CFE’s Global Tax Top 10 – January 2026

BRUSSELS | JANUARY 2026
 

On 20 January 2026, the OECD held its public consultation meeting on the Global Mobility of Individuals, following a submission process carried out in late 2025 as part of the OECD Inclusive Framework’s evidence-based work on the tax implications of evolving working patterns.

The consultation reflected the growing recognition that cross-border remote working, short-term stays and more flexible employment models create real challenges under existing domestic rules and tax treaty concepts, both for taxpayers and employers, as well as for tax administrations seeking workable and proportionate compliance solutions.

Aleksandar Ivanovski, Director of CFE Tax Advisers Europe, and Brodie McIntosh, Tax Policy Analyst, represented CFE at the consultation meeting. The agenda covered a wide range of issues connected to modern mobility, including economic trends shaping cross-border work, corporate income tax implications (including permanent establishment risk), the interaction with social security frameworks, and employment income taxation questions such as residence, taxing rights and compliance burdens. The discussion also highlighted how emerging work patterns, including digital nomadism and platform-based work, raise practical questions around tax certainty, administrability and coordination across jurisdictions

CFE’s participation built on our written contribution, Opinion Statement CFE 5/2025, submitted in response to the OECD consultation. In our submission, we emphasise the increasing complexity faced by individuals and employers navigating cross-border mobility in good faith, including uncertainty in the application of residence tests, treaty rules and employment income provisions, and the resulting risks of double taxation and disproportionate compliance obligations. We support the OECD’s work in this area and encourage the development of clearer, more coherent and administrable guidance, with a focus on proportionality in low-risk and temporary mobility cases and strengthened mechanisms for coordination, dispute prevention and dispute resolution.

GTAP Chairman, Piergiorgio Valente, also participated in the consultation, representing the Global Tax Advisers Platform (GTAP), bringing forward the perspective of tax professionals across multiple global regions. GTAP operates as an umbrella body for 65 tax institutes and professional organisations worldwide, including CFE Tax Advisers Europe, the Asia Oceania Tax Consultants’ Association (AOTCA) and the West African Union of Tax Institutes (WAUTI). In his intervention, Piergiorgio presented six priority actions aimed at improving legal certainty and reducing compliance burdens for mobile workers and employers, including internationally aligned safe-harbour thresholds for cross-border remote work, modernisation of treaty tie-breaker rules on tax residence, and stronger treaty protection for individuals benefiting from preferential tax regimes. He also highlighted the need for more effective dispute prevention and resolution mechanisms for residence conflicts, common administrative approaches for cross-border remote work, and improved accessibility and consistency of national guidance.

CFE and GTAP will continue to contribute practice-based insights to support international tax certainty for globally mobile individuals and employers.

UN International Tax Cooperation Convention: Key Updates Ahead of February 2026 Negotiations

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting agreed a Side-by-Side Package relating to the Pillar Two global minimum tax, adopted by consensus and published by the OECD Secretariat in early January 2026, delivering on earlier G7 and G20 commitments to address concerns raised by the United States, while preserving the core objectives of Pillar Two as set out in the October 2021 OECD tax agreement.

The Package comprises five core elements: simplification measures to reduce compliance and administrative burdens; a new targeted safe harbour for certain substance-based tax incentives; new safe harbours under a side-by-side system for groups headquartered in jurisdictions with eligible minimum tax regimes; an evidence-based stocktake mechanism to address potential BEPS and level playing field risks; and a reaffirmation of the central role of qualified domestic minimum top-up taxes (QDMTTs) in protecting source country tax bases.

In a subsequent webinar, the OECD Secretariat described the Package as a stabilisation and simplification intervention responding to the increased complexity expected from 2026 as Pillar Two moves into wider application. The Secretariat pointed in particular to the expiry of transitional measures at the end of 2025, the scheduled rollout of the undertaxed profits rule (UTPR) in multiple jurisdictions, and the need to provide greater certainty and operational stability for both taxpayers and tax administrations.

