G7 deal won’t require changes to the Pillar Two Directive, European Commission says
The European Commission reportedly stated on Tuesday 1 July that the G7 provisional agreement on Pillar Two will not require any amendments to the EU's Pillar Two Directive. In a joint statement released on 28 June, G7 countries agreed that the US tax system and the OECD’s Pillar Two rules can coexist, noting that US-headquartered groups' domestic and foreign income will be exempt from the Undertaxed Profits Rule (UTPR) and Income Inclusion Rule (IIR), as they already fall under existing US minimum tax legislation. During a press conference, a European Commission spokesperson clarified that this outcome can be implemented through a Safe Harbour mechanism and would not necessitate changes to the current EU Directive on Pillar Two. The spokesperson also noted that a transitional Safe Harbour for US multinationals is already in place until the end of 2025. The new agreement would therefore establish a permanent Safe Harbour arrangement, pending approval by the OECD. The Commission highlighted that Article 32 of the EU Directive contains a dynamic link with OECD-agreed Safe Harbours and reaffirmed its commitment to finalizing the technical aspects within the OECD Inclusive Framework. On the same day, the S&D Group in the European Parliament deplored in a statement that “EU members of the G7 betrayed tax justice by agreeing to a shady agreement with US President Donald Trump”, requesting a debate on the issue at the next Plenary session with European Commissioner Wopke Hoekstra, providing clarity and answers.
European Commission makes recommendations on tax incentives to drive clean investment
The European Commission issued on Wednesday 2 July a Recommendation on tax incentives to support the Clean Industrial Deal, launched in February 2025. The Recommendation, which is a non-binding instrument, sets out common principles to guide Member States when introducing tax incentives to stimulate private investment in clean technologies and industrial decarbonisation. In particular, incentives should apply only to clean technologies and industrial decarbonisation, and exclude fossil fuel-related investments. Measures must be easy for companies and tax authorities to implement, with clear eligibility criteria and incentives should provide timely support to companies making investment decisions.The Recommendation advocates for two core instruments: accelerated depreciation (up to immediate expensing) and targeted tax credits. Tax incentives introduced under the Recommendation must comply with EU State Aid regulations, including the new Clean Industrial Deal State Aid Framework (CISAF). Member States are asked to report to the Commission on their adoption of relevant measures set out in this Recommendation by 31 December 2025, as well as to regularly monitor and report on how tax incentives are delivering clean investment and contributing to the broader goals of the Clean Industrial Deal.
Danish Presidency of the Council of the EU kicks off
The Danish Presidency of the Council of the EU started on Tuesday 1 July and published its indicative agendas for Council meetings for the period from 1 July 2025 up to 31 December 2025. The document indicates the ambitions of the Danish Presidency on tax matters. It notably aims at reaching an agreement on the revision of the Energy Taxation Directive at the November ECOFIN meeting as well as an agreement on the Council Directive on VAT rules on the abolition of the €150 threshold and on customs warehouses and to formally adopt the Customs Union Reform package at the December ECOFIN. Tax simplification will also be on the agenda, with the adoption of conclusions on economic consequences of EU legislation in November and a policy debate on tax simplification and competitiveness in the EU. In December, the European Commission should also present to Finance Ministers an overview report on implementation and simplification as well as its annual progress report on enforcement and implementation.
EU Finance Ministers meet in Brussels on 8 July
EU Finance Ministers will meet on Tuesday 8 July in Brussels to discuss several economic and financial matters. They will notably adopt the final legislative acts that pave the way for Bulgaria to become a member of the euro area and to begin using the euro as its official currency as of 1 January 2026. The Council will also be invited to activate the national escape clause under the Stability and Growth Pact (SGP) for requesting Member States to help facilitate their transition to higher defence spending at national level while ensuring debt sustainability. Furthermore, the Council will hold a policy debate on the Single Currency package on the basis of a Presidency issues paper. The package consists of complementary legislative proposals setting the legal framework for the possible introduction of a digital euro and addressing the legal tender status of euro cash. The Commission will also be invited to present its proposal of 17 June to amend the EU’s securitisation framework, as part of the savings and investment union. Following the presentation, Ministers will have an initial exchange of views on the proposal. Finally, the Danish presidency will present its priorities and work programme in the field of economic and financial affairs. No tax matter is on the agenda of this ECOFIN Council.
