BRUSSELS | DECEMBER 2025
This month, the OECD public consultation examining the tax challenges arising from the increasing global mobility of individuals, including cross-border remote working, short-term assignments and highly mobile professionals closed for input. The consultation sought stakeholder input on how existing international tax rules apply in these contexts, and whether further clarification, coordination or reform is needed to ensure tax certainty, fairness and administrability in a post-pandemic environment.
CFE Tax Advisers Europe published an Opinion Statement responding to the consultation, drawing on the practical experience of European tax advisers supporting individuals and employers engaged in cross-border mobility. The Statement observes that global mobility has intensified significantly, placing strain on domestic residence rules, tax treaty concepts and employment income provisions that were developed for more static working patterns. The Statement highlights that in practice, inconsistent interpretation of residence tests, days-count thresholds, permanent establishment concepts and employer obligations across jurisdictions can give rise to uncertainty, double taxation risks and disproportionate compliance burdens, particularly for remote workers and short-term assignees.
CFE calls on the OECD to provide clearer and more coherent guidance on the application of existing international tax rules to mobile individuals, with a focus on residence determination, remote working arrangements and employer compliance responsibilities. The Statement emphasises proportionality and administrability, especially in low-risk or short-term mobility scenarios, and highlights the importance of improved coordination between tax authorities, including effective dispute prevention and resolution mechanisms, to enhance tax certainty for taxpayers acting in good faith.
Separately, the Global Tax Advisers Platform, of which CFE is a founding member, has also submitted a detailed response to the same OECD consultation, reflecting the collective experience of tax advisers across multiple regions. The GTAP submission identifies persistent uncertainty around tax residence, employment income sourcing, employer withholding obligations and permanent establishment risk, as well as misalignment between tax, social security, company law and immigration frameworks. GTAP emphasises the need for internationally aligned safe harbours, clearer residence tie-breaker guidance, proportionate compliance thresholds and stronger coordination between tax authorities to reduce double taxation risks and administrative friction for mobile individuals and their employers.
Both submissions underline that while existing international tax principles remain broadly relevant, their application to modern mobility patterns is often unclear and inconsistent. They encourage the OECD to develop pragmatic, coherent and administrable guidance that reflects real-world working arrangements and supports tax certainty for taxpayers acting in good faith.
Countries Withhold Support for Proposed Changes to OECD Minimum Tax Framework
In December, Estonia’s Ministry of Finance confirmed that it did not approve proposed amendments to the international minimum tax rules developed under the OECD Pillar Two process which were anticipated to be agreed upon last week, on the grounds that they are unsuitable for the Estonian tax system.
In a webpost concerning the issue, the Estonian Ministry of Finance set out that it considers the rules to be technically complex and administratively burdensome, particularly in light of Estonia’s small number of ultimate parent entities and the limited revenue expected to arise from implementation. It notes that although Pillar Two was endorsed by 137 jurisdictions in 2021, global implementation remains uneven, with only a minority of countries having implemented the rules to date and the EU standing out as the only jurisdiction to have made them mandatory. Estonia argues that this asymmetry, combined with recent OECD adjustments such as carve-outs that tend to favour larger economies, risks undermining competitive neutrality and placing EU-based multinational groups at a disadvantage in global markets at a time of heightened competitiveness pressures.
The Ministry also raises broader structural concerns about the interaction between the evolving OECD technical standards and EU law, warning that the pace and volume of rule-making create legal uncertainty and significant administrative challenges, particularly for smaller tax administrations with limited capacity to assess wider system impacts. This position follows a communication from Estonia to the European Commission published in early December in which Estonia set out detailed concerns regarding the EU Pillar Two Directive, including the risk that substantive OECD changes are effectively incorporated into EU law without full legislative scrutiny or sufficient Member State involvement. Estonia further noted that provisions originally intended to support simplification, such as the use of safe harbours, now risk expanding the scope and complexity of the regime.
