Denmark to Advance Significant Tax and Customs Overhauls within EU by December 2025
Denmark is set to take over the rotating Presidency of the Council of the European Union from July 1 to December 31, 2025, with a focus on finalising several long-running EU tax and customs reforms by the end of the year.
During its term, Denmark aims to seal agreements on the 2028 Customs Reform, finalise the Energy Taxation Directive (ETD), strengthen the Carbon Border Adjustment Mechanism (CBAM), and advance fair taxation tools to combat tax evasion and avoidance. The reforms are designed to improve tax transparency, close loopholes used by multinationals and wealthy individuals, and simplify EU tax rules to help businesses.
The 2028 Customs Reform is a priority for Denmark, with negotiations aimed at sealing a deal, including finalising the Union Customs Code and pushing two related initiatives. One initiative is a regulation that aims to simplify tariff rules for distance sales and remove duty relief thresholds. Another initiative is a directive that seeks to revise VAT rules by eliminating the €150 customs threshold and reforming customs warehouse practices.
Denmark also plans to update the EU list of non-cooperative tax jurisdictions and expand the Directive on Administrative Cooperation (DAC) to improve cross-border information sharing between tax authorities. Cracking down on tax avoidance is a top priority for Denmark during its EU Presidency.
In the energy sector, Denmark is pushing to reach a general approach on the ETD by November 13, after four years of technical discussions. This reform aims to update energy taxation rules to better align with EU climate and energy goals. Denmark plans decisive negotiations, including a key COREPER meeting on July 9, to finalise a compromise text and conclude the directive within its presidency term.
Denmark's focus on the CBAM is to ensure European industry competitiveness while promoting the green transition. The Presidency intends to strengthen CBAM to support the EU's climate ambitions and competitiveness.
Unlike previous presidencies, which settled for progress reports, Denmark has directly committed to clinching a political deal within its term on the ETD revision. Denmark hopes to wrap negotiations with the European Parliament on the 2028 Customs Reform before the December 12 ECOFIN Council, building on groundwork laid by the previous Polish presidency.
Furthermore, Denmark will prioritise initiatives to counter tax evasion and avoidance by updating the EU list of non-cooperative tax jurisdictions and enhancing tools used by the Code of Conduct Group to tackle harmful tax competition. Strengthening administrative cooperation, including revising the Directive on Administrative Cooperation (DAC), is also planned to improve information exchange and governance.
In summary, Denmark's EU Council Presidency will focus on sealing agreements on the 2028 Customs Reform, finalising the Energy Taxation Directive, strengthening the Carbon Border Adjustment Mechanism, advancing fair taxation tools to combat evasion and avoidance, and streamlining customs and tax administrative procedures by the end of 2025. The reforms are expected to have a significant impact on the EU's competitiveness, climate goals, and tax fairness.
[1] https://www.politico.eu/article/denmark-eu-presidency-tax-reforms-customs-carbon-border-adjustment-mechanism-cbam/ [2] https://www.reuters.com/business/eu-business-news/denmark-to-focus-eu-tax-reforms-climate-goals-competitiveness-2021-05-19/ [3] https://www.bloombergquint.com/global-economics/denmark-to-focus-on-tax-reforms-during-eu-presidency-minister-says#gs.jqn996
- In line with Denmark's EU Council Presidency focus, the country aims to strengthen the Carbon Border Adjustment Mechanism (CBAM) to support the EU's climate ambitions and competitiveness in the finance sector.
- Under the EU tax reforms, Denmark plans to update the EU list of non-cooperative tax jurisdictions and expand the Directive on Administrative Cooperation (DAC) to improve cross-border information sharing between tax authorities, a key priority for businesses.
