The EU Approves EN 16931 E-Invoicing Updates and Proposes Financial Sector Tax Harmonization

The European Union is advancing two significant tax and digital compliance initiatives: the formal approval of the updated EN 16931 e-invoicing standard to support the VAT in the Digital Age (ViDA) mandate, and a newly drafted parliamentary report calling for comprehensive reform of financial sector taxation.

Approval of the Revised EN 16931 E-Invoicing Standard

On February 13, 2026, the European Committee for Standardization (CEN) formally approved revisions to the EN 16931-1 semantic data model. Originally established in 2017 for public procurement and B2G transactions, the standard has now been modernized to accommodate B2B exchanges.

This update follows an informal agreement reached in October 2025 and ensures the standard is fully equipped to support the Digital Reporting Requirements (DRR), which will mandate structured intra-community e-invoicing starting in July 2030.

Key Technical Updates for B2B Transactions

The CEN/TC 434 subcommittee established a new core B2B semantic data model, updated syntax bindings (for CII and UBL), and refined extension methodologies. To support the upcoming ViDA requirements, several specific data fields and functionalities have been introduced, including:

• Invoice coding
• Support for repeat and multiple orders
• Early payment discounts and late payment fines
• New invoice information, including bank IBAN details, corrective invoice sequential numbering, and mentions of triangulation simplifications (where applicable)
• Foreign exchange (FX)
• A broader range of exempt supplies
• National special VAT schemes, such as margin scheme
• The capability to add XML attachments
• Classification for invoice codes

Proposed Overhaul of Financial Sector Tax Rules

On February 4, 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) published a draft report calling for the urgent harmonization of financial sector taxation to eliminate a fragmented landscape of 91 distinct national taxes.

The core issue identified in the report is the VAT exemption for financial services, a rule established in 1977 due to the technical difficulties of taxing these transactions at the time. Although those constraints no longer exist, the exemption remains.

This outdated rule stops financial institutions from charging or recovering VAT, unfairly disadvantaging digital and fintech firms that operate differently from traditional banks. It also discourages outsourcing by forcing firms to keep services in-house, thereby reducing efficiency.

To resolve these inefficiencies, the ECON committee has outlined several recommendations:

• Targeted VAT Application: The European Commission is urged to draft a proposal to reform VAT rules for financial services, specifically proposing the taxation of clearly measurable and identifiable charges, such as fees and commissions.
• FTT Alternative: Expressing disappointment over the withdrawal of the proposed EU-wide Financial Transaction Tax (FTT), which was projected to generate up to EUR 75 billion annually, the committee is pressing the Commission to introduce a viable alternative.
• Windfall Taxes: The report suggests implementing transparent, time-limited, and coordinated taxes on exceptional bank profits generated by macroeconomic shifts (e.g., rising interest rates) rather than service innovation.

With the release of this draft report, the European Commission faces heightened pressure to deliver concrete proposals for VAT reform and financial sector taxation. Future legislative updates will be carefully tracked.

There’s more you should know about global e-invoicing changes – learn more about the new and upcoming regulations.