CFE’s Tax Top 5 – 22 July 2025

The OECD issued a Tax Report to G20 Finance Ministers ahead of the meeting held last week in South Africa, outlining key developments in international tax co-operation. The report highlights continued progress in the implementation of the BEPS minimum standards, advances on the Two-Pillar Solution, and significant gains in tax transparency. It also covers outcomes of the April Inclusive Framework Plenary, where members endorsed simplification efforts, agreed new workstreams on tax and inequality, and commenced a diagnostic phase on global mobility. The OECD also reported on capacity-building initiatives, especially for developing countries, and transmitted a stocktake of international transparency efforts since the inception of the G20.

The G20 communiqué, issued at the conclusion of the Durban meeting held from 17 to 18 July, reaffirms collective support for stabilising the international tax system and advancing inclusive tax policy reform. Members acknowledged ongoing negotiations within the OECD/G20 Inclusive Framework to address the tax challenges of the digitalised economy, and agreed to continue constructive engagement on Pillar Two global minimum taxes, with the shared aim of finding a balanced and practical solution. G20 members welcomed the tax transparency progress report and looked ahead to further reports expected later in the year on BEPS implementation, simplification of tax rules, and the voluntary exchange of real estate ownership information.

Implementation of Pillar One and Pillar Two continues to gain traction. On Pillar One, members of the Inclusive Framework are negotiating the implementation of Amount A, aimed at reallocating taxing rights on residual profits of large multinationals. Several countries have already adopted Amount B, a simplified elective transfer pricing mechanism. Under Pillar Two, more than 55 jurisdictions have implemented or committed to the GloBE Rules or equivalent minimum taxes, while efforts are underway to develop simplified safe harbours and effective tax rate calculations for high-tax jurisdictions. Members also discussed a potential side-by-side arrangement to defuse concerns raised by proposed US retaliatory tax measures.

The OECD and G20 also placed strong emphasis on supporting developing countries, with the Global Forum now counting 172 members, including 69 jurisdictions committed to the Crypto-Asset Reporting Framework. In 2024 alone, tax transparency efforts helped developing countries raise more than EUR 2.4 billion in additional revenue. These developments align with the broader G20 agenda of enhancing domestic revenue mobilisation and strengthening international capacity-building frameworks, as well as supporting the inclusion of developing countries in global tax decision-making

EU Commission Sets Out Plans for 2028 – 2034 EU Budget & Corporate Contribution Mechanism

On 16 July, the European Commission unveiled its proposal for the next Multiannual Financial Framework for the period 2028 to 2034, setting a long-term EU budget of nearly EUR 2 trillion, equivalent to an average of 1.26% of the Union’s gross national income. The proposal aims to provide the EU with the financial means to address geopolitical instability, energy transition, and emerging challenges in areas such as migration, defence, digitalisation, and climate resilience. The Commission emphasises the need for a streamlined and flexible budget that enables faster responses to unforeseen crises while reinforcing investment in strategic sectors and regions.

The Framework introduces a redesigned revenue system, anchored by proposals for five new own resources intended to diversify income and reduce reliance on national contributions. Notably, this includes a Corporate Resource for Europe (CORE), an annual lump-sum contribution from companies operating in the Single Market with net turnover exceeding EUR 100 million. This contribution will range from EUR 100,000 to EUR 750,000 depending on company size, and is projected to generate around EUR 6.8 billion annually. The CORE is framed as a means of aligning corporate responsibility with access to the European market and ensuring that large enterprises contribute directly to the EU budget.

The MFF also includes an update to existing resources and new measures such as a revised plastics levy and an excise-based own resource on tobacco. Additional income streams will be derived from the Emissions Trading System (ETS), the Carbon Border Adjustment Mechanism (CBAM), and a new levy based on non-collected electronic waste. Together, the full package of new and adjusted resources is expected to yield EUR 58.5 billion per year. The proposal maintains a payments ceiling of 1.75% and a commitments ceiling of 1.81% of gross national income, with a temporary 0.25 percentage point increase to support borrowing for crisis response loans if required.

In parallel, the Commission proposes the creation of a crisis response mechanism backed by exceptional borrowing powers and a new EU Competitiveness Fund worth EUR 409 billion. The Commission maintains that the proposed financial framework balances ambition with prudence, providing stable resources to pursue common EU priorities and respond to systemic global shifts over the next decade. Subject to Council unanimity and ratification by Member States, the revised MFF and own resources package would enter into force on 1 January 2028.

