EU Advances EN 16931 E-Invoicing Revisions and Proposes Financial Sector Tax Reforms
The European Union is advancing two major regulatory measures focused on tax modernization and digital compliance. These include the formal adoption of an updated EN 16931 e-invoicing standard to support the VAT in the Digital Age (ViDA) initiative, along with a parliamentary push to fundamentally restructure the taxation of the financial sector.
CEN Authorizes Updates to EN 16931 E-Invoicing Standard
To ensure technical readiness for the upcoming Digital Reporting Requirements (DRR), which enforce structured intra-community e-invoicing by July 2030, the European Committee for Standardization (CEN) formally ratified updates to the EN 16931-1 semantic data model on February 13, 2026.
Following an informal agreement in October 2025, the standard, originally designed in 2017 exclusively for public procurement and B2G frameworks, has been officially broadened to support B2B exchanges.
The CEN/TC 434 subcommittee formulated a dedicated core semantic data model for B2B transactions, refined extension methodologies, and updated syntax bindings for CII and UBL. To meet impending ViDA specifications, the revised standard now mandates or accommodates the following:
- Standardized invoice coding and classification for invoice codes.
- Functionality to process multiple and repeat orders
- Early payment discounts and late payment fines
- Supplementary invoice data, including bank IBANs, sequential numbering for corrective invoices, and declarations of triangulation simplifications where applicable.
- Foreign exchange (FX) information.
- A broader scope of exempt supplies.
- Support for national special VAT schemes, such as the margin scheme.
- The technical capacity to append XML attachments.
ECON Draft Report on Financial Sector Taxation
On February 4, 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) published a draft report demanding an urgent resolution to the EU’s fragmented financial tax landscape, which currently comprises 91 distinct national levies.
The 1977 VAT Exemption Problem
The report centers on the obsolescence of the 1977 VAT exemption for financial services, a rule originally enacted to address technical tax barriers that no longer exist. Because financial institutions cannot charge or reclaim VAT under this directive, modern fintech and digital firms face significant competitive disadvantages compared to traditional banks. The restriction also stifles operational efficiency by penalizing service outsourcing, effectively compelling firms to keep operations internal.
Proposed Tax Reforms
- VAT Rule Reforms: Publish a proposal to reform VAT rules for financial services by taxing clearly identifiable charges that are easy to measure, such as fees and commissions.
- FTT Alternative: Present a concrete alternative plan to the withdrawn EU-wide Financial Transaction Tax (FTT), which the Parliament notes could have generated between EUR 3.5 billion and EUR 75 billion annually.
- Windfall Taxes: Implement coordinated, time-limited, and transparent “windfall taxes” on exceptional bank profits that arise from extraordinary circumstances, such as rising interest rates, rather than from improved services or innovation.
The publication of this draft report intensifies pressure on the European Commission to introduce formal proposals for VAT reform and broader financial sector taxation. Any subsequent legislative developments will be closely monitored.
There’s more you should know about global e-invoicing changes – learn more about the new and upcoming regulations.
