INTERNATIONAL TAX PLAZA - The European Council approved conclusions on the use of tax incentives to support clean technologies and industry

On October 10, 2025 the European Council approved conclusions on the use of tax incentives to support clean technologies and industry as part of the EU’s clean industrial deal. The conclusions respond to a Commission recommendation on the topic, which was published on July 2, 2025.

The clean industrial deal is a flagship initiative of the Competitiveness Compass – the EU’s roadmap to make business easier and faster and ensure Europe’s prosperity. The deal itself aims to support industrial decarbonisation and position the EU as a competitive and attractive hub for manufacturing by promoting clean technologies and circular business models.

The Commission’s recommendation puts forward tax incentives that could be used to boost clean industry in the EU, namely targeted tax credits and accelerated depreciation. It also recommends that tax incentives adhere to certain overall principles to ensure that such measures are cost-effective, simple and timely.

In its conclusions, the Council stresses the need to reignite economic dynamism in Europe and to strengthen competitiveness and resilience. In that vein, the conclusions welcome the Commission’s recommendation, and the policy options it sets out to help achieve the objectives of the Clean Industrial Deal.

At the same time, the Council highlights the need to keep tax incentives simple for companies and tax authorities, in particular given the differences in tax systems across the EU. The Council notes that tax incentives should be seen as one possible element to be considered by each member state as part of an evolving policy mix to support the development of clean energy, industrial decarbonisation and clean technology.

Further, the conclusions underline that flexibility in their application is key. They stress that member states – some of whom already have similar measures in place - are free to design, implement and apply tax incentives in accordance with their individual situations, taking into account potential budgetary impacts.

Finally, the Council encourages member states, with the support of the Commission, to evaluate, if appropriate, the effectiveness of tax incentives they have implemented and to exchange good practices with other member states.

The Council conclusions on tax incentives to support the Clean Industrial Deal, as approved by the Council at its 4120th meeting held on October 10, 2025 can be found here.

Follow International Tax Plaza on Twitter (@IntTaxPlaza)