed for intended withdrawal.
  3. Debt-Equity Bias Reduction (DEBRA): A proposal concerning a debt-equity bias reduction allowance and limitations on interest deductibility for corporate income tax purposes is also set to be withdrawn.
  4. Financial Transaction Tax (FTT): The proposal to introduce a tax on qualifying financial transactions under enhanced cooperation has been withdrawn.