US Treasury announces G7 deal excluding US firms from Pillar Two
The United States and other G7 countries have reached an agreement that will exempt US companies from the OECD's Pillar Two global minimum tax. This deal, announced by US Treasury Secretary Scott Bessent on Thursday 26 June, also means the US will drop its controversial Section 899 "revenge tax". Secretary Bessent shared the news via an X post, confirming that "OECD Pillar 2 taxes will not apply to US companies" and highlighted plans for collaborative implementation across the OECD-G20 Inclusive Framework in the coming weeks and months. Scott Bessent added that Section 899, originally designed to penalise foreign entities for perceived discriminatory taxes against US companies, is now unnecessary and should be removed from the reconciliation bill in Congress. The official joint statement was subsequently published on Saturday 28 June. It states the US tax system and the OECD Pillar Two will sit “side-by-side”. According to the agreement, domestic and foreign profits from US parented groups will be excluded from the Undertaxed Profits Rules (UTPR) and the Income Inclusion Rules (IIR) because they are already subject to existing US minimum tax rules. Currently, all G7 members except the US — Canada, France, Germany, Italy, Japan and the United Kingdom — have already implemented Pillar Two. Recognising that these issues have relevance to a wider group of jurisdictions, the US intends to discuss and develop this understanding within the OECD Inclusive Framework “with a view to expeditiously reaching a solution that is acceptable and implementable to all”, the statement reads.
EU leaders discuss ongoing geoeconomic challenges
During their meeting in Brussels on Thursday 26 and Friday 27 June, EU leaders discussed geoeconomic challenges and the ongoing developments in Ukraine and the Middle East. In the conclusions adopted at the end of the meeting and supported by all Member States except Hungary, EU leaders reaffirmed their support to Ukraine and commended Ukraine for the pace of its accession-related reforms under the most challenging circumstances, welcomed the significant progress it has achieved, and encouraged Ukraine and the Commission to intensify work on the accession process. EU leaders addressed the latest developments in the Middle East. In particular, the European Council called for an immediate ceasefire in Gaza and the unconditional release of all hostages, leading to a permanent end to hostilities. EU leaders welcomed the ceasefire between Iran and Israel and urged all parties to refrain from taking action that could lead to further escalation. EU leaders also discussed Europe’s competitiveness. Reiterating its calls for the removal of remaining barriers to the Single Market, the European Council welcomed the Commission’s new Strategy for the Single Market and its EU Startup and Scaleup Strategy and called for work on implementation to begin without delay. EU leaders acknowledged the key role of an ambitious simplification and better regulation agenda in ensuring Europe’s competitiveness. They stressed the importance of a “simplicity by design” approach and emphasised the need for continued efforts at all levels to ensure a clear, simple, smart and innovation- and SME-friendly regulatory framework.
European Commission adopts a new State aid framework supporting clean industry
The European Commission adopted on Wednesday 25 June a new Clean Industrial Deal State Aid Framework (CISAF), which aims at simplifying the rules for public support (e.g., grants, interest and tax reliefs, guarantees, government holdings). The CISAF foresees an easier and quicker approval for Member States to invest in clean energy projects through simplified procedures and speedy implementation. Member States are for instance allowed to provide temporary electricity price support for energy-intensive industries, to make them more competitive in global markets. Support for various eco-friendly technologies, including electrification, hydrogen, and carbon capture, utilisation and storage is foreseen to increase energy efficiency and competitiveness. Moreover, CISAF includes possibilities for support of manufacturing projects in clean technologies recognised in the Net-Zero Industry Act, including for critical raw materials. In particular, the framework allows Member States to stimulate demand for clean technology products by offering tax incentives, such as allowing companies to deduct the cost of clean technology investments from their taxable income more quickly. It also includes possibilities for State aid to avoid delocalisation of industry. Finally, CISAF offers possibilities for Member States to reduce the risks linked to private investments in clean energy, decarbonisation, clean tech manufacturing, energy infrastructure and the circular economy. The CISAF applies as of 25 June 2025 and will remain in force until 31 December 2030. It replaces the Temporary Crisis and Transition Framework (TCTF), which was in place since 2022. A more detailed overview of support possibilities under the new CISAF is available here.
