CFE’s Tax Top 10 – September 2025

BRUSSELS | SEPTEMBER 2025

On 23 September, the EU Parliament’s FISC Subcommittee held a public hearing to examine the tax implications of recent US policy developments under the Trump II administration. Benjamin Angel (Director, DG TAXUD, EU Commission) described the interaction of the US corporate minimum-tax landscape of the net CFC-tested income (NCTI/ex-GILTI), Base Erosion and Anti-Abuse Tax (BEAT) and the 15% Minimum Tax. He discussed comparability issues with the OECD’s Pillar Two —especially jurisdictional vs global blending— while cautioning that both systems are complex, the overall effective rates may be similar. On the “side-by-side” arrangement, he stressed that any OECD safe harbour would need safeguards and would require legal changes if agreed; he also flagged ongoing EU work on permanent Pillar Two simplifications and a 2025 “tax omnibus” to review direct-tax legislation.

Prof Kimberly Clausing (Eric M. Zolt Chair in Tax Law and Policy, UCLA School of Law) argued the US regime is weaker on certain features (notably jurisdictional blending), underlined the role of UTPR in deterring free-riding, and pointed to sizeable recent US tax cuts for foreign income of multinationals as evidence of a softer stance. Quentin Parrinello (Policy Director, EU Tax Observatory) warned that equivalence for a global-blending regime could dilute incentives for low-tax jurisdictions to raise rates and weaken revenues and tax morale; he urged preserving a robust minimum-tax framework and caution on making concessions permanent.

BusinessEurope’s Chief Economist, Lúcio Vinhas de Souza, focused on EU competitiveness and simplification, arguing that uneven global take-up of Pillar Two risks asymmetries for EU firms. He called for practical measures within EU streamlined rules, improved withholding-tax/refund processes, stronger dispute resolution mechanisms, investment-supportive tax incentives—and cautioned against new turnover- or DST-type levies that may shift costs to EU users.

In Q&A, members probed spillovers from US-China tariffs, the role of trade-defence tools, prospects for UN-led tax talks, and how to keep the EU’s Savings & Investment Union attractive; speakers broadly agreed that tax is one of several competitiveness drivers and that certainty, simplification and coordinated international engagement remain priorities.

OECD Publishes 2025 Tax Policy Reforms Report 

Last week, US President Donald Trump announced that, as of 1 October 2025, imports of branded or patented pharmaceuticals will face a 100 per cent tariff unless the manufacturer is actively constructing production facilities in the United States. Generic drugs, which account for around 90 per cent of US imports, will be excluded. Trump’s move forms part of a wider extension of tariffs to imported trucks, furniture, and cabinetry, framed by the White House as both economic and national security measures.

The EU indicated confidence that its August agreement with Washington, which caps tariffs on EU goods at 15 per cent, would shield the bloc’s pharmaceutical exports, though industry groups voiced concern over the potential impact on access to life-saving medicines. By contrast, the UK described the decision as “concerning” and pledged to seek outcomes that protect its $6.5bn annual pharma exports to the US. Switzerland, which does not have a specific agreement on pharmaceutical tariffs, remains exposed despite earlier 39 per cent duties excluding drugs.

European drugmakers may be able to offset the effects through existing US investment plans. Several major companies, including AstraZeneca, GSK, Novartis, Roche, and Novo Nordisk, have already committed to new US facilities in a bid to secure exemptions. However, industry executives remain uncertain whether the exemption will apply across product portfolios or only to drugs produced domestically once new plants are operational.

The European Commission has published its implementation strategy for the VAT in the Digital Age package, which introduces three major reforms: new digital reporting requirements, updated VAT rules for the platform economy, and a single VAT registration framework. The strategy sets out how businesses and Member States will be supported in applying these changes, aimed at modernising VAT compliance, tackling fraud, and reducing administrative burdens.

Key Measures

Digital reporting: From 2030, cross-border B2B transactions will require real-time digital reporting based on e-invoicing, replacing current recapitulative statements. This is expected to reduce VAT fraud by up to EUR 11 billion annually and cut compliance costs by EUR 4.1 billion per year.

