CFE’s Tax Top 5 – 22 April 2025

The United States remains engaged in negotiations on the global tax agreement, despite President Trump’s earlier denunciation in his January memorandum dismissing the deal’s relevance to US policy, according to OECD Secretary-General Mathias Cormann. Speaking at the Delphi Economic Forum, Mr Cormann confirmed ongoing discussions with US officials on technical implementation, suggesting potential US involvement in advancing the long-delayed international tax reforms targeting major tech companies and multinationals. The OECD stressed the need for US support on Pillar One, which ensures large corporations pay taxes where they operate, warning that failure could trigger unilateral digital taxes and threaten global trade.

The second pillar — a 15% global minimum corporate tax — has been adopted by over 40 countries and can advance without US approval, though Washington’s technical concerns remain unresolved. EU officials have agreed to resume dialogue with the US on the second pillar, but experts remain sceptical about full US endorsement due to challenges aligning the deal with American interests.

Mr Cormann highlighted the urgency of international cooperation to prevent double taxation and tax base erosion, warning that rising tariffs, protectionism, and geopolitical tensions could undermine global growth, calling multilateral collaboration essential in this pivotal period for economic governance.

Tariffs, Tech & Tough Talk: EU Navigates the 90-day Truce with the US

EU Trade Commissioner Maroš Šefčovič met with senior U.S. trade officials last week in Washington in an effort to ease escalating transatlantic trade tensions. Following the discussions, Šefčovič underscored the need for reciprocal engagement, stating that while the EU has demonstrated flexibility and paused its retaliatory measures, it is now essential for the United States to clearly define its position.

European Commission President Ursula von der Leyen also commented on the evolving geopolitical landscape, noting that the uncertainty caused by President Donald Trump’s tariff policies has led to a surge in global interest in deepening trade relations with the European Union. She remarked that numerous heads of state and government have reached out to explore closer cooperation, viewing the EU as a stable and reliable partner amidst growing protectionism. Von der Leyen stressed that Europe is now wide awake to its potential role in shaping a new global order, seizing the opportunity to strengthen its position in international trade.

In parallel, Italian Prime Minister Giorgia Meloni travelled to Washington to meet with President Trump, advocating for the EU’s “zero-for-zero” tariff proposal on industrial goods to advance European interests. Speaking after the meeting Trump said, “Of course there will be a trade deal. They want to make one very much, and we are going to make a trade deal, I fully expect it, but it will be a fair deal.”

These developments follow the European Commission’s approval on 9 April 2025 of an initial package of countermeasures in response to the U.S. tariff regime, particularly aimed at protecting the steel, automotive, and pharmaceutical sectors. However, after President Trump announced a 90-day suspension on the implementation of new global tariffs, the EU reciprocated by pausing its planned retaliatory measures for the same period to allow space for negotiations. Despite this temporary pause, EU officials have reiterated their readiness to act decisively should talks fail to produce a fair outcome.

President von der Leyen has made it clear that if negotiations do not lead to a balanced agreement, the EU is prepared to escalate its response with targeted countermeasures, including targeting digital advertising revenues. EU leaders continue to warn of the broader economic risks posed by protectionist policies, including supply chain disruptions, heightened global uncertainty, and increased inflationary pressures that could disproportionately affect vulnerable populations worldwide.

EU Commission Consults on Capital Markets Integration

The European Commission has launched a targeted consultation aimed at advancing the integration and modernisation of EU capital markets, under the framework of the Savings and Investments Union strategy. This initiative seeks to remove cross-border barriers that continue to hinder efficient trading, post-trading, asset management and fund distribution within the Single Market.

Among the areas identified as key impediments to market integration are tax-related obstacles, particularly those contributing to legal and regulatory fragmentation. The consultation calls for feedback on the extent to which domestic tax systems act as barriers to cross-border capital flows, both in terms of direct and indirect taxation. Respondents are encouraged to identify instances where divergent or complex national tax rules—such as withholding tax procedures or tax treatment of financial instruments—hamper the consolidation of infrastructure or discourage the scaling-up of investment funds across borders. Particular attention is being given to tax-related “gold-plating” at the national level, where Member States exceed minimum EU requirements, thereby creating issues for those operating cross-border.

In the asset management context, the consultation touches upon the potential role of tax policy in shaping the market landscape. This includes exploring whether existing tax regimes support or constrain efforts to consolidate fund structures and promote more efficient fund passporting across the EU.

The consultation further links tax considerations to supervisory convergence. It notes that divergent supervisory and fiscal practices can increase costs and regulatory burdens for financial service providers, thereby reducing the incentive to operate across borders. Legislative proposals to enhance supervisory convergence and potentially reallocate certain supervisory tasks to the EU level are expected later in 2025.

The consultation runs until 10 June 2025 and the consultation questionnaire can be accessed here.

EU Parliament FISC Hearing on the Role of Tax in Supporting the Green Transition

On 24 April 2025, the FISC Subcommittee will convene a public hearing titled “The Role of Tax in Aligning the Green Transition and Competitiveness”, focusing on how tax policy can contribute to sustainability goals while maintaining economic competitiveness.

The hearing aims to explore the use of tax incentives to promote cleaner energy solutions, particularly within the aviation and maritime transport sectors. A key element of the discussion will be the recommendations outlined in the Draghi report, which addresses fiscal strategies to drive the green transition. Experts will examine how targeted tax measures can encourage sustainable practices without undermining industrial competitiveness.

Participants will include policy specialists from the transport, logistics, and industrial sectors, alongside representatives from academia and the OECD. Speakers such as Mr Kurt Van Dender from the OECD, Ms Angela Köppl of WIFO, Ms Mitra Qurban from DHL Group, and Mr Lúcio Vinhas de Souza of Business Europe will share their insights. The programme will feature expert presentations followed by an interactive discussion with FISC Members.

Following the public hearing, FISC will then hold its first discussion on a new own-initiative draft report entitled “The Role of Simple Tax Rules and Tax Fragmentation in European Competitiveness.” The report, prepared by Rapporteur MEP Michalis Hadjipantela, outlines a range of policy considerations aimed at simplifying the EU tax framework, with a particular focus on reducing compliance burdens for small and medium-sized enterprises (SMEs).

Minutes of the 39th VAT Expert Group Meeting Published

The minutes from the 39th meeting of the VAT Expert Group (VEG), held on 26 March 2025, have been published, outlining key discussions held at the most recent meeting of the Expert Group.

Discussions focused on the future of EU VAT policy and the implementation of the VAT in the Digital Age (ViDA) package. A central topic was the presentation of the inception report for the study “Challenges of VAT beyond ViDA,” aimed at delivering data-driven recommendations on VAT simplification, digitalisation, and environmental considerations. VEG members welcomed the study and highlighted the need for a flexible VAT system capable of adapting to evolving market dynamics.

The EU Commission also provided updates on ViDA implementation, particularly in relation to Digital Reporting Requirements and electronic invoicing. They reported that preparations are underway for stakeholder workshops and guidance to ensure consistent interpretation across Member States, with a revised European e-invoicing standard expected by September 2025.

Further discussions addressed follow-up actions on VAT rules for the platform economy, Single VAT Registration, and measures to enhance the security of IOSS VAT number verification. Collaborative timelines were outlined, with consultations and pilot projects scheduled through 2026. Members emphasised the practical challenges in platform-related VAT compliance and called for clear guidance to support businesses. An update was also provided on the implementation of the new SME VAT scheme, noting delays in some Member States despite operational support tools.

The next VEG meeting is planned to take place online on 27 June 2025.

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