EuroCommerce

What the Commission proposes

The European Commission has launched a public consultation on territorial supply constraints, which are limitations imposed by large manufacturers to prevent retailers from buying products in one Member State and reselling them in another. These practices fragment the Single Market, limit consumer choice, and lead to significant price differences for daily consumer goods across the EU. The initiative aims to introduce new tools to address these constraints beyond situations currently captured by competition law, as announced in the May 2025 Single Market Strategy. This consultation gathers input from stakeholders to better understand the impact and scale of these supply restrictions.

• Territorial supply constraints hinder retailers from buying goods in one Member State to resell in another
• Such practices fragment the Single Market and limit consumer choice
• They contribute to significant price differences for daily consumer goods across the EU
• The initiative follows the Single Market Strategy announced in May 2025
• New tools are proposed to address these constraints beyond existing competition law

What is asked: Respondents are asked to provide information and comments on territorial supply constraints, their impact on the Single Market, consumer choice, and retail prices, as well as views on potential tools to address them.

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What the Commission proposes

The European Commission has launched a call for evidence for an evaluation and impact assessment running in parallel regarding VAT rules and the circular economy. The initiative aims to modernise selected value added tax rules that currently hinder circular business models, sustainable consumption choices, and the single market for secondary raw materials. It focuses on three specific pillars: second-hand goods, the donation versus destruction of viable goods, and VAT deduction rules for passenger cars. A legislative proposal is indicatively planned for the second quarter of 2027.

• Evaluates and reviews current EU VAT rules to ensure they align with the circular economy and complement the Ecodesign for Sustainable Products Regulation and the Circular Economy Act.
• Examines the VAT treatment of second-hand, refurbished, and remanufactured goods to address lack of deduction rights and complex margin schemes.
• Addresses economic distortions where destroying viable goods is more advantageous under current VAT rules than donating them.
• Considers aligning VAT deduction rules for passenger cars with sustainability objectives and zero-emission mobility goals.
• Assesses policy options including mandatory or discretionary measures on vehicle deductions, harmonised margin schemes, and VAT relief on donations.

What is asked: The Commission asks respondents to provide feedback and evidence on the evaluation of current VAT rules and the impact assessment of potential policy options regarding second-hand goods, the donation or destruction of viable goods, and VAT deduction rules for passenger cars.

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1. Reducing resource dependencies and keeping materials in productive use for longer are important not only for achieving the EU’s environmental objectives, but also for improving its industrial competitiveness and economic security. This is reflected in the Clean Industrial Deal, in which the Commission identified circularity as one of the key enablers of a competitive and decarbonised European economy and announced a future ‘green VAT initiative’ (also referred to as ‘Circular VAT’). The importance of the circular economy for achieving the EU’s ambition to boost competitiveness and economic security will also be reflected in the forthcoming Circular Economy Act (CEA), which is intended to strengthen the single market for secondary raw materials and is scheduled for adoption in late 2026.

   Proposal for a Council Directive amending Directive 2006/112/EC as..., page 1 (EN)

2. It is estimated that the remanufacturing sector alone has the potential to create 500 000 new jobs and could grow by EUR 69 billion by 20302. Focusing only on online recommerce, i.e. the resale of used products online (figures on the traditional bricks-and-mortar segment are unavailable), recent estimates put the value of second-hand goods sales in the EU at approximately EUR 94 billion3, with a projected annual growth rate exceeding 15% for 2027. Moreover, consumer engagement with this market is widespread. Nearly 87% of EU consumers are reported to have bought or sold second-hand goods4. However, at the other end of the spectrum, there are business models that rely on surplus production which potentially involve the destruction of unsold goods.

   Proposal for a Council Directive amending Directive 2006/112/EC as..., page 3 (EN)

3. The Ecodesign for Sustainable Products Regulation (ESPR), which entered into force in 2024 and is being progressively implemented, is a key instrument for making environmentally sustainable and circular products the norm. By establishing requirements relating to durability, repairability and reusability, which thereby support the repair- and second-hand markets, it prolongs product life and encourages customers to make more sustainable choices. In addition, the ESPR also addresses the destruction of unsold but viable consumer products by requiring economic operators to take all necessary measures to prevent them having 1 Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, 11.12.2006, p. 1, ELI: http://data.europa.eu/eli/dir/2006/112/oj) Ref. Ares(2026)8589104 - 09/09/2026

   Proposal for a Council Directive amending Directive 2006/112/EC as..., page 1 (EN)

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What the Commission proposes

The proposal introduces a Council Directive, known as the Omnibus on Taxation, which amends six existing directives in the field of direct taxation to simplify the EU corporate tax framework and support business growth and competitiveness. It aims to reduce administrative and compliance burdens for cross-border activities while maintaining high standards of protection against tax avoidance and abusive practices. The initiative aligns existing rules with international tax developments, such as the Pillar Two global minimum tax, and addresses procedural and legal obstacles in areas like withholding taxes and corporate reorganisations. Overall, the measures seek to improve legal certainty and ensure the coherent functioning of the internal market without lowering tax standards.

