CFE’s Tax Top 5 – 11 August 2025

The first session of the Intergovernmental Negotiating Committee on the proposed United Nations Framework Convention on International Tax Cooperation was held from 4–8 August 2025 at UN Headquarters in New York, chaired by Egypt’s Deputy Minister of Finance, Ramy Youssef. Over 100 Member States participated, with discussions in the opening days focusing on Workstream 1, which covers the core Convention, including dispute prevention and resolution, capacity building, and technical assistance.

Positions largely reflected those expressed in earlier negotiations, with developing countries—particularly from the Africa Group—reaffirming objectives set out in the adopted Terms of Reference, while several EU and OECD members expressed caution over commitments that could become binding. Civil society representatives contributed perspectives on sustainable development, high-net-worth individual taxation, and environmental tax measures.

Delegates also addressed how the Convention’s commitments would interact with proposed protocols, notably on digital economy taxation (Protocol 1) and dispute prevention and resolution (Protocol 2), and how these would align with existing frameworks from other international forums. Key points of debate included the scope of cross-border service taxation, barriers to effective dispute resolution, and approaches to fair allocation of taxing rights. Positions varied on whether commitments should remain high-level and indicative or be more prescriptive, and on distinguishing optional from mandatory obligations. Some participants called for commitments to remain adaptable to different national capacities and evolving economic conditions, while others sought more targeted and binding provisions.

The week concluded with discussions on governance structures for the future Convention, including the potential for a Conference of Parties, and on improving mutual administrative assistance and exchange of information. Delegates from various regions highlighted challenges such as limited treaty networks, high compliance costs, and difficulties in accessing information even when legal frameworks are in place. While no final decisions were taken, the first week established the main points of convergence and divergence, setting the stage for more technical and detailed negotiations in the second week from 11–15 August 2025.

CJEU Ruling in Banca Mediolanum on Taxation of Cross-Border Dividends  

On 1 August 2025, the Court of Justice of the European Union delivered its judgment in Joined Cases C-92/24 to C-94/24, Banca Mediolanum. The decision concerns the compatibility of Italian legislation with Council Directive 2011/96/EU, the Parent-Subsidiary Directive, in relation to the taxation of dividends received by financial intermediaries from subsidiaries established in other EU Member States. In the tax years 2014 and 2015, Banca Mediolanum, resident in Italy, received such dividends, which were subject to Italian corporate income tax on up to 5% of their amount. Additionally, Italian law required that 50% of these dividends be included in the tax base for the regional tax on production activities applicable to financial intermediaries.

Banca Mediolanum sought reimbursement of the regional tax on production activities component, arguing that the relevant legislative provision conflicted with the Directive. The Italian tax authority rejected the claim, asserting that the rule complied with EU law. The Italian court referred the matter to the CJEU, seeking clarification on the scope of the exemption system under the Directive. The Court held that the Directive allows Member States to choose between an exemption or an imputation system for avoiding double taxation on cross-border profit distributions, with Italy applying the exemption system.

The CJEU further held that, under the exemption system, Member States must refrain from taxing profits distributed by subsidiaries resident in other Member States to their parent companies beyond the 5% threshold permitted by the Directive. This prohibition applies regardless of whether the tax in question is corporate income tax or another form of tax that includes such dividends in its assessment base. The Court found that requiring 50% of the dividends to be included in the base effectively amounted to taxing more than 5% of the distributed profits, contrary to the Directive’s aim of preventing economic double taxation.

The judgment confirms that, where the exemption system has been chosen, national legislation may not impose tax on more than 5% of such dividends, even if the taxation occurs through a levy that is not corporate income tax. The decision is binding on the referring court and will guide other national courts in similar disputes.

Programme Online: 2025 CFE Tax Symposium in Ghent on 18 September 2025

Registration is now open for the 2025 CFE Tax Symposium, taking place on Thursday, 18 September 2025, at the historic Oude Vismijn in Ghent, Belgium. Hosted in partnership with the Institute for Tax Advisors and Accountants Belgium, this year’s symposium, “Taxation in Transition: Compliance, Rights & Innovation in a High-Data World”, will convene policymakers, academics, and leading practitioners to examine the practical impact of the latest EU and international tax policy developments.