Platform economy: From 2028 (with possible delay to 2030), platforms in short-term accommodation rental and passenger transport will be deemed suppliers, collecting and remitting VAT when underlying providers do not. This ensures consistent treatment across Member States and reduces complexity for SMEs.

Single VAT Registration: From 2027–2028, extensions to the One-Stop Shop (OSS) and new mechanisms such as the “transfer of own goods” scheme and mandatory reverse charge will reduce the need for multiple VAT registrations, supported by significant IT upgrades.

Roadmap of Key Milestones

2026 – Implementing Acts and Technical Specification
In 2026, the Commission will adopt implementing regulations on digital reporting and the architecture of central VIES, while also setting out secure IOSS arrangements. Functional and technical specifications are due by the third quarter, and explanatory notes will be finalised by year-end. This period will lay the legal and IT foundations for the next phases.

2027 – Early SVR Improvement
From 1 January 2027, selected reforms to the Single VAT Registration (SVR) take effect, including enhancements to OSS and IOSS processes and alignment with the SME scheme. Explanatory notes for the platform economy will also be published, ensuring businesses and platforms have clarity on their new obligations.

2028 – Main Reform Stage
The principal measures of ViDA will apply from 1 July 2028. Platforms in passenger transport and short-term accommodation sectors will become deemed suppliers (with an option for Member States to defer to 2030), and the SVR framework will be expanded through the new transfer of own goods module and mandatory reverse charge. Significant OSS/IOSS improvements will also come into force at this stage.

2029–2030 – Digital Reporting Rollout
Between 2029 and mid-2030, Member States will test interoperability between national systems and central VIES. On 1 July 2030, digital reporting requirements (DRR) will enter into force for cross-border B2B transactions, making e-invoicing the default standard across the EU.

2035 – Final Convergence
By 1 January 2035, Member States with domestic real-time digital reporting systems must align them with the EU-wide model, completing the staged implementation of the ViDA package.

CFE were delighted to co-host the CFE Tax Symposium 2025: “Taxation in Transition: Compliance, Rights & Innovation in a High-Data World” in Ghent, with our Belgian Member Organisation, the Belgian Institute for Tax Advisors and Accountants (ITAA) last week on 18 September 2025. The Symposium gathered tax professionals, policymakers, academics and business representatives to discuss the impact of recent policy shifts, digitalisation and data-driven processes on compliance, taxpayers’ rights, and innovation in tax administration. The conference was opened by the Presidents of CFE and ITAA, Piergiorgio Valente and Bart van Coile, respectively.

Panel 1 — Pillars One and Two, Side-by-Side System, and Competitiveness Rsks for the EU

Prof. Georg Kofler (Professor of International Tax Law, WU Vienna; Chair, CFE ECJ Task Force) set the scene with a legal and geopolitical overview of the current state of Pillar 2. He highlighted pending legal questions around the EU Minimum Tax Directive—especially property-rights concerns where UTPR might load very large top-ups onto small EU entities of low-taxed foreign-headed groups—and flagged unresolved issues of extraterritoriality, treaty compatibility and the still-shifting interaction between QDMTTs, CFC rules and safe harbours. He cautioned that depending on how “side-by-side” coexistence is drawn up, Pillar Two could either catalyse simplification or trigger a new wave of complexity.

Félicie Bonnet (Head of Global Minimum Tax, OECD) underlined that more than sixty jurisdictions have now legislated Pillar Two—most with QDMTTs, which are fast becoming the cornerstone of the regime. She stressed three near-term priorities at the Inclusive Framework: (1) workable side-by-side parameters that maintain a level playing field; (2) simplifications that let groups rely much more on consolidated accounts and jurisdictional computations as transitional reliefs expire; and (3) proportionate information and filing requirements so administrations get what they need without unnecessary burden on taxpayers. She reminded attendees that Pillar Two is a common approach: even non-adopters agree others may apply it to their groups.