• Amends Directives 2003/49/EC, 2009/133/EC, 2011/96/EU, (EU) 2016/1164, (EU) 2017/1852, and (EU) 2025/50.
• Simplifies the Union framework on direct taxation to reduce compliance costs for businesses.
• Eliminates overlapping provisions and addresses practical issues arising from the interaction with the Pillar Two Directive.
• Removes procedural barriers and legal uncertainty linked to withholding tax relief.
• Maintains existing safeguards and high levels of protection against tax avoidance and evasion.

What is asked: Respondents expressed their views on simplifying existing EU tax rules to improve the functioning of the internal market and enhance Europe's attractiveness for investment and business.

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1. 9 The Draghi report on EU competitiveness 10 European Commission, ‘A competitiveness Compass for the EU’, COM (2025) 30 Final 11 Among the key objectives of the Savings and Investment Union is the breaking down of barriers to integrated financial markets and supporting investments, as explained here: https://finance.ec.europa.eu/regulation-and-supervision/savings-and-investments-union_en#what 12 ‘Commission Recommandation of 2 July 2025 on tax incentives to support the Clean Industrial Deal and in light of the Clean Industrial Dearl State aid Framework’, C(2025) 4319 final. 13 Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law (OJ L 169, 30.6.2017, p. 46, ELI: http://data.europa.eu/eli/dir/2017/1132/oj).

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2. 38 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions (Commission Staff Working Document), The EU Startup and Scaleup Strategy, COM(2025)270 final, pages 53 and 54. 39 M. Draghi, The future of European competitiveness (Part A, A competitiveness strategy for Europe), September 2024. 40 Ibid, p. 6. 41 European Law Institute, For a European Approach to R&D Tax Incentive(s), 2021. 42 D. D’Andria, D. Pontikakis, A. Skonieczna, Towards a European R&D Incentive? An assessment of R&D Provisions under a Common Corporate Tax Base, Working Paper No 69 - 2017, p. 4. 43 OECD R&D statistics released on 31 March 2026, cf. https://www.oecd.org/en/data/insights/statistical- releases/2026/03/oecd-overall-rd-growth-stable-government-rd-budgets-decline-and-reorient-towards-defence.html.

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3. 20 VVA/KPMG, Tax compliance costs for SMEs: An update and a complement Final Report KPMG/VVA 2022. 21 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19, ELI: http://data.europa.eu/eli/dir/2013/34/oj).

   Proposal for a COUNCIL DIRECTIVE amending Directives 2003/49/EC,..., page 28 (EN)

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What the Commission proposes

The European Commission proposes a revision of EU public procurement rules through a new regulation that repeals the existing 2014 directives on public procurement, utilities, and concessions. The initiative aims to modernize and simplify rules, reduce administrative burdens, and enable preferences for European products in strategic sectors to secure supply chains and add EU value. It also amends multiple sector-specific regulations and directives containing procurement provisions to improve coherence and transparency. Furthermore, the proposal addresses high administrative burdens and legal uncertainty identified in previous evaluations regarding public buyers and businesses.

• Revises and replaces Directives 2014/23/EU, 2014/24/EU, and 2014/25/EU with a single Public Procurement Act regulation.
• Enables preference for European products in strategic sectors to ensure security of supply and EU added value.
• Aims to modernize and simplify rules, specifically considering EU start-ups and innovators.
• Amends various sector-specific regulations and directives that contain public procurement provisions.
• Addresses administrative burdens and legal uncertainty that currently affect public buyers and businesses, including SMEs.

Summary written by AI from the Commission's document.

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1. • The need for objective, transparent, and value-creation-based criteria that incentivize EU investment and promote vendor diversity • The importance of considering the origin of operators, including quality jobs, ownership, and tax residence, as well as EU added value • The need for clear definitions and application of Made in Europe criteria, with a focus on strategic industries and avoided blanket rules that could lead to cost increases and supply chain disruptions • The potential to link EU content provisions with sustainability performance, to support industrial decarbonization and innovation, and create green jobs in the EU • The importance of promoting collective bargaining, quality jobs, and regulating subcontracting to contribute to the Made in Europe objective • The need for consistency with EU and WTO law, to avoid discrimination and ensure that the rules are fair and

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2. industries and jobs • The need for certification and traceability tools to ensure the credibility of Made in Europe requirements • The importance of considering the impact of Made in Europe criteria on small and medium-sized enterprises (SMEs) and ensuring that they do not create unnecessary barriers to entry or disproportionately affect certain industries or sectors. Some respondents also suggested that Made in Europe criteria should be applied in a way that takes into account the entire life cycle of a product or service, including its production, use, and disposal, and that they should be linked to EU environmental and

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3. Obligations in relation to subcontracting (notably transparency) and clarifications on the link to the subject matter, among others, will have positive social impacts. Incentivising the use of the EU Ecolabel will facilitate green procurement for public buyers. FLX.2 will extend such procurement to concessions and improve coherence with sectoral legislation, for example regarding exclusion grounds. MPL.1 would facilitate the inclusion of environmental and social considerations in procurement procedures by making this less complex for public buyers, inter alia through the Eligibility Network which automates the verification of exclusion grounds and selection criteria (including environmental and social requirements). Interconnected EU tools such as the DPP (holding key product sustainability information) would help public buyers to compare products.

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