On simplification, the Package introduces a permanent simplified effective tax rate (ETR) safe harbour, extends the transitional country-by-country reporting (CbCR) safe harbour by one year, and commits the Inclusive Framework to a further simplification work programme. The permanent simplified ETR safe harbour applies a simplified jurisdictional ETR test against the 15% minimum rate, without a buffer, and is designed to rely largely on consolidated reporting packages and jurisdictional aggregates. It removes certain volatility drivers present under the transitional CbCR safe harbour and allows re-entry where a group has previously failed to qualify. The simplified ETR safe harbour is intended to apply from 1 January 2027, with an option for earlier application from 1 January 2026.

The one-year extension of the transitional CbCR safe harbour retains the existing threshold and is framed as a practical transition measure, particularly for smaller and mid-sized in-scope groups. Further simplification work is planned, including integration of the routine profits test and de minimis test into the permanent safe harbour in the first half of 2026 and targeted guidance on continuity issues and specific group structures.

The Package also introduces a substance-based tax incentive safe harbour, allowing an elective add-back to covered taxes for certain generally available, expenditure-based or production-based incentives, subject to caps linked to payroll and tangible assets. The safe harbour is intended to apply from 1 January 2026 and is designed to mitigate cliff-edge effects where an adjusted ETR narrowly falls below 15%.

The side-by-side system provides new safe harbours for groups headquartered in jurisdictions assessed by the Inclusive Framework as having eligible domestic and, where relevant, worldwide minimum tax regimes. Where elected, the income inclusion rule at intermediate parent level and the UTPR are switched off for the group, while QDMTTs continue to apply. A UPE safe harbour is also introduced for jurisdictions meeting domestic eligibility criteria only, replacing the transitional UTPR safe harbour for fiscal years beginning on or after 1 January 2026. The United States is the only jurisdiction listed on the OECD Central Record as having a qualified side-by-side regime.

Finally, the Package provides for an evidence-based stocktake in 2029 to identify and address any systemic BEPS or level playing field risks arising from the interaction of Pillar Two and the side-by-side system. Throughout the presentation, the Secretariat reaffirmed the central role of QDMTTs and confirmed that discriminatory or conditional domestic taxes will not be treated as qualified or creditable under the GloBE rules.

EU Tax & Customs Priorities Under the Cyprus Presidency for Semester I 2026

In its programme for the period January to June 2026, the Cyprus Presidency of the Council of the EU has set out tax simplification and administrative burden reduction as core elements of its economic and competitiveness agenda. In the field of taxation, the Presidency will focus on promoting the EU tax decluttering and simplification agenda, with the aim of streamlining existing tax rules and improving their application across member states.

The programme places particular emphasis on direct taxation, including initiatives to simplify compliance requirements, enhance administrative cooperation and reduce unnecessary reporting and procedural burdens for businesses. These efforts are positioned within the broader EU regulatory simplification agenda and are intended to support a more competitive business environment.

In parallel, the Cyprus Presidency intends to advance legislative work towards a modernised EU Customs Union. This includes progressing negotiations on the Customs Reform Package, with a focus on strengthening customs controls, improving data use and risk management, and facilitating legitimate trade through more efficient and digitalised customs processes during the first half of 2026.

OECD Publishes Updated Transfer Pricing Country Profiles

The OECD has released an updated set of Transfer Pricing Country Profiles, reflecting jurisdictions’ latest approaches to key transfer pricing principles and how closely these align with the OECD Transfer Pricing Guidelines. The country profiles provide a structured overview of areas such as the arm’s length principle, transfer pricing methods and comparability analysis, treatment of intangible property and intra-group services, cost contribution arrangements, documentation requirements, dispute resolution mechanisms and the use of safe harbours or other implementation measures.

The OECD confirmed that the latest update represents the fourth batch of updated transfer pricing country profiles, covering eight jurisdictions: Bosnia and Herzegovina, Brazil, Costa Rica, Croatia, Greece, Iceland, Korea and Norway. These updates are intended to reflect current legislation and administrative practice, and may be relevant for tax advisers supporting European groups with cross-border structures or operating footprints in these jurisdictions.

This round of updates also continues the OECD’s approach of expanding the profiles beyond core transfer pricing concepts, by including new insights linked to developments under Pillar One. In particular, the updated profiles include jurisdiction-specific information relating to the simplified and streamlined approach for baseline marketing and distribution activities (Amount B), which may support advisers in evaluating how jurisdictions interpret or operationalise simplification measures for routine distribution arrangements.