Although Estonia benefits from a derogation under the Directive allowing it to defer implementation until 2030, the Government notes that it must already begin preparing for complex and costly administrative and compliance systems, despite minimal expected fiscal gains. Drawing on the experience of other jurisdictions, Estonia points out that the minimum tax rules are expensive to administer, subject to frequent technical adjustments and burdensome for both tax authorities and businesses. In the context of increasing fiscal pressures, including rising defence expenditure, Estonia considers the minimum tax an inefficient use of administrative resources and has called for a more proportionate and flexible EU approach, including consideration of suspending, amending or narrowing the scope of the Directive to better reflect differing Member State circumstances while preserving the overall integrity of Pillar Two.
Joint Declaration Sets Out EU Legislative Priorities for 2026
The European Parliament, the Council of the European Union and the European Commission have issued a Joint Declaration on EU Legislative Priorities for 2026, setting out a shared commitment to place competitiveness, simplification and effective enforcement at the centre of the Union’s legislative agenda. The Declaration highlights the need to reduce regulatory and administrative burdens, accelerate adoption of priority files and ensure proper implementation of EU law, alongside progress on the next Multiannual Financial Framework (MFF) and the Own Resources Decision.
The legislative agenda includes proposals with direct relevance for corporate taxation and cross-border activity, notably the 28th Regime for Innovative Companies and the Savings and Investments Union initiatives. These measures aim to facilitate investment, support scale-ups and deepen the Single Market, potentially influencing the design of corporate tax regimes, incentives for innovation and the taxation of cross-border savings and investments.
Additionally, simplification is identified as a horizontal priority, with several Omnibus legislative packages scheduled for 2026 that may affect tax compliance environments. In particular, simplification proposals targeting SMEs and small mid-cap enterprises, digitalisation and artificial intelligence, chemicals, cybersecurity and data are intended to streamline obligations and improve coherence across EU legislation. While not tax-specific, these initiatives may indirectly impact corporate tax compliance, reporting obligations and administrative interaction with tax authorities.
Finally, the Declaration underlines the fiscal dimension of the 2026 agenda through planned MFF sectoral proposals and a continued focus on enforcement and conditionality mechanisms. Although no new tax measures are set out, the agreed priorities point to continued emphasis on tax-relevant simplification, budgetary coordination and revenue-related frameworks as part of the EU’s broader competitiveness and economic security agenda.
OECD Issues 2025 Revenue Statistics Report
The OECD’s Revenue Statistics 2025 Report was published this month, presenting final tax revenue data for 2023 and preliminary data for 2024 across OECD countries, showing that the average tax-to-GDP ratio rose to 34.1% in 2024, its highest recorded level and the first increase since 2021. Tax-to-GDP ratios in 2024 ranged widely, from 18.3% in Mexico to 45.2% in Denmark, with increases recorded in 22 of the 36 countries with available data, driven largely by higher personal income tax (PIT) revenues and social security contributions, while declines were mainly linked to lower corporate income tax receipts. Over the longer term, most OECD countries now report higher tax-to-GDP ratios than in 2010, reflecting sustained revenue pressures linked to ageing populations, social spending and fiscal consolidation needs.
In terms of tax structures, social security contributions accounted for the largest share of total tax revenues in 2023 (25.5% on average), followed by PIT (23.7%) and value added tax (20.5%). While the overall tax mix has remained relatively stable over time, recent shifts include a modest increase in the share of social security contributions and a decline in taxes on goods and services. The report also highlights differences in the allocation of tax revenues across levels of government, with central governments receiving the majority of revenues in both federal and unitary systems, while property taxes remain a key revenue source at sub-national level in several countries.
