E-News from KPMG’s EU Tax Centre

Latest CJEU, EFTA, ECHR

CJEU finds Spanish withholding tax in breach of EU law

On December 19, 2024, the Court of Justice of the European Union (CJEU or the Court) rendered its decision in case C-601/23. The case concerns the compatibility of the Spanish dividend withholding tax with EU law.

The plaintiff is a UK-based company with no permanent establishment in Spain (the Plaintiff) that received dividends from a company based in the Basque Country (Biscay). The payment was initially subject to a withholding tax rate of 19 percent but ultimately reduced to 10 percent under the Spain-UK double tax treaty.

Based on Spanish legislation applicable at the time, the withholding tax levied represented a final tax for non-resident companies, with no available mechanism for reimbursement in the event that the recipient sustained losses in the relevant tax year. On the other hand, for a resident company subject to corporate income tax (CIT) in Biscay, the withholding tax constituted an advance payment on account of CIT, which only gave rise to the actual levying of the tax if that company had a positive tax base for the tax year in question. If the tax base was negative, the tax withheld would be reimbursed.

The Court found that Spain’s withholding tax rules, which treated the withholding tax on dividends as a prepayment of CIT for resident companies (which could be reimbursed in the event of tax losses), but as a final levy for non-resident companies in similar circumstances, constitute an unjustified restriction on the free movement of capital.

For more information on the case, please refer to our Euro Tax Flash Issue-554.

EU Institutions

Priorities of the Polish Presidency of the Council

On December 13, 2024, the Polish Minister of Foreign Affairs presented the priorities of the Polish Presidency of the Council of the EU (January 1 – June 30, 2025). In the field of direct taxation, the Polish Presidency aims to:

• support EU competitiveness by tackling harmful tax competition: the work in this area will include updating the EU list of non-cooperative jurisdictions for tax purposes, including evaluating the commitments made by cooperating jurisdictions to uphold good governance principles in tax matters. The updated EU list of non-cooperative jurisdictions will be approved by the Council in February 2025.
• continue the work related to the eight amendment to the Directive on administrative cooperation in the field of taxation (DAC9), aimed at ensuring exchange of information on data relating to Pillar Two. The Presidency will take measures to ensure that DAC9 is fully compliant with the OECD standard, with the aim of maintaining the competitiveness of the European economy.

FASTER Directive published in the EU Official Journal 

On January 10, 2025, the Council Directive (EU) 2025/50 on faster and safer relief of excess withholding taxes (FASTER Directive) was published in the Official Journal of the EU. The Directive enters into force the twentieth day following this publication, i.e. January 30, 2024.

Member States need to transpose the Directive by December 31, 2028. The rules will become applicable as of January 1, 2030.

For more information, please refer to E-News Issue 204 and Euro Tax Flash Issue 553.  

OECD and other International 

Release of additional Administrative Guidance on Article 9.1 (Pillar Two)

On January 15, 2025, the Inclusive Framework on BEPS (IF) released the fifth tranche of Administrative Guidance (AG5) that aims to clarify the interpretation and application of Article 9.1 of the GloBE Rules.

Based on Article 9.1 of the GloBE Model Rules, pre-GloBE deferred tax assets (DTAs) arising from temporary differences and prior year losses may be carried into the GloBE regime and used in the calculation of the ETR of a Constituent Entity. As those DTAs reverse in an accounting period, there is a deferred tax expense which, when added to the current tax expense, lifts the ETR for that period. However, Article 9.1.2 of the Model Rules ‘undoes’ certain DTAs relating to transactions that occurred after November 30, 2021, that are perceived to give rise to tax advantages which are not considered to be ‘economic’.

AG5 extends the scope of Article 9.1.2 and excludes DTAs from recognition under the transitional rules, including where:

• the DTASs are attributable to a government arrangement concluded after November 30, 2021, and the arrangement gives rise to a tax credit or other tax relief (such as a tax basis step-up) that does not arise independently of the arrangement. A tax credit or relief arises independently of a government arrangement if no critical aspect of the credit or relief, such as the eligibility or amount, relies on discretion exercised by the general government.
• the DTAs are attributable to an election or choice exercised or changed after November 30, 2021, which retroactively changes the treatment of a transaction in determining its taxable income in a tax year for which an assessment has been made or tax return has already been filed. 
• a DTA or deferred tax liability arose pursuant to a corporate income tax that was enacted by a jurisdiction that did not have a pre-existing corporate income tax that became effective after November 30, 2021, and before the Transition Year (as defined).

This exclusion in the three scenarios outlined above is subject to a two-year grace period during which the tax expense from the release of such DTAs may still be considered, subject to a limitation of 20 percent of the amount of each DTA originally recorded. The grace period is not applicable if the DTA results from an arrangement concluded or amended after November 18, 2024.

