CFE’s Tax Top 5 – 6 October 2025

BRUSSELS | 6 OCTOBER 2025

Council Adopts Simplified CBAM Framework to Ease SME Burden

The Council of the EU has adopted a regulation amending the Carbon Border Adjustment Mechanism (CBAM), aiming to reduce the administrative burden on EU importers, particularly SMEs, while maintaining the climate ambition of the scheme. The reform, part of the broader Omnibus I legislative package, introduces a mass-based ‘de minimis’ exemption and a suite of procedural simplifications to support smoother implementation ahead of CBAM’s operational phase starting January 2026.

Under the updated rules, importers bringing in less than 50 tonnes of CBAM goods annually will be exempt from CBAM obligations. This replaces the previous exemption based on consignment value. The threshold is calculated to maintain CBAM coverage over 99% of embedded emissions, thereby safeguarding the scheme’s environmental integrity.

Additional simplifications cover authorisation, data collection, emission calculations, verification procedures, and liability assessments. New flexibility is also introduced, allowing authorised declarants to delegate declaration duties and easing quarterly compliance thresholds from 80% to 50%. The revised regulation also includes transitional measures for importers in early 2026. Those who have applied for CBAM authorisation by 31 March 2026 may continue importing pending the decision, avoiding trade disruption.

CBAM certificate pricing for goods imported in 2026 will reflect the quarterly average EU ETS prices of the respective import period. The regulation also introduces refined provisions on penalties, customs representative responsibilities, and registry processes. Importers exceeding the threshold without authorisation may face financial penalties but be relieved of formal CBAM obligations upon payment.

The legislative act will enter into force three days after its publication in the EU Official Journal. Most provisions apply from 1 January 2026, with certain administrative processes taking effect in 2027.

EU Commission Seeks Mandate to Negotiate UN Tax Dispute Protocol

On 29 September 2025, the European Commission issued a Recommendation for a Council Decision authorising it to participate, on behalf of the EU, in negotiations at the United Nations on the second Early Protocol to the Framework Convention on International Tax Cooperation. The second Early Protocol is being developed alongside the Framework Convention and a separate protocol on cross-border services taxation, as mandated by UN General Assembly Resolution 79/235. The Commission seeks this authorisation under Article 218 TFEU, given that elements of the Protocol are expected to fall within the EU’s exclusive competence under Article 3(2) TFEU.

The Commission’s mandate will be to ensure that any outcome remains compatible with EU law. Specifically, the Protocol should allow Member States to continue applying EU law in mutual relations, safeguard the exclusive competence of the Court of Justice of the EU, and permit taxpayers to choose the instrument to resolve disputes. The agreement must also respect the EU’s human rights framework and avoid conflicts with existing international obligations.

The Recommendation further sets out that the second Early Protocol should contribute to the stability, certainty and coherence of the international tax architecture, and avoid duplication or fragmentation of standards. The intergovernmental negotiating committee is expected to consider the work of other international tax forums and draw on existing tools and expertise. The final outcome should be broadly supported, and the negotiation process inclusive, transparent, and open to input from all UN Member States and stakeholders.

Negotiations on the Protocol will continue through to 2027. Depending on how discussions evolve, the EU Commission may seek that their mandate to negotiate be expanded to cover additional areas.

CFE Opinion Statement on the European Commission Consultation Concerning a “28th Regime” for Start-ups & Scale-ups

Last week, CFE Tax Advisers Europe submitted an Opinion Statement in response to the European Commission’s consultation on the creation of a “28th Regime” – a simplified EU legal form intended to facilitate cross-border growth for start-ups and scale-ups.

CFE strongly supports the objective of creating a streamlined EU-wide corporate structure, but stresses that meaningful tax simplification must form a core part of the initiative if it is to succeed. Drawing lessons from the limited uptake of the Societas Europaea, the submission highlights that without harmonised tax rules and coordinated compliance measures, a new entity form will not deliver sufficient value to smaller businesses.

