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The article explores the paradox of increasing tax complexity in the EU's simplification efforts and critiques the misconception of simplicity as a primary goal.

June 10, 2026

Complexity, Tax Systems and the European Union’s Competitiveness: The EU Tax Decluttering and Simplification Agenda Paradox

Key Points

The article explores the paradox of increasing tax complexity in the EU's simplification efforts and critiques the misconception of simplicity as a primary goal.
Analyzes the 2025 Tax Decluttering and Simplification Agenda in the EU.
Uses DAC directives as a case study to examine compliance burdens.
Discusses the implications of decentralized systems for tax complexity.
Identifies market failures such as transaction costs contributing to complexity.
Argues for structural consolidation and technological harmonization.
Highlights the unintended consequences of incremental layering on compliance burdens.

Abstract

The European Union’s 2025 Tax Decluttering and Simplification Agenda faces a paradox: tax systems are growing more complex despite efforts to simplify them. This article argues that complexity is unavoidable in decentralized systems and that policymakers often mistake simplicity for the ultimate goal rather than a design guideline for EU competitiveness. Instead of broad standardization, an argument can be made for fostering “perfect competition” among Member States by correcting market failures such as transaction costs and information asymmetries. Using the DAC directives as a case study, the text highlights how incremental layering has increased compliance burdens. It concludes by advocating structural consolidation and technological harmonization.

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