The EU Council approves tax incentives for the development of clean technologies and industry
The Council of the European Union has announced that it has formally approved the conclusions approving the use of tax incentives to promote the Clean Industry Agreement, the main framework aimed at harmonizing the decarbonization of industry, the introduction of clean technologies and increased competitiveness across the EU.
The Council stressed the need to revive Europe's economic dynamism, strengthen industrial resilience and maintain the EU's position as a global manufacturing hub. The conclusions are based on the European Commission's "Competitiveness Compass" and "Communications on Clean Industrial Transactions", which set out a coordinated roadmap to reduce emissions and strategic dependence on external suppliers.
The Council welcomed the recommendation of the European Commission on tax incentives and a new system of state aid in the framework of "Clean Industrial Transactions". (CISAF), which sets guidelines for Member states implementing national tax measures to support clean energy, industrial decarbonization, and innovation.
Tax incentives are recognized as a key policy tool within the broader EU policy in the field of environmentally friendly industry, ensuring a balance between competitiveness and climate objectives. However, the Council confirmed that taxation remains the responsibility of the Member States. Governments are free to design incentives according to their tax priorities and budgetary capabilities, provided they support the objectives of the Clean Industry Agreement.
Flexibility remains a central principle, given the diversity of Europe's industrial bases and tax systems.
When developing tax incentive schemes for member States, it is recommended that:
Focus support on activities that directly contribute to decarbonization and the introduction of environmentally friendly technologiesto prevent the distortion of competition in the domestic market.Encourage cost-based incentives to increase cost effectiveness.maintain simplicity and transparency to ensure legal certainty for companies and administrations.The Council called for continued exchange of information and best practices between Member States and the European Commission, and regular reporting on international developments related to tax incentives for industrial decarbonization.
The Council also called for an ongoing evaluation of the effectiveness of the incentives and close cooperation between the European Commission, the European Council and national authorities. This approach aims to ensure that they