CFE’s Tax Top 5 – 13 October 2025

ECOFIN Reviews Tax Blacklist & Approves Coordinated Tax Incentives for Clean Technologies

Council Maintains EU List of Non-Cooperative Jurisdictions
Sitting in its ECOFIN configuration on 10 October, the Council of the EU confirmed its list of non-cooperative jurisdictions for tax purposes without any changes. The eleven jurisdictions currently on the list—American Samoa, Anguilla, Fiji, Guam, Palau, Panama, Russia, Samoa, Trinidad and Tobago, the US Virgin Islands, and Vanuatu—were deemed to still be non-compliant despite some positive developments.

The Council also endorsed an updated state of play document (Annex II), which monitors jurisdictions that have committed to aligning with EU tax good governance principles. Costa Rica and Curaçao have been removed from this annex, having fulfilled their respective commitments. Meanwhile, Brunei Darussalam has made a new commitment to reform its foreign-source income exemption regime by the end of 2025.

The EU list of non-cooperative jurisdictions, established in 2017, forms part of the EU’s broader strategy to promote fair taxation and combat tax avoidance. It is updated twice a year based on the work of the Council’s Code of Conduct Group (Business Taxation), which collaborates with international partners such as the OECD Forum on Harmful Tax Practices. The next update is scheduled for February 2026.

Council Endorses Tax Incentives to Support Clean Technologies and Industrial Decarbonisation
At the same meeting, the Council adopted conclusions supporting the use of tax incentives to accelerate the green transition, welcoming the European Commission’s July 2025 Recommendation on the matter. The Council noted that well-designed tax incentives, including accelerated depreciation and targeted tax credits, can be useful tools to stimulate private investment in clean technologies and promote the decarbonisation of EU industry. Member States have been encouraged to implement incentives in a manner that is simple, effective, fiscally sustainable, and compatible with their respective tax systems and EU State aid rules.

The conclusions invite Member States to assess the effectiveness of their tax incentive measures and share best practices, while recognising the need for flexibility given the diversity of national tax frameworks. The Council also underlined the importance of transparency, monitoring, and regular evaluation to ensure that incentives achieve their intended environmental and economic objectives. The Commission’s Recommendation forms part of the Green Deal Industrial Plan and aims to complement existing EU policy instruments that support the deployment of net-zero technologies and sustainable industrial production.

EU Commission October Infringement Package

As part of its October 2025 Infringement Package, the European Commission has initiated infringement proceedings against Spain concerning its income tax rules for non-residents. Under current Spanish law, non-resident individuals who own property in Spain and use it as a habitual residence are subject to a tax on notional rental income, calculated as 2% of the cadastral value of the property. Spanish tax residents are exempt from this taxation when the property serves as their main residence. The Commission considers this treatment to be discriminatory and contrary to the free movement of workers and capital under Articles 45 and 63 of the Treaty on the Functioning of the European Union (TFEU), and incompatible with the general principles of equal treatment and non-discrimination. In its letter of formal notice, the Commission asserts that Spain’s tax provisions impose a heavier burden on non-resident taxpayers and deter cross-border economic activity. Spain now has two months to respond and bring its legislation into line with EU law, failing which the Commission may issue a reasoned opinion.

The Commission also issued formal notices to multiple Member States for failing to fully transpose EU VAT rules. Ireland, Greece, Spain, Cyprus, Lithuania, Portugal, and Romania have not completed transposition of the special VAT scheme for small enterprises introduced under Directive (EU) 2020/285. Separately, Belgium, Bulgaria, Greece, Spain, Lithuania, Portugal, and Romania have not fully transposed the 2022 rules on VAT rates introduced by Directive (EU) 2022/542. The Commission considers that failure to implement these rules may distort competition and disrupt the functioning of the internal market, particularly for SMEs.

The Commission has also taken action against Belgium for failing to comply with EU customs rules relating to data reporting. Belgium has not fulfilled its obligation to transmit complete customs surveillance data to the EU’s central SURV3 system, as required by Commission Implementing Regulation (EU) 2021/1226. The Commission warns that incomplete or inaccurate data hinders effective customs surveillance and undermines uniform enforcement of the Union Customs Code.