A special feature of the 2025 edition focuses on “disentangling” PIT revenues by income source, based on new data provided by 29 OECD countries using a methodology developed with the European Commission. This analysis shows that employed labour income remains the dominant source of PIT revenue in all reporting countries, but its share of total PIT revenue has declined in around two-thirds of countries since 2011. Over the same period, the relative importance of capital income and self-employment income has increased in many jurisdictions, while the contribution of pensions and social transfers varies considerably. The OECD notes that this new breakdown enhances analysis of redistribution, tax policy design and revenue resilience, and provides a more detailed basis for assessing how PIT systems respond to structural economic change and shocks.
European Commission Launches Package to Integrate EU Financial Markets
The European Commission has presented a legislative package designed to remove structural barriers in EU financial markets and advance the Savings and Investments Union strategy. The initiative aims to respond to fragmentation that limits competitiveness, with the Commission emphasising that deeper market integration is essential to support investment, competitiveness, and the green, digital and security transitions. By simplifying access to capital markets and reducing cost differentials between domestic and cross-border activity, the reforms aim to create a single financial market that operates more efficiently and provides better wealth-building opportunities for citizens and improved financing conditions for businesses.
The legislative package introduces measures to reduce regulatory and supervisory divergence across Member States. It proposes enhanced passporting for Regulated Markets and Central Securities Depositories, the creation of a Pan-European Market Operator status to consolidate authorisations under a single licence, and streamlined rules for the cross-border distribution of Undertakings for Collective Investment in Transferable Securities and Alternative Investment Funds. To support innovation, the package would adapt the regulatory framework for distributed ledger technology by amending the DLT Pilot Regulation to increase proportionality, relax operational limits and provide greater legal certainty. Supervisory reforms would transfer direct oversight of significant trading venues, Central Counterparties, Central Securities Depositories and all Crypto-Asset Service Providers to ESMA, alongside a strengthened coordination role in the asset management sector.
The package also contains broad simplification measures aligned with previous Savings and Investments Union initiatives. These include converting directives into directly applicable regulations, reducing national options and discretions to prevent gold-plating, and streamlining level-2 empowerments to achieve a more coherent framework.
The reforms follow calls from the European Council and Parliament in 2025 to advance capital market oversight, remove cross-border barriers and update rules for new technologies. The proposals will now be negotiated by the Parliament and the Council, with the Commission underscoring the need to maintain the unity of the package to ensure coherent reform across the entire investment chain.
OECD Establishes Framework for Automatic Exchange of Information on Immovable Property
This month, twenty-six jurisdictions pledged to implement the new OECD framework for the automatic exchange of information on offshore real estate, marking an expansion of global tax transparency beyond financial accounts and crypto-assets. The initiative is set out in the Multilateral Competent Authority Agreement on the Exchange of Readily Available Information on Immovable Property (IPI MCAA), designed to close long-standing gaps in cross-border tax reporting by enabling tax administrations to access electronically searchable and reliable data on foreign property holdings, transactions and related income. The framework responds to challenges faced by administrations, including limited visibility over cross-border immovable property ownership, rising levels of underreported foreign property and the use of real estate to shelter undeclared wealth.
The Framework provides two reporting modules: one covering ownership visibility through a one-off exchange of existing holdings and annual reporting of new acquisitions, and a second covering disposals and recurrent income to support enforcement of capital gains, rental and related taxes where relevant. Participation is voluntary and based on the provision of information on an “as is” basis, subject to confidentiality and data-protection safeguards and the requirement for jurisdictions to demonstrate foreseeable relevance when opting to receive information.
The Multilateral Agreement establishes a standardised minimum data set, including identifying information for legal and beneficial owners, property characteristics, transaction details and income data, with exchanges to be transmitted via the OECD Common Transmission System. One-off exchanges are due by the end of January following the agreement’s entry into effect, with annual exchanges targeted for 31 January each year and no later than 30 June. The framework also includes mechanisms to correct errors, safeguard confidentiality, address non-compliance and allow amendments.
The OECD expects the first exchanges to begin in 2029, noting that strengthened transparency in this area will help tax administrations verify the tax treatment of foreign property income and gains and assess the legitimacy of funds used for acquisitions.
