2026

During a September 10 meeting of the Council’s company law working party, approximately 19 EU member states pushed back against the inclusion of Article 79 in the proposed "28th regime" (EU Inc.) regulation, resisting the insertion of a direct tax provision into a non-tax file subject to qualified majority voting despite efforts by the Irish EU Council presidency to limit talks to technical drafting. While France and Renew Europe MEP Pascal Canfin defended the deferred stock option taxation scheme as the vital centerpiece needed to prevent EU Inc. from becoming an empty shell, dissenting delegations countered that the Commission’s own emphasis on the provision’s indispensability undermines its legal justification as a merely "ancillary" measure, echoing member states' successful pushback against similar tax clauses in the pan-European personal pension product dossier.

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Carvalho examines a recent note published by the International Tax Observatory and its implications for the relationship between pillar 2 and controlled foreign corporation rules in the EU.

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European Union lawmakers are calling on the OECD and the European Commission to evaluate the revised minimum tax deal, warning that the bloc must ensure its tax system remains competitive as it pursues international reforms.

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Nineteen EU countries are pushing back against a provision in a bill on regulating companies across the bloc that would limit their governments’ ability to tax corporate stock options as part of a bid to support startups.

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The European Commission’s dedicated strategy and legislative proposals for the EU’s outermost regions, published September 10, declined to grant requested Pillar 2 minimum tax carveouts for regional incentive hubs like the Canary Islands’ Economic and Tax Regime (REF) and the Madeira Free Zone. Despite lobbying from the Conference of Presidents of the Ultraperipheral Regions arguing that an unmitigated 15 percent minimum tax neutralizes state-aid-approved regional development incentives permitted under TFEU Article 349, Brussels restricted its direct regional tax initiatives to local indirect measures—proposing to extend and streamline France's dock dues (octroi de mer) regime through 2030 while reviewing the Canary Islands' specific import tax (AIEM).

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Ahead of the September 18 ECOFIN meeting in Dublin, an analytical commentary assesses the dim prospects for an EU-wide harmonized windfall profits tax on oil and gas companies, despite a formal push by six member states (Austria, Germany, Italy, Poland, Portugal, and Spain) amid energy market shocks. While proponents argue an EU-wide levy would equitably distribute risks and fund consumer energy bill relief, structural roadblocks—namely the Treaty on the Functioning of the European Union’s unanimity mandate for direct taxation and the historical failure of Energy Taxation Directive revisions—stand in the way. Moreover, with ExxonMobil’s pending EU General Court challenge questioning the legality of emergency qualified majority voting under TFEU Article 122 for the 2022 "solidarity contribution," Ireland’s pro-business council presidency and European Commission guidance (such as the tax-neutral AccelerateEU strategy) will likely reinforce that windfall profit taxation remains within the exclusive, albeit fragmented, discretion of individual member states.

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In an interview with Tax Notes, BusinessEurope Deputy Director for Taxation Mariella Caruana urged EU member states not to let domestic revenue protection derail the European Commission’s Tax Simplification Omnibus, arguing that retaining overbroad rules like interest deduction caps on genuine third-party debt undermines single-market competitiveness. Supporting proposed harmonized interest limitation caps, DAC6 reporting carveouts for Pillar 2 groups, and the removal of minimum shareholding thresholds for cross-border withholding tax exemptions, Caruana cautioned that allowing member states to reintroduce national divergences would dilute meaningful administrative relief into mere superficial statutory rewriting.

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French Prime Minister Sebastien Lecornu said he would seek to reduce a tax on the profits of large companies that was introduced in 2025 as a one-off to help rein in the runaway budget deficit.

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A compromise proposal by the Irish EU Council presidency to defer the proposed DAC6 cross-border reporting carveout for Pillar 2 enterprises until 2031—pending a European Commission evaluation by late 2029—failed to resolve deep member state divisions during a September 4 working party meeting. While aimed at ensuring an evidence-based approach and aligning with the OECD side-by-side agreement by removing restrictive Commission caveats, the compromise raised concerns among several delegations regarding the narrow legislative window to repeal the carveout if deemed unsuitable, as well as the presidency’s proposed deletions of int

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The OECD’s Tax Policy Reforms 2026 report, published September 8, reveals that governments are increasingly enacting targeted corporate surtaxes and sector-specific levies—particularly on banks, extractive industries, gambling, and digital platforms—to fund mounting public expenditures such as defense. While overall statutory corporate tax rates held relatively steady across surveyed jurisdictions, base-narrowing tax incentives for R&D and strategic sectors outpaced base-broadening measures, alongside an expanding wave of digital platform VAT collection mandates and increased excise taxes on health-related goods.

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