The extension of 9.1.2 under AG5 applies for the Income Inclusion Rule (IIR), Undertaxed Profits Rule (UTPR) and transitional Country-by-Country (CbyC) Reporting Safe Harbour. It also applies to the Qualified Domestic Minimum Top-up Tax (QDMTT) Safe Harbour, such that if the rules are breached, the switch-off mechanism will apply to undo the benefit of the QDMTT Safe Harbour and impose a credit methodology. 

For more information, please refer to a report prepared by KPMG International.

Release of the outcome of the transitional peer review process (Pillar Two)

On January 15, 2025, the IF on BEPS further released the outcome of the transitional peer review process in form of a central record, which lists the jurisdictions that have been awarded the Transitional Qualified Status in relation to the local implementation of the DMTT and IIR. The document also indicates which of those DMTTs are considered to be eligible for the QDMTT Safe Harbour in a foreign jurisdiction:

• IIR regimes awarded transitional qualified status: Australia (based on draft law), Austria, Belgium, Bulgaria, Canada, Croatia, Czechia, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Korea, Liechtenstein, Luxembourg, Netherlands, Norway, Romania, Slovenia, Sweden, Türkiye, United Kingdom and Viet Nam.
• DMTT regimes awarded transitional qualified status and considered eligible for the QDMTT Safe Harbour: Australia (based on draft law), Austria, Barbados, Belgium, Bulgaria, Canada, Croatia, Czechia, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, Netherlands, Norway, Romania, Slovak Republic, Slovenia, Sweden, Switzerland, Türkiye, United Kingdom and Viet Nam.

It is further noted that a Conditional DMTT, i.e., a regime that only applies to a CE when the MNE Group is subject to the GloBE Rules in another jurisdiction can be recognized as qualified under certain circumstances, including that the DMTT will not be conditional in any other year. This is the case for Barbados, where the regime has been recognized as qualified based on the understanding that the DMTT is conditional for 2024 only.

According to the supplementary Q&A document, the central record will be updated on a regular basis and the fact that a jurisdiction is not included in the list does not mean that its legislation is not qualified, but rather that the process has not yet been initiated or completed for that legislation. The transitional qualified status of an implementing jurisdiction’s legislation will end once the full legislative review is completed. According to the Q&A document, the full legislative review is expected to start no later than two years after the effective date of the legislation. Importantly, the document clarifies that if a jurisdiction loses its qualified status (e.g., following the full legislative review), the effect will not apply retrospectively, thus providing additional certainty to MNE Groups.

For more information on the transitional self-assessment peer review process, please refer to E-News Issue 197.

Release of revised GloBE Information Return outline and related materials (Pillar Two)

On January 15, 2025, the IF on BEPS further released a revised standardized template of the GloBE Information Return (GIR) with accompanying explanatory notes and additional AG on Article 8.1.4 and 8.1.5 of the GloBE Model Rules.

Key takeaways include:

• Data points required: the GIR template outlines and describes the standard set of data points required to complete the GIR and updates the initial version published in July 2023 (see previous KPMG coverage in E-News Issue 181). Compared to the version released in July 2023, the GIR template provides further clarifications and takes into account new AG released in December 2023 and June 2024.
• Relevant legal basis for GIR completion: The accompanying AG clarifies that the GIR will be completed based on a single data source, which in principle should be the GloBE Model Rules and Commentary (as amended by any AG). An exception applies where only a single jurisdiction has taxing rights under the GloBE Rules in respect of a specific jurisdiction or subgroup and where the QDMTT Safe Harbour applies (and the switch off rule does not apply). In these scenarios, an MNE Group will be required to prepare the relevant jurisdictional sections of the GIR based on the relevant jurisdiction’s domestic law. Where more than one jurisdiction has taxing rights over another jurisdiction (e.g., in scenarios where the UTPR applies) the MNE Group will be required to determine whether a jurisdiction’s domestic law diverges from the GloBE Model Rules and Commentary and, where there are differences, to report a series of additional data points under a jurisdiction’s domestic legislation.
• Information on jurisdictions with no taxing right: The explanatory notes to the GIR template clarify that MNE Groups will not be required to complete the GIR for jurisdictions where no jurisdiction has a taxing right.

In addition, the IF on BEPS released two related materials:

• the GIR Multilateral Competent Authority Agreement, which will provide a framework for jurisdictions that are signatories to the Convention on Mutual Administrative Assistance in Tax Matters to automatically exchange the GIR; and
• the GIR XML Schema and User Guide for Tax Administrations, which has been designed to facilitate the exchanges of GIR information between tax administrations but can also be used for domestic GIR filings where permitted by tax administrations. 

