eu tax

Hungary and Estonia Halt EU Business Tax Code Revision

December 6, 2021 |

Revamping Tax Practices in the EU: A Necessary Reform

In the words of EU Commissioner Paolo Gentiloni, the European Union (EU) is currently in the final stages of a significant overhaul of the 1997 Code of Conduct for Member States. This reform aims to address and prohibit damaging national business tax practices that undermine the integrity of the EU’s internal market.

Necessity of Reform

First and foremost, it is essential to understand the rationale behind this reform effort. Over the years, certain member states have exploited gaps and inconsistencies in the existing tax framework to gain unfair advantages in attracting businesses and investment. Such practices not only distort competition within the EU but also erode public trust in the fairness and effectiveness of the EU’s tax policies.

Addressing Loopholes

Transitioning to the proposed reforms, it is evident that one of the primary objectives is to close existing loopholes that allow for double non-taxation and the abuse of tax benefits. These loopholes often arise from ambiguities or gaps in national tax laws, which some member states exploit to offer highly favorable tax arrangements to certain businesses or individuals.

Strengthening Enforcement Mechanisms

Moreover, the revamped Code of Conduct seeks to strengthen enforcement mechanisms by empowering the EU Council’s Code of Conduct Group to scrutinize and evaluate tax measures implemented by member states. This enhanced oversight aims to ensure greater transparency and accountability in the implementation of tax policies across the EU.

Overcoming Resistance

Despite the clear benefits of these reforms, progress has been hindered by resistance from certain member states, notably Hungary and Estonia. These countries have been reluctant to agree to the proposed changes, citing concerns over sovereignty and competitiveness.

The Path Forward

However, despite the challenges posed by Hungary and Estonia, there is a collective determination among other EU member states to push forward with the reform agenda. The Slovenian Presidency of the EU Council, in particular, has demonstrated a commitment to keeping the issue on the agenda of the upcoming Ecofin Council meeting on December 7.


In conclusion, the ongoing efforts to reform tax practices within the EU reflect a broader commitment to strengthening the internal market and promoting fair competition. While challenges remain, the momentum for change is strong, driven by a shared recognition of the importance of creating a level playing field for businesses and ensuring the integrity of the EU’s tax system.


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