Benjamin Angel (Director, DG TAXUD, European Commission) clarified the EU perspective: that recognition of the U.S. system as “equivalent” under Article 52 is not a viable consideration given design differences (jurisdictional vs global blending, rates, substance carve-outs). Instead, the Commission’s working solution is a safe-harbour-based approach that can fit into the Directive’s dynamic co-existence mechanism. He warned that allowing GILTI push-down would erode Pillar Two’s core achievement—establishing a global minimum as a floor to tax competition—and he counselled against overstating tax as the determinant of FDI, pointing to EU-wide variations in statutory rates that have not dictated investment flows. Aleksandar Ivanovski, Director of CFE, moderator of the panel, highlighted that tax policy is now part of a wider transatlantic discussion on trade policy, competition and enforcement of EU antitrust/State aid law.

Jorge Ferreras Gutiérrez (Deputy Director General of the Spanish Ministry of Finance) explained how Spain legislated Pillar Two under considerable time pressure, reflecting the EU’s commitment to early adoption. Once enacted, such taxes are politically and legally difficult to amend, which complicates adaptation to new OECD/EU guidance. Spain’s position is clear: the EU cannot afford to fall into a less competitive position vis-à-vis the U.S. after significant domestic investment in implementation.

Helen Pahapill (Estonian Ministry of Finance) set out Estonia’s contrasting stance. Estonia opted to delay, citing the Directive’s complexity and the limited relevance to its distribution-based corporate tax system. She described the Directive as a “door” through which OECD rules enter domestic law, raising sovereignty and transparency concerns. With high compliance costs and little expected revenue benefit, Estonia continues to push for simplification as a priority.

In Q&A, Prof. Kofler returned to underline unresolved technical and legal issues: whether QDMTTs could be prioritised over CFC rules, how to treat conditional QDMTTs, the risks of distortions from industrial subsidies and tax credits, and the broader concern that Pillar Two may complicate rather than simplify tax systems. Aleksandar Ivanovski raised the issue of the tax treatment of refundable and non-refundable tax credits, as well as the ability of EU Member states to provide such incentives, which raises not only transatlantic issues, but also issues of different fiscal capacity of Member states in providing such incentives and credits.

Panel 2 — DAC evaluation and the Planned DAC10 Recast: Simplification Without Deregulation

During this panel, Reinhard Biebel (Head of Unit, Direct Tax Policy, DG TAXUD, European Commission) discussed the findings of the evaluation of DAC1–6: the framework is a success, but fragmentation in transposition/implementation, uneven penalties, persistent IT and data-quality challenges (notably taxpayer identification/matching), and limited transparency about how exchanged data are actually used all create avoidable burden.

The Commission’s goal for DAC10 is a single recast that consolidates the nine existing DACs into one coherent instrument, streamlines overlapping obligations (e.g., DAC3/DAC6; DAC4/DAC9 with Pillar Two data; elements touching real-estate income), strengthens guidance to drive consistent application, and explores practical fixes (e.g., standardisation/verification of TINs). Biebel stressed the motto: simplify, not de-regulate.

Raluca Enache (Head of the EU Tax Centre, KPMG) and Philippe Vanclooster (Board Member, ITAA, former Chair of the CFE Professional Affairs Committee) discussed practical compliance issues: duplications between DACs (private/public CbCR, DAC6 vs rulings, and now Pillar Two information returns), divergent XML/reporting schemas by obligation, and especially DAC6 hallmarks without the MBT (e.g., TP-related hallmarks) that pull in many low-risk cases. They argued for clarifying that unimplemented options do not trigger reporting, introducing a de minimis threshold, creating a whitelist of routinely low-risk transactions, and ensuring sequencing so that DAC6 deadlines don’t front-run rulings that will be reported anyway.

The panel also explored the implications of digitalisation and AI. Moderator, Eduardo Gracia Espinar, (Partner, EMEA Ashurst) framed how digitalisation and pre-populated returns are shifting the taxpayer–administration relationship. Speakers cautioned that pre-filled returns should not invert the burden of proof and that GDPR issues in non-EU exchanges remain live.