For more information, please refer to a report prepared by KPMG International.

Pillar One update statement

On January 13, 2025, the Co-Chairs of the IF on BEPS released an update on the status of the Pillar One negotiations. Key takeaways include:

• Amount A: According to the release, the revised Multilateral Convention (MLC) text was presented to the IF for approval. Members were informed that agreeing to adopt the final text does not obligate them to sign it. Only one member opposed the adoption of the text, citing the lack of consensus on the Amount B and another member's reservation about signing the MLC text. The text has remained unchanged since then, with negotiations focusing on resolving the outstanding issues related to Amount B.
• Amount B: The release indicates that substantial work has been done on the detailed parameters of the Amount B Framework, with only a few unresolved issues among certain jurisdictions. According to the release, discussions on a number of pending issues are well advanced and are now focusing on procedural questions and the precise wording of tests. However, the release also indicates that there remain concerns that the pricing matrix delivers inappropriate outcomes for taxpayers performing baseline marketing and distribution activities in their respective jurisdictions. The release notes that various solutions have been proposed to reconcile the differing positions of IF members. This includes a solution to limit the application of Amount B to distributors with revenues below a certain threshold, with an alternative fast-track early certainty mechanism for those above it. According to the release, a universally supported path forward has yet to be found, and efforts continue to address outstanding concerns as part of a consensus-driven solution.

For more information on Pillar One, please refer to Euro Tax Flash Issue 553.

Peer review report on the exchange of information on tax rulings (BEPS Action 5)

On December 16, 2024, the OECD issued the 2023 peer review report on compliance of Inclusive Framework members with the exchange of information on tax rulings under the BEPS Action 5 minimum standard.

The review covered 136 jurisdictions and included the following key findings:

• 104 jurisdictions are considered to fully comply with the standard;
• 32 jurisdictions received a total of 56 recommendations “to improve their legal or operational framework to identify the relevant tax rulings and exchange information”;
• over 26,000 tax rulings in scope of the transparency framework have been identified between 2010 and end of 2023, over 1,900 tax rulings being issued in 2023;
• more than 58,000 exchanges of information took place between 2010 and end of 2023, with approximately 4,000 exchanges undertaken in 2023.

For more information, please refer to the OECD press release.

Update on the BEPS MLI

On January 8, 2025, Kenya deposited its instrument of ratification for the Multilateral Instrument (MLI), which will enter into force on May 1, 2025, for Kenya.

Based on the overview of signatories and parties to the MLI (dated January 10, 2025), 104 jurisdictions have signed the MLI out of which 88 jurisdictions have either ratified, accepted, or approved the MLI.

For more details, please refer to the OECD’s press release. 

Local Law and Regulations

Guidance on new controlled foreign company rules published

On December 13, 2024, the Belgian tax authorities published two circular letters (Circular 2024/C/82 and 2024/C/83), clarifying certain elements of their controlled foreign company (CFC) rules. In 2023, Belgium amended its CFC rules to change from model B (transactional approach) to model A (categorical approach – passive income) under the EU Anti-Tax Avoidance Directive (ATAD). As such, whilst the previous regime only targeted income derived from non-genuine arrangements put in place for the essential purpose of obtaining a tax advantage, the new regime focuses on the taxation of non-distributed passive income of low-taxed entities. For our previous coverage, please refer to E-News Issue 189.

To qualify as a CFC, the foreign entity must either not be subject to income tax or be subject to an income tax rate that is less than half of the corporate income tax that would apply if the foreign entity were a Belgian tax resident The circular letters provide further guidance on the taxation condition, such as the accounting standard to be used, and the treatment of permanent differences and previous losses. It is also clarified that a DMTT levied in the country of the foreign entity cannot be considered as an income tax when determining if the taxation condition has been fulfilled.

Moreover, the circular letters provide further guidance on the application or conditions of the safe harbor for economic activity (e.g., safe harbor for performance of substantial economic activity), including when intra group services may qualify as economic activity and under what conditions holding companies are deemed to be part of an economic activity.

For more information, please refer to a report prepared by KPMG in Belgium.

Changes to various automatic exchange of information rules (DAC6 and DAC7)

On December 31, 2024, Belgium enacted a bill including changes to the existing rules providing for the automatic exchange of information (DAC6 and DAC7) and introducing a data protection provision. The rules are effective as from January 1, 2025.