Harvard Centre for International Development & Irish Tax Institute Global Tax Policy Conference: 23 & 24 October 2025

The 5th Global Tax Policy Conference, co-hosted by the Irish Tax Institute and the Harvard Center for International Development, will take place on 23–24 October 2025 in Dublin and is open for registration. This flagship event brings together a distinguished international lineup of policymakers, tax administration leaders, academics, and industry practitioners to examine the evolving landscape of global tax policy. The conference will open with a keynote address by Ireland’s Minister for Finance and Eurogroup President, Paschal Donohoe TD, setting the tone for two days of high-level dialogue.

Day one will feature sessions on the current state and future trajectory of global tax reform, with contributions from senior figures at the OECD, European Commission, and IRS. Discussions will explore the challenges of implementing complex global tax rules, the growing burden of corporate tax compliance, and the feasibility of a harmonised approach to dispute resolution. Speakers include Manal Corwin (OECD), Gerassimos Thomas (DG TAXUD), Danny Werfel (former IRS Commissioner), and representatives from the IMF, United Nations, and Tax Justice Network.

The second day will focus on the tax implications of global mobility and remote work, with a session dedicated to how tax systems can respond to digitalised forms of labour. Another panel will address how tax policy can support environmental and climate goals. The closing session, chaired by Harvard’s Jay Rosengard, will consider what the future of global taxation might look like, with emphasis on achieving consistency and certainty across jurisdictions. Across both days, the programme balances technical insight with practical implementation challenges, and offers a valuable opportunity for stakeholders to engage with emerging international tax dynamics.

More information and registration is available here.

Belgian Constitutional Court Refers Question on Validity of UTPR in EU Pillar 2 Directive to CJEU for Preliminary Ruling

The Belgian Constitutional Court has referred a question to the Court of Justice of the European Union for a preliminary ruling in a case challenging Articles 35 and 36 of the Belgian Law of 19 December 2023, which implements the OECD Pillar Two UTPR, in accordance with EU Directive 2022/2523. These provisions require Belgian entities of multinational groups to pay additional taxes on under-taxed income generated by affiliated companies in third countries that do not apply a qualified Income Inclusion Rule (IIR).

The applicant, a U.S.-based business organisation, argued that this mechanism violates fundamental rights and principles protected under Belgian constitutional law and EU law. In particular, they assert the law breaches the principles of equality and non-discrimination, legal certainty, the right to property, freedom to conduct a business, and the territoriality principle in taxation—on the basis that Belgian companies may be taxed on foreign income with no connection to their own activities or financial capacity.

Given that the Belgian law transposes EU Directive 2022/2523, the Court has referred a preliminary question to the Court of Justice of the European Union. It asks whether Articles 12 to 14 of the Directive—which mandate the application of the top-up tax to EU-based entities in the above circumstances—are compatible with Articles 15–17, 20 and 21 of the EU Charter of Fundamental Rights, Articles 49 and 56 TFEU, the principle of legal certainty, and the principle of tax territoriality. The Belgian Court will await the CJEU’s judgment before ruling on the validity of the contested national provisions.

July Infringement Package: Commission Targets VAT & Customs Compliance

As part of its July infringement package, the European Commission has initiated a series of tax-related infringement procedures against a number of Member States for failing to comply with obligations under EU law.

Letters of formal notice were issued to France and Cyprus for not having fully deployed key customs IT systems—specifically, the Temporary Storage system, National Import System, and, in the case of France, the Automated Export System. These systems are critical to the implementation of the Union Customs Code and the functioning of EU-wide customs controls. Six additional Member States—Czechia, Ireland, Italy, Malta, Slovenia, and Slovakia—were also sent letters of formal notice over failures to transmit standardised customs data via the EU’s SURV3 digital system.

The Commission also took action regarding the transposition of VAT legislation. Cyprus received a letter of formal notice for not fully transposing Directive 2022/542 on VAT rates, which expands the scope for applying reduced and zero rates to essential products. Additionally, Belgium, Bulgaria, Greece, Spain, and Romania received reasoned opinions for the same Directive, having missed the 31 December 2024 deadline. A separate set of reasoned opinions was issued to Bulgaria, Greece, Spain, and Romania for failing to transpose the updated VAT rules for small enterprises introduced under Directive 2020/285.

Italy was the subject of two further infringement actions. The first concerns the exclusion of certain non-resident self-employed persons from Italy’s flat tax regime, which the Commission considers incompatible with the freedom of establishment. The second relates to municipal tax advantages for non-resident pensioners, which are conditioned on specific residence and pension source criteria. The Commission views these as discriminatory and contrary to EU rules on the free movement of persons and workers.

Lastly, the Netherlands received a reasoned opinion over its tax treatment of investment funds. The Commission argues that Dutch rules disproportionately disadvantage foreign funds by denying them equivalent access to dividend tax offsets, potentially infringing the free movement of capital. Each Member State targeted in this month’s package has two months to respond before the Commission may escalate proceedings to the Court of Justice of the European Union.

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