Panel 3 — Technology, AI and Professional Standards in Tax Practice

This panel explored issues surrounding use of AI by the tax advisory profession. The common thread was that digitalisation can cut cost and improve accuracy, if framed by clear guidance, proportionate expectations, and enforceable human-in-the-loop safeguards.

Nicolas Devillers (Partner, BDO Luxembourg) showed how automation now handles large parts of VAT and indirect tax workflows (data ingestion, anomaly detection, exception-focused review), with “AI as a supervised junior” rather than a black box. Petra Pospíšilová (President, Czech Chamber of Tax Advisers) described the surge in structured reporting (control statements, CESOP, CbCR, soon Pillar Two), arguing tax authorities should provide robust tooling and clear specifications to avoid shifting pure IT burdens to taxpayers.

Jane Mellor (Head of Professional Standards, CIOT, UK) focused on ethics and professional standards: using AI within the PCRT principles (integrity, due care, explainability, confidentiality), updating engagement terms to disclose tooling, and ensuring human oversight—especially where automated systems feed compliance or penalty decisions.

Key Takeaways

The conference was closed by CFE Treasurer Branislav Kováč. Across all three panels, a theme emerged: coordination first, then simplification. Pillar Two will only deliver a level playing field if coexistence respects its core architecture. The DAC10 recast is the right moment to remove overlaps and restore clarity without weakening cooperation. And as AI-driven compliance accelerates, we must balance efficiency with taxpayer rights, transparency and professional judgment.

CFE wishes to thank our excellent moderators and panellists — Georg Kofler, Félicie Bonnet, Benjamin Angel, Jorge Ferreras Gutiérrez, Helen Pahapill, Aleksandar Ivanovski, Reinhard Biebel, Raluca Enache, Philippe Vanclooster, Eduardo Gracia Espinar, Nicolas Devillers, Petra Pospíšilová, Jane Mellor  & Jeremy Woolf—as well as our co-organisers at ITAA and everyone who joined us in Ghent.

EU Imposes 2.95 Billion Euro Fine on Google for Dominant Online Advertising Position

The European Commission has fined Google €2.95 billion Euro for abusing its dominant position in the online advertising technology market, marking one of the largest antitrust penalties ever imposed in the EU. The Commission found that Google systematically favoured its own ad exchange, AdX, through its ad server and buying tools, in breach of Article 102 TFEU. By doing so, Google gave AdX an unfair advantage over rival platforms, distorting competition and harming publishers, advertisers and ultimately consumers.

The Commission has ordered Google to end these self-preferencing practices and to implement measures to address inherent conflicts of interest across the adtech supply chain. Google has 60 days to propose remedies or face further action, with the Commission noting that only divestment may adequately resolve the competition concerns. Executive Vice-President Teresa Ribera said of the antitrust penalty: “Google must now come forward with a serious remedy to address its conflicts of interest, and if it fails to do so, we will not hesitate to impose strong remedies… Digital markets exist to serve people and must be grounded in trust and fairness.”

The fine has sparked a backlash from former US President Donald Trump, who described it as “very unfair” and threatened retaliatory tariffs, claiming it punishes American companies and undermines fair trade. The Commission, however, has insisted that competition enforcement operates independently of political considerations and applies equally to all companies active in the European market. The case coincides with similar proceedings in the United States, where a judge has already found Google in breach of competition law over comparable adtech practices. A remedies trial is scheduled to begin later this month.

OECD Issues 2025 Compilation on Country-by-Country Reporting, Revised BEPS Action 5 Transparency Framework Standard & Updated XML Schema 

2025 Compilation of Peer Review Reports on Country-by-Country Reporting
In September, the OECD issued the 2025 Compilation of Peer Review Reports on Country-by-Country Reporting (CbCR), reviewing the implementation of the BEPS Action 13 minimum standard across 141 jurisdictions. The report covers both the domestic legal and administrative frameworks and the exchange of CbC reports between tax authorities. It notes that most jurisdictions now have legislation in place requiring CbCR for large multinational enterprise groups, with more than 3,000 bilateral exchange relationships currently operational. Progress has been made in addressing recommendations from previous peer reviews, although some issues remain concerning alignment with the minimum standard, particularly in respect of legislative frameworks and the effective exchange of information.