Each of the concerned Member States has two months to address the identified shortcomings. If the Commission is not satisfied with their responses, it may proceed to the next stage of infringement proceedings by issuing a reasoned opinion or referring the matters to the Court of Justice of the European Union.

CFE ECJ TaskForce Statement on CJEU Case C-601/23, Credit Suisse, on Withholding Taxes, Losses & Territoritality

CFE’s ECJ TaskForce has issued an Opinion Statement on the judgment of the Court of Justice of the EU in Credit Suisse Securities (Europe) Ltd v Diputación Foral de Bizkaia. The case examined whether a non-resident loss-making company must be granted the same withholding tax refund mechanism as a resident company under the free movement of capital.

The Court confirmed its position in Sofina, finding that definitive taxation of dividends paid to non-resident loss-making companies, without the possibility of reimbursement, constitutes a restriction not justified under EU law.

Justifications and Legal Principles

The CJEU rejected arguments presented by several Member States, including justifications based on effective tax collection, tax system coherence, and the balanced allocation of taxing rights. The Court reaffirmed that non-resident and resident taxpayers are in objectively comparable positions when both are taxed on the same type of income, and that withholding tax disadvantages must be assessed on an annual basis.

While the ruling cited earlier case law such as Futura, the Court did not engage directly with the principle of territoriality, nor did it specify whether the applicable law for determining a loss-making position is that of the residence state, source state, or both.

Implications and Open Questions

CFE notes that the implications of Credit Suisse may extend beyond dividend withholding tax. The logic of the ruling could potentially apply to other forms of source taxation, such as interest, royalties, or permanent establishments, and may also have consequences for cross-border group taxation regimes.

Open questions remain regarding how Member States should implement equivalent refund mechanisms for non-residents, how losses should be calculated across jurisdictions, and what procedural obligations companies must meet to demonstrate entitlement to a refund.

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

FISC to Host Inter-Parliamentary Meeting on Digital Taxation

On 16 October 2025, the European Parliament Subcommittee on Tax Matters (FISC), in cooperation with the Legislative Dialogue Unit, will host an inter-parliamentary committee meeting focused on the taxation of the digitalised economy. The meeting will bring together Members of the European Parliament, representatives of national parliaments, national tax administrations, the European Commission, and invited economic experts. The aim is to facilitate an exchange of views on the rationale, design, and implementation of digital taxes within the EU and beyond.

The meeting will explore the reasons why some Member States have introduced national digital services taxes (DSTs) or similar measures, the tax bases and rates adopted, and the challenges faced during implementation. Participants are also expected to discuss the broader policy context, including ongoing international efforts at the OECD and G20 levels to address the tax challenges arising from digitalisation. The meeting is intended as a follow-up to the European Parliament’s March 2025 EU Tax Symposium, with a particular focus on enhancing inter-parliamentary dialogue on digital tax policy issues. The session will be webstreamed via the Parliament’s multimedia centre.

EU Parliament Backs Simplification of Tax Rules to Boost EU Competitiveness

On 9 October 2025, the European Parliament adopted a non-binding resolution on the role of simple tax rules and tax fragmentation in European competitiveness. MEPs stressed that tax complexity and fragmentation in the Single Market undermine investment and economic growth, particularly for SMEs and cross-border operators. The resolution underscores the need to reduce compliance burdens and calls for the accelerated digitalisation of tax systems, building on initiatives such as the VAT in the Digital Age (ViDA) package.

Parliament reiterated its support for the Business in Europe: Framework for Income Taxation (BEFIT) proposal and the associated transfer pricing directive, seeing them as crucial for simplification and a level playing field. It urged the Commission and Member States to avoid the proliferation of national tax incentives, noting that overlapping or conflicting rules may distort competition and lead to inefficiencies. The resolution also highlighted the risks of gold-plating EU directives and called for uniform transposition to preserve the integrity of the Single Market.

While acknowledging the subsidiarity principle in tax matters, Parliament encouraged better coordination and transparency, particularly regarding harmful tax practices. It welcomed progress and called for continued scrutiny of tax regimes through tools such as the Code of Conduct Group and state aid investigations. MEPs also expressed concern about persistent gaps in the EU list of non-cooperative jurisdictions and suggested more objective and transparent listing criteria.