In addition, the OECD materials highlight continued attention to the transfer pricing treatment of hard-to-value intangibles, reflecting how jurisdictions may implement the approach described in the OECD Transfer Pricing Guidelines. For groups with significant intangible-driven value chains, this information may assist advisers in identifying jurisdictions where administrative practices may be more developed or specific in relation to valuation uncertainty and ex post outcomes.

EU Parliament Hearing on Single Market Tax Barriers & Cost of Non-Europe in Tax Harmonisation 

At its meeting on 27 January 2026, the European Parliament’s Subcommittee on Tax Matters (FISC) held a public hearing on “Tackling tax obstacles in the Single Market”, alongside a presentation of the European Parliamentary Research Service (EPRS) Cost of non-Europe report on EU tax policy harmonisation.

Speakers highlighted the scale of tax fragmentation across the EU, pointing to the very high number of national tax expenditures which contribute to duplicated compliance obligations. SMEs, representing around 95% of EU businesses, were estimated to lose more than one fifth of turnover to tax compliance, while transfer pricing disputes continue to increase amid divergent national definitions and thresholds.

The Commission indicated that a broad simplification package is planned for June, including a review of around 15 tax directives, the removal of unused reporting requirements and consideration of lighter compliance for groups within scope of Pillar Two, given the global 15% minimum tax. Possible repeal of overlapping rules, including ATAD, was also referenced.

The hearing discussed potential short-term improvements, such as simplified compliance pathways for SMEs, faster and more accessible tax rulings, and mandatory escalation mechanisms in joint audits to prevent lengthy disputes.

The study concluded that targeted EU-level coordination, rather than full harmonisation, could best reduce compliance costs, strengthen enforcement and limit arbitrage in areas including wealth taxation, cryptoassets, digitalisation of tax administration and tax compliance.

US Signals Tariff Pause as Greenland Dispute Raises Wider EU-US Trade Uncertainty  

Trade tensions eased late last week after US President Donald Trump said the United States would not proceed with additional tariffs on European countries that had been scheduled to take effect on 1 February, following the announcement of a “framework” understanding with NATO relating to Greenland and wider Arctic security. Trump described the arrangement as a “concept of a deal” and indicated that further discussions would follow.

The tariff threat had been positioned as leverage in the context of rising tensions over Greenland. Trump had previously indicated that tariffs could be applied to a group of European countries, including Denmark and other major allies, until an agreement was reached, creating the prospect of a sudden escalation in transatlantic trade measures. The situation prompted strong reactions in Europe, with EU leaders and national governments signalling that they were prepared to respond if tariffs were imposed, and framing the issue as both an economic and geopolitical challenge for the EU and NATO.

Although the immediate tariff escalation has been paused, the episode has reinforced concerns over the predictability of EU–US trade relations where tariff measures may be introduced, withdrawn, or revived in response to broader political disputes.

ECOFIN Meeting of 20 January: Economic Governance & Policy Priorities 

At its meeting on 20 January 2026, the Economic and Financial Affairs Council (ECOFIN) discussed the priorities of the incoming Cyprus Presidency and adopted a number of decisions across economic governance and EU financial policy. In the area of taxation, the Presidency confirmed its intention to advance the EU tax decluttering and simplification agenda as part of broader efforts to strengthen competitiveness, alongside progress towards a modernised EU Customs Union.

In economic governance, the Council opened an excessive deficit procedure (EDP) for Finland, citing a government deficit of 4.4% of GDP in 2024 and a planned deficit of 4.3% in 2025. A Council recommendation was adopted setting out a net expenditure path and requiring Finland to present corrective measures by 30 April 2026, with the objective of bringing the deficit below the 3% reference value by 2028. ECOFIN also approved conclusions on the Commission’s 2026 Alert Mechanism Report, initiating the annual macroeconomic imbalance procedure under the European Semester. No new Member States were identified for in-depth review.

The Council further adopted implementing decisions approving targeted amendments to the recovery and resilience plans of Finland, Ireland, the Netherlands, Spain, Germany and Sweden under the Recovery and Resilience Facility. In addition, ECOFIN formally approved a further €500 million in macro-financial assistance to Jordan in the form of long-term loans, with disbursements linked to the implementation of agreed economic reforms.

OECD & ATAF Advance Transfer Pricing Simplification in Amount B Capacity Building Workshops