CFE identifies key tax-related barriers to cross-border scaling, including inconsistent access to tax incentives, divergent transfer pricing rules, and duplicative reporting obligations. The Opinion further urges the Commission to integrate tax and corporate law reforms in parallel, ensuring the new regime provides a genuinely practical, low-burden route.

CFE proposes targeted simplification measures, such as:

  • A single EU tax filing interface
  • Harmonised documentation standards
  • Safe harbours for transfer pricing
  • Coordinated R&D incentives and startup-friendly loss relief
  • Clear guidance on State aid compatibility

The submission further recommends aligning the regime with the EU’s digital agenda, leveraging tools such as the EU Company Certificate and European Business Wallet. A recognised EU “kitemark” could enhance trust and improve access to cross-border investment, particularly for VC and private equity.

CFE concludes that the 28th Regime should focus on practical simplification and coherence, rather than simply creating another legal form. If designed with these principles, the regime could become a meaningful instrument to support innovation, competitiveness, and scale-up growth in the Single Market.

We invite you the read the Statement and remain available for any queries you may have.

EU Commission Issues Recommendation on Savings & Investment Union

The European Commission has issued a Recommendation encouraging Member States to establish national frameworks for Savings and Investment Accounts (SIAs), with the aim of boosting retail investor participation in capital markets and supporting long-term wealth creation for EU citizens. The initiative forms part of the broader Savings and Investments Union strategy and seeks to address barriers such as low financial literacy, fragmented markets, and limited access to simple, affordable investment products. SIAs are intended to offer individuals an accessible means to invest in a diversified range of financial instruments, typically under advantageous conditions, including tax benefits.

The Recommendation places emphasis on the tax dimension of SIAs, highlighting both the role of incentives in promoting uptake and the importance of streamlined compliance procedures. It also addresses cross-border tax neutrality and alignment with EU internal market rules. Member States are encouraged to provide SIAs with tax treatment at least as favourable as the most advantaged investment products available under national law. This may include deductions from taxable income, tax exemptions for income generated within the account, deferral of tax liability until withdrawal, or a flat tax rate.

The Recommendation also permits additional monetary incentives, such as lump-sum payments, but underlines that tax measures should be well-targeted, easy to apply, and designed to avoid market distortions or discriminatory effects. In particular, Member States are asked to ensure tax neutrality in the transfer of portfolios between providers — whether domestic or cross-border — so that such transfers do not trigger taxable events or lead to the loss of tax advantages.

To reduce compliance burdens and encourage participation, Member States should enable SIA providers to support automated tax reporting and pre-filled tax returns. Providers should be allowed to collect tax on behalf of account holders or transmit data directly to tax administrations. These procedures should apply equally to providers authorised in other Member States, ensuring consistency and supporting the free movement of capital. The Recommendation also invites Member States to cooperate in preventing double taxation where investors change tax residence, and to monitor the fiscal impact of SIA-related incentives as part of broader tax policy planning.

OECD Tax Certainty Day: 31 October 2025 

The OECD will hold its seventh Tax Certainty Day on 31 October 2025, bringing together tax policymakers, administrations, business stakeholders and experts to assess the state of the global tax certainty agenda. The event will take place in a hybrid format, both in person at the OECD Conference Centre in Paris and virtually via Zoom, with sessions running from 09:00 to 16:45 CET.

The event is organised by the OECD Forum on Tax Administration, which includes over 50 tax administrations from advanced and emerging economies. Discussions will focus on enhancing tax certainty as a means to support investment, job creation and growth, particularly amid ongoing global economic challenges. The agenda will address key topics including simplification strategies, international administrative practices, and capacity building for jurisdictions at the early stages of the tax certainty journey.

A central feature of the programme will be the release of the 2025 Mutual Agreement Procedure (MAP) and Advance Pricing Arrangement (APA) Statistics, followed by presentations on global trends and challenges in dispute prevention and resolution. Pre-registration is required for both virtual and in-person attendance, with a deadline of 15 October 2025. Final confirmation will be issued by 17 October.

The selection of the remitted material has been prepared by:
Dr. Aleksandar Ivanovski & Brodie McIntosh