This article was first published in the 23rd edition of the Fact Book on 24 June 2025.
The European Commission is embarking on the SIU (Savings and Investments Union) action plan, a comprehensive strategy designed to channel household savings into productive investments. From the information available so far, during the current European Commission mandate, to contribute to that plan TAXUD will work on tax policy measures to remove tax barriers to cross-border investments (such as FASTER – implementing acts, administrative guidance and exchanges of best practices).
The aim is to support Member States actions in simplifying tax legislation through, for example, exchanges of best practices, enforcement of free movement of capital and other single market freedoms. Also, with guidance on what types of tax incentives align with the EU acquis and State Aid rules. It is still unclear whether TAXUD will promote legislative initiatives, or if the policy measures will take the form of soft law (administrative guidance).
We already know some of the key files/areas that will be covered by the Commission Action Plan in the context of the SIU. These are i) the tax treatment of the Savings and Investment Accounts1; ii) the FASTER (Faster and Safer Tax Relief of Excess Withholding Taxes) Directive2 and iii) the DEBRA (Debt-Equity Bias Reduction Allowance) Directive.
As the EU continues to refine its approach to corporate taxation, the DEBRA proposal stands out as pivotal. Introduced by the European Commission in May 2022, DEBRA aims to create a level playing field between debt and equity financing, by offering a tax allowance on increases in company equity and limiting the tax deductibility of interest payments. This proposal marks a significant step in reducing the over-reliance on debt, which has long been a structural issue within the EU's corporate sector.
The DEBRA proposal is currently under negotiation within the Council's Working Party on Tax Questions (direct taxation). The Council completed an article-by-article examination of the proposal in November 2022. However, in December 2022, it decided to suspend the examination of the DEBRA proposal, suggesting it might be reassessed within the broader context of corporate tax reform, particularly in relation to the Commission's BEFIT (Business in Europe: Framework for Income Taxation) proposal. This highlights the ongoing efforts to harmonise tax measures between Member States and leverage existing rules to tackle the debt-equity bias more effectively.
In March 2024, the Eurogroup released a statement on the future of the Capital Markets Union. This invited Member States to explore ways of reducing the debt-equity bias through their national tax systems and of sharing best practices and plans to address this bias. This collaborative approach underscores the importance of coordinated action to improve the EU's business environment and competitiveness.
The SIU seeks to bridge the gap between savings and investment needs, providing fertile ground for initiatives like DEBRA to thrive. EFAMA has been actively engaged in the discourse surrounding the DEBRA proposal to raise awareness on addressing the debt-equity bias and promoting a more balanced and resilient financial system. The DEBRA proposal's objectives are to be supported by all Member States. However, care needs to be taken in its implementation to ensure it does not inadvertently stifle investment or create new complexities for businesses.
As negotiations progress, stakeholders must remain informed and engaged. The interplay between the DEBRA proposal and the SIU action plan represents an opportunity to reshape the EU's financial landscape. By fostering a more equitable tax environment, and channelling savings into productive investments, these initiatives have the potential to drive sustainable growth and innovation.
These proposals and the SIU action plan are not just regulatory changes; they represent part of a broader vision for a more dynamic and resilient European economy. As these initiatives progress, EFAMA will continue to provide insights and advocate for policies that enhance EU’s competitiveness.
The future of corporate taxation and investment in the EU is being written, and stakeholder engagement is key to shaping its success. Stay tuned for further updates as the negotiations progress and the Commission's action plan takes shape. Let’s continue in a positive direction, together.
Notes to Editors
Access the original article here.
