Trump administration withdraws the US from the Global Tax Deal
On Monday 20 January, the Trump administration published a memorandum stating that the Global Tax Deal, negotiated by the prior US administration, has “no force or effect in the United States”. It is also re-launching the threat of US retaliatory measures against any country that has or is likely to put in place tax rules that disproportionately affect American companies. Although this does not come as a surprise for many, EU reactions have been immediate. During the Ecofin Council press conference on Tuesday 21 January, the European Commissioner for Economy, Valdis Dombrovskis, said the EU remains committed to its international obligations and open to a meaningful dialogue with its international partners. “We trust that it's worth taking the time to discuss these matters with a new US tax administration in order to better understand their asks and explain also our position”, he added. In a statement issued on the same day, the Chair of the European Parliament’s Subcommittee on Tax Matters, Pasquale Tridico (The Left, Italian), viewed the decision as a “significant setback”. “Trump’s threats of retaliation should not deter us. Our duty is to serve the citizens and European companies, who are heavily penalised by tax evasion practices of large multinationals, particularly tech giants”, he said. Reacting in an op-ed published in the press, Gabriel Zucman, Director of the EU Tax Observatory, argued in favour of an “interposition protectionism” in response to Trump’s policy. OECD Secretary-General Mathias Cormann said the OECD will keep working with the US and all countries at the table to support international cooperation that promotes certainty, avoids double taxation, and protects tax bases. Pascal Saint-Amans, former OECD tax director and non-resident fellow at Bruegel, said in the press his advice to the EU is to hold firm on Pillar Two.
Member States start deep talks on DAC9
EU Member States have started to negotiate on the proposal for a ninth amendment of the Directive on Administrative Cooperation in the field of taxation (DAC9), aiming to simplify compliance obligations for multinational enterprise groups (MNEs) under the Pillar Two Directive. The Polish Presidency of the Council of the EU has reportedly identified 11 issues for discussion for Member States’ meeting on 24 January. One of them is the use of delegated acts to swiftly amend the standard form for the top-up tax information return to align with any update of the GLOBE information return. Another topic for discussion is whether to share information with some of the countries that opted to temporarily delay applying the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR), as permitted by article 50 of the Pillar Two directive (i.e. Estonia, Latvia, Lithuania, Malta and Slovakia). A third topic would be to decide if the large-scale domestic groups should also submit their reports. As MNEs are expected to submit their first top-up tax information return by 30 June 2026, as required under the Pillar Two Directive, the negotiations on DAC9 will have to be quick. The Presidency aims at reaching an agreement on DAC9 at the March Ecofin Council.
Outcomes of Ecofin meeting on 21 January
EU Finance Ministers met in Brussels on Tuesday 21 January. They held, in camera, a policy debate on ensuring a globally competitive business environment in Europe through simplification, decluttering and regulatory burden reduction. According to a press release, during the discussion, Ministers strongly supported the prospect of reducing and simplifying reporting requirements for businesses and expressed a shared commitment to meaningful steps towards regulatory simplification for companies, as an effective way to improve the competitiveness of the EU economy. Ministers looked forward to the Commission’s planned proposal for an ‘Omnibus simplification package’ that aims at streamlining and reducing regulatory burden on businesses. The Polish Presidency of the Council of the EU also presented, in public session, its work programme for the first semester of the year in the field of economic and financial affairs. Andrzej Domanski, Polish minister for Finance, opened the meeting by saying that they are taking over the Presidency at the times of uncertainty, marked by the consequences of Russia’s aggression on Ukraine and the rising geopolitical tensions. The main trust of the work through the Ecofin Council will be to respond to the challenges of the EU’s current economic and financial situation, he said. He also confirmed that the Presidency will focus on streamlining the Single Market to strengthen the competitiveness of the European economy. The Council also adopted several recommendations to Member States in the context of the implementation of the economic governance framework.
EPP statement on enhancing competitiveness by cutting back bureaucracy and over-regulation
When they met in Berlin on Friday 17 and Saturday 18 January, the leaders of the European People’s Party (EPP), adopted a statement on enhancing competitiveness by cutting back bureaucracy and over-regulation. “Regulation can bring benefits for companies, through harmonisation of divergent national rules or by technical rules that establish how a legislative framework should be implemented in practice throughout the EU. However, this can also entail numerous additional obligations and burdens for companies, with a cumulative effect over time. The proportionality and necessity of such additional requirements has to be carefully and comprehensively screened, cross-checked with "practitioners" (i.e. companies who have to implement), and any overreach should be quickly addressed a determined, ambitious and comprehensive deregulation and simplification agenda with a concrete and binding action plan involving all institutions”, the statement reads. In particular, the corporate sustainability legislation is proving to be excessive and burdensome, with immense trickle-down effects for European SMEs, they say. Therefore, they advocate to put on hold for at least two years the implementation of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), as well as related legislation including the taxonomy regulation and the Carbon Border Adjustment Mechanism (CBAM). In the meantime, the Omnibus regulation expected for the end of February should limit the scope of these laws to the largest companies with more than 1000 employees, eliminate the indirect effect to SMEs, align legislative overlaps that currently lead to double reporting and significantly reduce the reporting obligations for large companies by at least 50%, they say. EPP leaders also request that the trilogue procedures is reformed to ensure more transparency and democratic accountability. National regulations in the EU Member States that go beyond European law should be withdrawn, they add. EPP leaders also adopted their general priorities for 2025.
MEPs to debate with EU Tax Commissioner on 6 February
MEPs from the FISC Subcommittee of the European Parliament are due to debate with EU Tax Commissioner, Wopke Hoekstra, on 6 February from 11:15 to 12:15. The exchange is expected to focus on critical taxation priorities, upcoming initiatives and strategic goals. On the same day, from 8:45 to 10:00, the FISC Subcommittee will host a public hearing on a coherent tax framework for the EU’s financial sector. The hearing will feed into the work on an own-initiative report by the FISC Subcommittee on the same topic. From 10:00 to 11:15, MEPs will exchange views with the European Chief Prosecutor, Laura Kövesi, and the Chair of Eurofisc, Yannick Hulot, on the role of the EPPO and Eurofisc in tackling VAT fraud in the EU.
EU Tax Symposium: registration is now open!
The European Parliament and the European Commission have opened on Thursday 23 January the registration for their third EU Tax Symposium in Brussels. This year’s theme will be “Strengthening Competitiveness and Fairness to Build Prosperity”. The event, which will take place in the Hemicycle of the European Parliament, will bring together Finance Ministers, Members of the European Parliament and national parliaments, policymakers, academics and civil society to discuss the future of tax systems in the EU. A preliminary programme has been published on a dedicated website. Four panel discussions are currently foreseen: - Panel I: Challenges for a fair contribution of ultra-high-net-worth individuals; - Panel II: EU sustainable competitiveness: What taxation can or cannot do?; - Panel III: European and international corporate tax reform: What are the next steps?; - Panel 4: Artificial intelligence for tax systems: Challenges, opportunities, and risks. The event will be followed by a networking cocktail. Register here.
