European Commission makes recommendations on tax incentives to accelerate the Clean Industrial Transition - European Commission
To support the Clean Industrial Deal (CID), the European Commission has put forward a to support the ), a cornerstone of the EU’s strategy to build a competitive, climate-neutral industrial base. The initiative, unveiled today as part of the CID implementation package, outlines a comprehensive framework for Member States to design cost-effective tax measures that stimulate investment in clean technologies and industrial decarbonisation.
The Recommendation advocates for two core instruments to drive clean investment:
1. :
2. :
The Recommendation focuses on the following principles to ensure tax measures are :
Tax incentives introduced under the Recommendation must comply with EU state aid regulations. For measures falling under the , conditions for compatibility with the internal market are set out in CISAF Section 5 for industrial decarbonisation and CISAF Section 6 for clean technologies. For other incentives, Member States may rely on exemptions under .
The Clean Industrial Deal, launched in February 2025, aims to establish a resilient, investable clean technology ecosystem in Europe. By aligning tax policy with climate goals, the Recommendation seeks to:
The Recommendation marks a pivotal step in transforming the EU’s industrial landscape. By leveraging tax incentives, the EU empowers businesses to lead the clean transition while ensuring fair competition. The principles outlined today will guide Member States in creating a coherent, impactful policy framework.
The recommendation aims to by providing cost-effective tax measures such as a. These tools reduce initial costs for companies adopting clean technologies (e.g., renewable energy, energy-efficient machinery) and align with EU climate goals to strengthen competitiveness and meet the 2050 net-zero target.
How do accelerated depreciation/immediate expensing and tax credits work to support clean investment?
Both measures are designed to be simple, certain, and timely to encourage businesses to prioritise sustainable investments.
Are these tax incentives compliant with EU state aid rules?
Yes. The recommendation is aligned with the . Tax incentives under CISAF are compatible with the internal market if they meet conditions such as caps on aid intensity and on eligibility. For non-CISAF measures, Member States may rely on exemptions under Commission Regulation (EU) No 651/2014 (GBER), which could for example be used for support to zero-emission vehicles.
Member States are asked to report on their adoption of relevant measures, with the European Commission facilitating exchanges on best practices, regularly monitoring and reporting on how tax incentives are delivering clean investment and contributing to the broader goals of the Clean Industrial Deal. This will help evaluate the effectiveness of tax incentives.