The review also finds that while many jurisdictions have improved their systems, challenges persist in relation to the timeliness and completeness of exchanges and the consistent use of CbC reports for tax risk assessment and transfer pricing purposes. The OECD will continue to conduct annual reviews and has indicated that particular focus will be placed on ensuring that jurisdictions not only meet the technical requirements but also make effective use of the information exchanged. The CbCR peer review process remains a core element of the OECD/G20 BEPS project, supporting international tax transparency and the monitoring of profit shifting risks.

Revised BEPS Action 5 Minimum Standard & Exchange on Tax Rulings XML Schema
Also this month, the OECD published a revised version of the BEPS Action 5 minimum standard on the spontaneous exchange of information on tax rulings, referred to as the transparency framework. The revisions follow a comprehensive effectiveness review carried out by the OECD/G20 Inclusive Framework on BEPS, aimed at improving the functioning of the standard in light of almost a decade of practical experience among member jurisdictions. Since the launch of the BEPS Project, more than 58,000 exchanges of information have taken place, covering over 26,000 tax rulings identified by participating jurisdictions. The revised framework includes updated terms of reference and a new assessment methodology, which will form the basis of peer review processes from 2026 onwards.

Also as part of this report, the OECD released a revised version of the Exchange on Tax Rulings XML Schema and the associated User Guide, which have been updated to reflect the findings of the review. The revised schema will apply to spontaneous exchanges taking place from 1 January 2027. The changes are intended to enhance the overall effectiveness, consistency and reliability of tax ruling exchanges under the BEPS minimum standards.

EU Parliament ECON Committee Adopts Position on BEFIT Legislation

The European Parliament’s Economic and Monetary Affairs Committee has adopted its position on the Commission’s proposed BEFIT legislation, which sets out a common framework for calculating the tax base of multinational companies operating in the EU. The report, led by Evelyn Regner (S&D, AT), was approved by 33 votes in favour, 19 against and 5 abstentions. While supporting the core elements of the Commission’s proposal, MEPs introduced several significant amendments.

A “significant economic presence” clause was added, establishing that companies with more than EUR 1 million in revenues in a Member State will be deemed to have a permanent establishment there. This is intended to ensure that digital and service-based businesses are taxed where they generate value, even without a physical presence. MEPs also proposed a royalties limitation rule, under which intra-group payments to entities taxed below 9% must be added back to the payer’s taxable base unless the recipient demonstrates substantial economic activity.

Further anti-avoidance measures were endorsed, including rules requiring that passive income earned by subsidiaries in low-tax jurisdictions without genuine economic activity be consolidated into the parent company’s taxable base. To stimulate investment, MEPs backed accelerated depreciation allowances for assets linked to EU climate, social, digital and defence objectives. In addition, limits were placed on the use of subsidiary losses, which may only reduce the parent company’s taxable base for up to five years, without allowing deductions to lower taxable income below zero.

Rapporteur Regner described the outcome as a “balanced compromise” that modernises establishment rules, strengthens anti-avoidance measures and supports the EU’s social and environmental objectives. The Committee’s position will be put to a Plenary vote in November, after which it will be transmitted to the Council for negotiations with Member States.

The BEFIT framework builds on the EU’s agreement to implement global minimum taxation standards, and will replace existing national corporate tax base rules for groups with revenues exceeding EUR 750 million. It also supersedes earlier proposals for a Common Corporate Tax Base and Common Consolidated Corporate Tax Base. The initiative is expected to simplify compliance, reduce disputes, and limit opportunities for tax avoidance across the single market.

OECD Publishes 2025 Economic Outlook Interim Report