Member States adopt a partial mandate on the Customs Reform Package
On Friday 27 June, Member States agreed, without discussion, on a position on the Customs Reform Package. This agreement follows a "silent procedure" initiated during the ECOFIN Council on 20 June, which reportedly confirmed broad support for the latest Polish compromise text. The 364-page mandate introduces sweeping changes to the Union Customs Code. Key reforms include the establishment of an EU Customs Authority, which will support and help coordinate the risk management work of national customs authorities, a new Customs Data Hub, designed to gradually replace existing IT infrastructure across Member States. The new rules also create a new category of the most transparent businesses – trust and check traders. Under this new scheme, businesses that provide maximum information on their activities and that fulfil other strict criteria will benefit from simplified customs obligations and, in some cases, be able to release their goods into circulation in the EU without any active customs intervention at all. Over 100 delegated and implementing acts are anticipated to further clarify these main provisions. However, not all aspects are without contention. Belgium, Estonia, and Germany have reportedly raised concerns about a recently introduced e-commerce handling fee to be collected by customs authorities on small consignmentsentering the EU through distance selling. This fee, added to the text in February, reportedly aims to offset the growing compliance burden from the surge in low-value consignments. Germany and Belgium have submitted written declarations during the 27 June meeting. The approved Polish Presidency text represents only a "partial mandate," with many provisions still needing clarification during upcoming negotiations with the European Parliament, such as the simplified tariff system and the exact design of the handling fee. The selection process for the new Customs Authority's location is also set to begin soon, with Spain and France already expressing interest in hosting it.
IMCO hearing on the Single Market Strategy
On Wednesday 25 June, the IMCO committee hosted in the European Parliament a public hearing on the European Commission’s newly adopted Single Market Strategy. Bringing together high-level Commission officials, academic experts and business representatives, the event examined key measures of the new Strategy, giving the opportunity to speakers to give their preliminary views. Panel discussions focused on measures to complete the Single Market — particularly the free movement of goods and services — and improve enforcement to create a level playing field for compliant companies and empowered consumers. Speakers featured Hubert Gambs (DG GROW European Commission), Sophia Zakari (SMEunited), Patrycja Gautier (BEUC), Stancikas Alvydas (DG GROW European Commission), Kirsten Wilbour Dam Christiansen (Danish Safety Technology Authority), Professor Mario Monti (Bocconi University). All presentations from the speakers are available here.
DG TAXUD Annual Report on Taxation
The European Commission presented on Tuesday 24 June its Annual Report on Taxation (ART), providing a comprehensive overview of the current state of taxation in the EU, during a half-day event in Brussels. The report found that tax revenues in the EU-27 decreased to 39% of GDP, the lowest ratio since 2011. The decline is mostly driven by lower revenues from environmental and property taxes. The EU-27 tax mix remained mostly stable over the last decade, though with labour tax revenues decreasing to 51.2%, consumption tax revenues decreasing to 26.9%, and capital taxes increasing to 21.9%, due to higher company profits. Member States reported close to 500 tax reform measures for 2024, aiming to generate revenue, ensure fairness, sustainability, and investment. Compliance gaps remain a concern, with VAT revenue losses estimated at €89bn (for 2022) and corporate income tax losses estimated at €40bn (in 2018). The report also states that the Directive on Administrative Cooperation (DAC) is a critical pillar in the fight against cross-border tax fraud, evasion and avoidance. The data exchanged under the DAC1, 2 and 4 generated an estimate of EUR 5-10 billion in annual tax benefits, according to the results of the upcoming evaluation of the DAC. Interestingly, the report also touches upon the taxation of high net-worth individuals (HNWI), recognising that it has gained momentum in the global tax policy debate. Strengthening international tax cooperation could help address the challenge of ensuring adequate levels of taxation for this specific group, the report says, recalling that it was estimated in the G20 context that, if individuals with more than USD 1 billion in wealth were required to pay a minimum amount of tax annually equal to 2% of their wealth, this would generate between USD 200 and USD 250 billion annually. The event can be re-watched here.
MEPs to quiz European Commission on digital taxation
On Monday 24 June, MEPs from the Economic and Monetary Affairs Committee (ECON) of the European Parliament voted to submit an oral question to the European Commission regarding the taxation of large digital platforms, likely to be debated during the July plenary session. While MEPs seek a clear position from the Commission on digital taxation, especially in light of US retaliation threats, they reportedly abandoned plans to adopt a resolution due to a lack of majority support. The submitted question asks the Commission to assess the state of the OECD negotiations, particularly with respect to Pillar One, and the impact of recent US actions on the viability of a multilateral solution. It also queries whether the Commission would consider unilateral EU action, under what conditions, and how it plans to safeguard the OECD’s two-pillar framework. Additionally, MEPs request a cost-benefit analysis of an EU-wide digital services tax (DST) and its potential effects on consumers.
FISC Workshop on tax barriers and cross-border workers
On Wednesday 25 June, the Subcommittee on Tax matters (FISC) held a workshop on tax barriers affecting cross-border workers. MEPs and experts highlighted that the rise in remote and cross-border work creates legal uncertainties, particularly around tax liabilities and social security contributions. The absence of a unified EU tax framework leads to burdensome compliance costs and administrative complexity for both workers and employers, they outlined. Panellists, which included Prof. Dr. Pasquale Pistone and Prof. Dr. Matthias Petutschnig from the WU Vienna University of Economics and Business, stressed the need for coordinated solutions, including potential harmonisation measures, simplified processes, and better information exchange to support labour mobility while respecting national sovereignty.