The morning’s first panel will examine the EU & international tax policy landscape, moderated by CFE Director Aleksandar Ivanovski. Speakers will include Benjamin Angel (European Commission), Felicie Bonnet (OECD), Jorge Ferreras Guiterrez (Ministry of Finance, Spain), Helen Pahapill (Ministry of Finance, Estonia), and Prof. Dr. Georg Kofler (WU Vienna). They will discuss OECD Pillar Two implementation, EU simplification efforts, and broader cross-border trends.

After a networking lunch, the focus will turn to DAC and Taxpayers’ Rights, in a panel moderated by Eduardo Gracia Espinar (Ashurst EMEA, Spain) with panelists Reinhard Biebel (European Commission), Dr. Viktoria Wöhrer (WU Vienna, invited), and Philippe Vanclooster (ITAA), examining DAC recast, proportionality of sanctions, taxpayer rights, and the use of pre-populated tax returns.

The final panel on the interplay of AI, tax technology & indirect tax, chaired by Jeremy Woolf (Pump Court, UK), will bring together Jane Mellor (CIOT, UK), Nicholas Devillers (BDO, Luxembourg), and Petra Pospíšilová (Czech Chamber of Tax Advisers) to discuss AI-enabled compliance tools, real-time VAT reporting (MOSS, IOSS, VIDA), secure IT architecture, and ethical data use.

Secure your place at the conference and register now!  More information and registration is available here.

14 Jurisdictions Sign OECD MCAA on GloBE Information Exchange

On 6 August 2025, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) published the current list of signatories to the Multilateral Competent Authority Agreement on the Exchange of GloBE Information (GIR MCAA), part of Pillar Two of the Inclusive Framework’s Two-Pillar Solution. The agreement provides a framework for the automatic exchange of information between tax administrations to support the application of the Global Anti-Base Erosion (GloBE) Rules.

The 14 signatories are Austria, Belgium, Denmark, France, Ireland, Italy, Japan, Korea, Luxembourg, New Zealand, Portugal, the Slovak Republic, Spain and the United Kingdom, with signature dates ranging from 11 June to 9 July 2025. By joining the GIR MCAA, these jurisdictions commit to automatically sharing specified data on the GloBE outcomes of large multinational enterprise (MNE) groups operating within their territories.

The exchange of GloBE information is intended to enhance transparency and reduce opportunities for profit shifting or base erosion by ensuring that minimum effective tax rates are met across jurisdictions. The GIR MCAA complements existing transparency measures, such as Country-by-Country Reporting, and additional signatories are expected in due course.

New HMRC Manual for Pillar 2 Top-up Tax (MTT & DTT) Released

The UK tax administration, HRMC, published an internal manual titled Multinational Top‑up Tax and Domestic Top‑up Tax on 5 August  2025, outlining its approach to implementing the UK’s Pillar Two obligations under the OECD’s GloBE rules, namely the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) for multinational groups, as well as the Domestic Top‑up Tax (DTT), the UK’s qualifying domestic minimum top‑up tax .

The manual is structured into key thematic sections. It addresses scope – including revenue thresholds, excluded entities, safe harbours, and tests for ownership and location  – as well as the method for calculating the effective tax rate, including components such as adjusted profits, covered tax balance, and the substance‑based income exclusion. It further details how to compute both standard and additional top‑up amounts and considers specific circumstances like permanent establishments, transparent entities, joint ventures, restructures, and sector‑specific entities such as shipping and insurance.

On the administrative side, the manual includes guidance on compliance obligations such as registration, filing and self‑assessment returns, payments, interest, penalties, discovery assessments, HMRC determinations, and appeals. A separate page outlines updates since the draft guidance was issued, including reorganised content on chargeability, new reference materials, and forthcoming guidance on areas such as insurance‑specific rules and post‑filing adjustments.

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