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

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.