On 24 June 2026, the European Commission's Directorate-General for Taxation and Customs Union (TAXUD) published a staff working document containing a subsidiarity grid to accompany its proposal for a recast of the Council Directive on administrative cooperation in the field of taxation. The document, referenced as SWD(2026)164, assesses whether the proposed EU-level action complies with the principle of subsidiarity, concluding that action at Union level is necessary to avoid fragmentation and ensure uniform regulation across Member States.
The legislative basis for the proposed directive is Articles 113 and 115 of the Treaty on the Functioning of the European Union (TFEU), which allow for harmonisation of tax laws affecting the internal market. The Commission argues that individual Member States acting alone cannot adequately address the transnational aspects of tax fraud, evasion, and avoidance, and that a coherent EU-wide strategy is essential for the proper functioning of the internal market. The subsidiarity grid draws on extensive consultations and evaluations, including public input and reports from the European Court of Auditors, to demonstrate that the initiative's objectives cannot be sufficiently achieved by Member States alone.
The proposal aims to enhance administrative cooperation by harmonising practices for information exchange among tax authorities. This would impact national tax administrations, which would need to adapt to new reporting and data-sharing requirements, potentially increasing administrative burden but also improving cross-border enforcement. EU taxpayers, particularly those with cross-border activities, may face greater scrutiny and compliance obligations, but could also benefit from reduced tax evasion and a level playing field. Businesses operating across borders would see more consistent rules, reducing compliance costs from divergent national systems. Civil society groups focused on tax justice may welcome stronger tools against tax avoidance, while some Member States may raise concerns about sovereignty and the proportionality of EU-level intervention.
The document is a staff working document, not a legislative proposal itself, but it accompanies the formal proposal that will be submitted to the Council for adoption. The Council will need to decide unanimously on the directive, as required by tax matters under the TFEU. The European Parliament will be consulted. The recast consolidates and updates existing rules, and the subsidiarity grid serves to justify the EU's role in this shared competence area.