ETAF supports the future Recommendation on the tax treatment of savings and investment accounts
On Friday 4 July, ETAF replied to the public consultation of the European Commission on its future Recommendation on savings and investment accounts, including their tax treatment, scheduled for publication in Q3 2025. ETAF supported the Recommendation as a suitable instrument and proposed several simplification measures to enhance retail investor participation in the Capital Markets Union. These include simplifying the investment process for small investors, introducing a common EU-wide denomination for savings and investment accounts and developing user-friendly digital platforms with integrated accessible tax information. ETAF also advocated for tax incentives — such as exemptions or allowances on interest and capital gains — to make investments more appealing and foster greater capital formation across the EU. Additionally, it recommended harmonising capital gains tax rates for retail investors to ensure consistency. Finally, ETAF called for a strong investor protection framework and clear risk disclosure, ensuring that investors understand and manage their risks within a transparent and fair market environment.
MEPs debate the updated AML Blacklist
On Monday 30 June, MEPs from the Economic Affairs and Civil Liberties committees of the European Parliament, along with Financial Services Commissioner Maria Luís Albuquerque, discussed the Commission’s recent proposal to revise the list of high-risk third countries in relation to anti-money laundering (AML) and counter-terrorism financing (CFT). Commissioner Albuquerque stressed that the revision was necessary to align the EU’s list with the latest assessments by the Financial Action Task Force (FATF). Ms Albuquerque further assured MEPs that any country removed from the list could be re-added if future FATF evaluations showed insufficient progress in meeting commitments. However, many MEPs voiced strong objections to the Commission’s approach. The decision to remove the UAE drew particularly sharp criticism, with MEPs arguing that despite some formal commitments, the UAE continues to pose significant AML/CFT risks and is a key hub for sanctions evasion. The delisting of Gibraltar also raised concerns and several MEPs called for Russia to be added to the high-risk list. In addition to the specific country decisions, MEPs criticised the overall process, describing it as a mere replication of FATF findings and expressed frustration over the lack of opportunity for individual scrutiny of each case. They opposed the practice of adopting changes to the entire list in a single package, which they said undermines proper parliamentary or Member State review. The European Parliament and the Council can object to the list during a one-month scrutiny period (extendable by another one-month period).
Brazil and Spain launch global coalition on taxing high-net-worth individuals
On Monday June 30, the Finance Ministers of Brazil and Spain announced the launch of a platform for countries committed to improving the taxation of high-net-worth individuals (HNWIs) on the sidelines of the 4th International Conference on Financing for Development in Sevilla. Building on the legacy of Brazil’s G20 Presidency on tax and inequality, the coalition will act as a catalyst for the effective taxation of high-net-worth individuals by providing guidance and actionable plans to countries, helping them address policy, administrative and data gaps to ensure that these individuals pay their fair share, Ministers said. Spain and Brazil are even considering steps toward a global wealth registry – acknowledging that this would take time, political will and major national efforts. More countries are expected to join this initiative in the coming months.
Launch of global coalition for premium flyers contribution
On the sidelines of the 4th International Conference on Financing for Development in Seville on Monday 30 June, France, Spain, Kenya, Barbados, Somalia, Benin, Sierra Leone and Antigua & Barbuda announced the launch of a coalition, under the Seville Platform for Action (SPA), to work towards COP30 on a better contribution of the aviation sector to fair transitions and resilience, with a special focus on premium flyers, in view of investing all or parts of the proceeds into resilient investments and fair transitions. The coalition aims to improve domestic revenue mobilization of developing countries and support international solidarity (in particular with regards to climate change mitigation and adaptation, pandemics and other development challenges). “It will work to increase the number of countries applying flight ticket levies, including on premium travels, and to tax private jets based on best practices, while ensuring upward harmonization and greater progressivity in countries which already have such levies in place”, the French government said in a statement. It will also work on principles for the use of the proceeds. In parallel, these countries may explore options for a generalized taxation at international level, building on current discussions at ICAO on the decarbonization of the aviation sector, in respect of the Chicago convention. The European Commission will provide technical support to this coalition.
IESBA ethical standards come into force
The IESBA Ethics Standards on Tax Planning, launched in April 2024, became effective on Tuesday 1 July. The standards are designed to provide a robust ethical framework to guide professional accountants when providing tax planning services or performing tax planning activities, thereby enabling them to make ethical judgments and decisions in this complex area. Instead of relying solely on a technical or rules-based approach, professional accountants will now apply a principles-driven framework that offers consistent guidance for tax planning services or activities. This framework may also be followed by other tax practitioners who wish to adhere to a high ethical benchmark. The objective of the framework is to help ensure that tax planning decisions take into account the public interest, including that they have a credible basis in laws and regulations and that they take into consideration the potential reputational, commercial, and broader economic consequences to which the tax planning arrangement could give rise. The IESBA encourages all professional accountants to familiarize themselves with the standards in order to uphold the profession’s commitment to ethical tax practices. Implementation support resources, including IESBA Staff Questions & Answers, can be accessed on the IESBA website.