EU Commission Opens Consultation on Recast of the Directive on Administrative Cooperation
The European Commission has launched a call for evidence and public consultation on a recast of the Directive on Administrative Cooperation in the field of direct taxation (DAC), as part of its REFIT agenda and broader efforts to simplify EU law and reduce administrative burdens.
The initiative follows on from the Commission’s evaluation of DAC1–DAC6 published in June 2025, which concluded that the DAC framework has significantly strengthened Member States’ ability to combat tax fraud, evasion and avoidance, generating estimated net benefits of EUR 6.8 billion per year, but also highlighted growing complexity, fragmented implementation and persistent data-quality and compliance challenges, particularly under DAC3, DAC4 and DAC6.
Against this background, the Commission is consulting concerning a consolidation of DAC1–DAC9 into a single legal instrument, alongside targeted reform measures to streamline overlapping and duplicative reporting obligations (notably between DAC4 and DAC9 in the context of Pillar Two), improve the functioning and proportionality of DAC6, revisit thresholds under DAC7, enhance taxpayer identification and IT interoperability, and improve the completeness of information exchange. An impact assessment is planned, with a legislative proposal currently envisaged for Q2 2026.
CFE Tax Advisers Europe will contribute to the ongoing consultation and has already submitted an Opinion Statement in 2025 welcoming consolidation and simplification of the DAC framework, while calling for targeted rationalisation of DAC6 hallmarks, clearer sequencing rules to avoid duplicative reporting, alignment of DAC4 and DAC9 notifications, harmonised penalties and clearer treatment of legal professional privilege.
OECD Update Reports
Enhanced Monitoring Report on Exchange of Information on Request Standards
The OECD’s 2025 Enhanced Monitoring Report was published in December, setting out the progress made by 25 jurisdictions in implementing the standard on transparency and exchange of information on request (EOIR).
The report notes steady improvement in the availability of beneficial ownership information, with most jurisdictions adopting multi-pronged approaches that involve legal entity obligations, central registers and strengthened anti-money laundering frameworks. However, effectiveness varies, and many registers still require further work to ensure accuracy, timely updates and comprehensive coverage. The report identifies ongoing challenges around inactive entities, with several jurisdictions unable to demonstrate that ownership and accounting information is reliably available for companies that remain legally active despite long-term non-compliance.
Jurisdictions have made progress addressing the 125 “in-box” recommendations issued in earlier peer reviews. Around 29% of recommendations are now considered provisionally addressed, while more than half are in the process of being implemented. A smaller proportion, 18 recommendations, remain unaddressed, prompting closer monitoring and an obligation on five jurisdictions to submit detailed schedules for remediation by March 2026. In some instances, jurisdictions that have improved their legal frameworks have received new recommendations focused on demonstrating effective implementation in practice, particularly in relation to beneficial ownership supervision.
The report highlights generally positive trends in exchange of information in practice. Across 2023–2024, the monitored jurisdictions received over 11,600 requests, responding to 76% within 90 days and a further 14% within six months. Seven jurisdictions have had recommendations on timeliness provisionally addressed following the introduction of better monitoring tools, staff training and improved communication procedures. Nonetheless, delays remain in some cases, and peer feedback indicates that communication difficulties — particularly regarding status updates and clarifications — still impede effective cooperation.
Peer input has increased significantly, with 802 submissions from 52 jurisdictions, over three-quarters of which reflect general satisfaction with EOIR performance. Around 12% raised concerns requiring a response, and in three cases these highlighted systemic issues that resulted in new recommendations. Two jurisdictions showed backsliding on timeliness compared with earlier reviews, leading to additional monitoring obligations and annual reporting requirements.
Future monitoring rounds will continue in 2026 and 2027, with most jurisdictions expected to report next in 2028.
