Harmonisation versus simplification was the cornerstone clash during the FISC subcommittee's public hearing on "Tackling tax obstacles in the Single Market". Benjamin Angel from the European Commission and Prof. Johanna Hey of the University of Cologne presented contrasting visions for addressing the European Union’s intricate tax landscape. Angel acknowledged the political and institutional deadlock blocking harmonisation efforts but remained pragmatic about soft law coordination and building trust among Member States. Hey championed a deregulatory approach, calling for repealing redundant directives and focusing on legal clarity through simplification rather than striving for politically fraught harmonisation. Meanwhile, Prof. Rita de la Feria critiqued the sovereignty-harmonisation trade-off as a false dichotomy, urging emergency coordination to overcome fragmentation, adding another layer of complexity to the debate.
This exchange unfolded at the European Parliament’s FISC Subcommittee meeting held on January 27, 2026, featuring experts and lawmakers probing persistent tax coordination hurdles.
On concrete proposals, Angel highlighted the fractured state of transfer pricing thresholds and intragroup withholding tax exemptions. He called for expanded use of advance pricing agreements (APAs) and soft-law mechanisms like the Joint Transfer Pricing Forum, although its revival faces political resistance, as Angel noted. Hey proposed repealing the Anti-Tax Avoidance Directive (ATAD) in favor of streamlined rules, warning about the overlap with OECD Pillar Two rules and stressing the burden on SMEs, which she argued should be treated differently than multinationals. Christos Theophilou, a tax attorney, reinforced SME-centric reforms, suggesting lighter documentation requirements and an "SME compliance lane."
Policy cleavages revolved around integration depth and regulatory complexity. Angel's stance favored some strengthening of EU-level coordination tools and increased trust-building mechanisms despite institutional deadlock—pointing to incremental changes with soft instrument use. Conversely, Hey preferred reduction of EU regulatory reach and national simplification focused on deregulatory frameworks. De la Feria gravitated towards stronger integration to counteract fragmentation and harmful tax competition.
Stakeholders impacted include EU producers and SMEs facing high compliance costs under complex national regimes, as noted by Angel and Hey. Simplification could ease SME burdens but might also reduce regulatory oversight, balancing consumer protection with business competitiveness. National authorities encounter challenges in administrative divergence, like non-interoperable IT systems highlighted by Angel. EU regulatory bodies grapple with enabling coordination amid political mistrust.
A consistent theme was rebuilding trust among Member States as an essential precondition for progress. Angel proposed extending corporate tax codes of conduct to personal income taxation to curb harmful competition. Yet, Council resistance to EP proposals and Member State unwillingness to cooperate may hinder swift advances.
Looking ahead, the European Parliament’s scrutiny signals continued focus on deepening fiscal integration, balancing simplification and harmonisation, with SME-friendly policies central to consensus. The complex interplay of sovereignty concerns, political feasibility, and legal fragmentation means incremental reforms via soft-law instruments and mutual trust-building remain the likely path forward.