The EU Council approved tax incentives to support the Clean Industry Deal

In a document published by the Council Secretariat, emphasis was placed on the importance of using fiscal measures as a strategic tool to revive economic dynamism, and to enhance competitiveness and resilience in Europe.

The decision highlighted that, in order for Europe to maintain a strong position in global supply chains, it is necessary to establish an investable clean technology ecosystem. The Council noted that member states could benefit from tax incentives to support energy transition and industrial decarbonization.

The EU Council welcomed the European Commission’s tax incentive recommendations published under the “Clean Industrial Deal” and the new State Aid Framework (CISAF). This framework will guide member states in shaping their tax policies to encourage investments in clean energy, industrial decarbonization, and clean technology.

The document also reminded that taxation powers remain solely with the member states and that there are no binding rules at the EU level. Therefore, member countries have the flexibility to develop approaches tailored to their own economic conditions, resources, and budget priorities.

While noting that some member states already implement similar tax incentives, the Council stated that expenditure-based tax incentives may be more cost-effective in attracting investment compared to revenue-based incentives. At the same time, it emphasized the importance of designing incentives in a simple, transparent, and legally secure manner.

The Council also requested the European Commission to inform member states about international developments in tax incentives and to establish evaluation mechanisms to measure the effectiveness of the policies applied.

EU officials stressed that the Clean Industrial Deal will serve not only environmental objectives but also Europe’s economic competitiveness and industrial autonomy. The decision is expected to contribute to the strengthening of European industry, particularly by encouraging private sector investment during the green transition process.