2025 Update to Peer Review of the Automatic Exchange of Financial Account Information
The 2025 update of the OECD’s Automatic Exchange of Financial Account Information Peer Review Report was also made available last week, and outlines continued global progress in implementing the Common Reporting Standard, with 118 jurisdictions assessed and 116 operating fully or substantially compliant legal frameworks.
The report confirms that over 97% of jurisdictions have now implemented the necessary domestic and international legislation to enable automatic exchange, although four jurisdictions remain “Not in Place” due to missing or significantly deficient frameworks. In practice, 108 jurisdictions have undergone effectiveness reviews, with 63% rated “On Track” and a further 18% “Partially Compliant”, while 19% were found to have fundamental deficiencies in administrative compliance systems. The report highlights steady improvements in data quality, including greater use of Tax Identification Numbers and a sharp reduction in undocumented accounts, but also notes ongoing challenges in ensuring consistent due diligence by Reporting Financial Institutions.
The Global Forum launched a second round of effectiveness reviews, including onsite visits in 99 early-adopter jurisdictions, focusing particularly on monitoring, verification and enforcement activities. Jurisdictions have significantly expanded risk-based compliance strategies, data quality checks and enforcement measures, with more than 4,400 penalties applied for non-compliance since 2022. The total number of accounts reported has risen sharply, reflecting both compliance activities and broader uptake of reporting obligations. The report also tracks implementation of the amended CRS adopted in 2023, which introduces digital money products, enhanced reporting fields and a new XML Schema. Around two-thirds of jurisdictions plan to begin exchanges under the amended standard in 2027, with others using a transitional period. More than 60 jurisdictions have signed the required CRS MCAA Addendum, although work on domestic legislation and IT upgrades is ongoing.
BEPS Action 5 Peer Review Reports on the Exchange of Information on Tax Rulings
The OECD has released its ninth annual peer review report under BEPS Action 5, examining the implementation of the minimum standard on the compulsory spontaneous exchange of information on tax rulings for the 2024 calendar year. The review assesses 139 Inclusive Framework members and jurisdictions of relevance, focusing on whether appropriate legal, administrative and operational frameworks are in place to identify rulings within scope and exchange information in a timely and standardised manner. The transparency framework applies to five categories of taxpayer-specific rulings that may give rise to BEPS risks, covering both certain past rulings and all future rulings, and operates through existing international exchange of information agreements subject to confidentiality safeguards.
The report notes continued high levels of activity, with more than 28,500 rulings cumulatively falling within scope since 2010 and over 2,300 new in-scope rulings issued in 2024 alone. By the end of 2024, approximately 64,000 exchanges of information had taken place, with around 5,500 exchanges carried out during the year under review. Most jurisdictions were found to be broadly compliant: 113 jurisdictions received no recommendations, and a further seven received only one recommendation. However, 46 recommendations for improvement were issued overall, largely relating to weaknesses in information-gathering processes, review and supervision mechanisms, delays in exchanges, or the absence of a fully effective domestic legal basis for spontaneous exchange.
The peer review also highlights the role of peer feedback, with 94 peer input questionnaires submitted, helping jurisdictions improve the clarity, completeness and timeliness of exchanged information. In several cases, jurisdictions took remedial action during or shortly after the review period, although changes implemented in 2025 are not reflected in the 2024 assessment and will be considered in subsequent reviews.
Updated FAQs on CARF & CRS Reporting
The OECD has published updated Frequently Asked Questions (FAQs) on the application of the Common Reporting Standard (CRS) and the Crypto-Asset Reporting Framework (CARF), with the aim of promoting consistent and effective implementation of the international standards for the automatic exchange of information in tax matters. The FAQs reflect questions raised by both business and government delegates and include new and updated clarifications.
In relation to CRS, the updates provide further guidance on the treatment of crypto-related and digital assets within the amended CRS framework, including clarification on when tokenised or digitally issued financial assets fall within the scope of CRS rather than CARF. The FAQs also address the classification and reporting of specified electronic money products, including stablecoins, and explain how changes in regulatory status during a reporting period should be treated. Additional clarifications relate to due diligence and reporting obligations, including aggregation rules, self-certifications, and the identification of controlling persons.
For CARF, the updated FAQs focus on operational and jurisdictional nexus issues, notably the application of the “regular place of business” test to branches of crypto-asset service providers. The OECD clarifies that, where a branch constitutes the highest nexus to a CARF-implementing jurisdiction, reporting obligations generally extend to all relevant transactions of the entity, subject to transitional exceptions during initial implementation. Further guidance is provided on the classification and reporting of tokenised assets, stablecoins, e-money products, non-fungible tokens, and complex crypto transactions such as wrapping, staking and collateralised loans.
The updated FAQs are intended to enhance legal certainty for both financial institutions and crypto-asset service providers, while supporting aligned implementation of CRS and CARF across jurisdictions as the international tax transparency framework continues to expand to digital and crypto-asset markets.
CFE Issues Joint Statement Calling for Targeted Reform on the EU Foreign Subsidies Regulation
CFE Tax Advisers Europe has joined eight industry associations in issuing a Statement to propose several ways to increase the Foreign Subsidies Regulation’s (FSR) proportionality and efficiency. The Statement sets out that the broad scope and implementation of the FSR is creating disproportionate compliance burdens, including in relation to routine tax and fiscal measures. While supporting the objective of preventing distortive foreign subsidies, the Statement notes that FSR notification requirements have become highly resource-intensive and costly, with impacts on investment decisions and legal certainty.
From a tax perspective, the Statement highlights concerns that the FSR captures a wide range of financial contributions with limited relevance to the internal market or the transaction under review, including ordinary tax policy tools such as transfer pricing adjustments, advance pricing agreements and other generally applicable fiscal measures. The coalition argues that this risks conflating legitimate tax measures with foreign subsidies, creating uncertainty and additional administrative burdens for multinational groups, and potentially diverging from established EU State aid and tax frameworks.
To address these issues, the statement calls for the FSR to be more tightly focused on material and high-risk financial contributions, with clearer thresholds and an apparent link between the contribution and the relevant transaction or procurement. It also urges restraint in the use of ex officio powers to investigate sub-threshold cases, warning that this could undermine the certainty intended by the thresholds and disproportionately affect SMEs and investment structures.
The coalition further recommends efficiency measures with indirect tax compliance benefits, including simplified reporting mechanisms and stronger data protection safeguards, given the volume and sensitivity of financial and fiscal data collected under the FSR. It concludes that a more proportionate and focused regime is necessary to preserve legal certainty, reduce unnecessary tax-related compliance costs and support the EU’s broader competitiveness and investment objectives
Council of the EU Agrees to Levy Customs Duty on Small Parcels Entering the EU
The Council of the EU has agreed to introduce a fixed customs duty of €3 per parcel on small consignments valued at less than €150 entering the EU from 1 July 2026, primarily targeting e-commerce imports that currently benefit from a customs duty exemption.
The measure, which will apply per individual item in a consignment according to its tariff heading, is intended as a temporary response to concerns about unfair competition for EU sellers, fraud, consumer health and safety risks, and environmental impacts. It will apply to goods imported by non-EU sellers registered under the EU’s import one-stop shop (IOSS) for VAT purposes, covering an estimated 93% of e-commerce flows into the EU.
The €3 duty will remain in force until the permanent arrangement agreed by the Council in November 2025 enters into application, under which the €150 customs duty relief threshold will be removed and normal EU tariffs will apply to all goods. The Council stressed that this measure is separate from the proposed ‘handling fee’ currently discussed in the broader customs reform and multi-annual financial framework, and noted that the Commission will regularly assess whether the fixed duty should be extended to imports from sellers not registered in the IOSS.
Aleksandar Ivanovski & Brodie McIntosh