Key changes include:

• DAC7: Reporting platform operators will be required to notify each relevant individual that their data will be collected and reported. Additionally, operators must share the relevant data with each reportable seller by January 10 following the reporting period (the previous deadline was January 31). The retention period for data of excluded sellers is extended from three to ten years. Furthermore, the new rules establish guarantee requirements for platform operators whose registration is revoked in Belgium or another Member State.
• Penalties under DAC6 and DAC7: The penalty regime for DAC6 and DAC7 is updated to consider situations where non-compliance is “independent of will”. The new rules state that a penalty “can” be imposed, suggesting that penalties are discretionary in cases of unintentional non-compliance.
• Protection of personal data: For the purposes of information exchange under the DAC, the new rules outline the responsibilities for the Belgian authorities in the event of a data breach, including notifying the European Commission, potentially suspending the exchange of information, and resolving the breach. Reporting financial institutions, intermediaries, reporting platform operators, and the Belgian competent authority are considered controllers subject to these conditions.

For more information, please refer to a report prepared by KPMG in Belgium. 

Guidance on the reformed investment deduction published

On December 30, 2024, the Belgian Ministry of Finance published a Decree outlining the administrative requirements for claiming the reformed investment deduction. The Decree specifies the necessary documents to be attached to the corporate income tax return and the additional administrative requirements that should be met to claim the deduction.

On December 31, 2024, the Belgian Ministry of Finance published a Royal Decree containing the lists of investments that qualify for, or are excluded from, the new investment deduction regime.

For previous coverage on the reformed investment deduction, please refer to E-News Issue 195. For more information, please refer to a report prepared by KPMG in Belgium.

Minimum taxation rules (under Pillar Two) enacted

On December 18, 2024, legislation implementing the EU Minimum Tax Directive was published in the Official Gazette of Cyprus. The legislation largely aligns with the provisions of the Directive and introduces the IIR for financial years starting on or after December 31, 2023, whereas a DMTT and UTPR are introduced for financial years starting on or after December 31, 2024.

Key takeaways include:

• DMTT: the DMTT generally follows the regular GloBE rules for calculating the ETR and Top-up Tax liability. The law requires the DMTT to be determined based on information from financial statements prepared in accordance with the Ultimate Parent Entity’s Financial Accounting Standard. Alternatively, DMTT may be based on information from another acceptable or authorized financial accounting standard that is permitted by the authorized accounting body and is adjusted to prevent any material competitive distortions and not based on the one that is used in the consolidated financial statements.
• Safe Harbour provisions: the law provides for a placeholder with reference to Article 32 on Safe Harbours in the EU Minimum Tax Directive. Based on a government announcement in July 2024, Article 32 is considered to include the transitional CbyC Reporting Safe Harbour, the transitional UTPR Safe Harbour, the QDMTT Safe Harbour, and the permanent Simplified Calculation Safe Harbour for non-material constituent entities (for previous coverage, please refer to E-News Issue 199). Further information is expected to be published through a Ministerial Decree.
• Registration: Local Constituent Entities are required to register with the Tax Commissioner within 15 months after the end of the reporting fiscal year (18 months for the transitional year).
• Filing requirements: The law provides for several filing requirements. The GIR would need to be filed within 15 months after the end of the reporting fiscal year (with an exception for the first year where the deadline is 18 months after the end of the first reporting fiscal year). If a GIR is filed by a foreign Constituent Entity, a notification must be filed within the same deadline. Additionally, the law requires the filing of a local self-assessment tax return within 30 days after the due date for filing the GIR.

Cyprus is one of the countries that has failed to transpose the EU Minimum Tax Directive into domestic legislation by December 31, 2023. Therefore, Cyprus, together with Poland, Portugal, and Spain were referred by the European Commission to the CJEU on October 3, 2024. For previous coverage, please refer to E-News Issue 201.

The EU Public Country-by-Country Reporting Directive implemented

On December 6, 2024, Cyprus published a Decree implementing the EU Public Country-by-Country (CbyC) Reporting Directive (the Directive) into domestic law. Key takeaways include:

• The provisions of the Cypriot bill are largely aligned with the text of the Directive.
• Cyprus adopted the “safeguard clause,” which allows in-scope groups to temporarily omit information for up to five years if disclosing it would cause significant competitive disadvantage to the companies concerned, provided they can justify the omission.
• Cyprus opted for the website publication exemption, which exempts companies from publishing the report on their own websites, if the report is already made publicly available to any third party in the EU, free of charge, on the website of the Cypriot commercial register.

The new provisions apply to financial years beginning on or after June 22, 2024.

For more information on public CbyC reporting, please refer to KPMG’s EU Tax Centre dedicated webpage.

Bill on various tax amendments published

On December 30, 2024, Denmark published in the Official Gazette a law to amend the corporate tax act and various other tax acts.

Key measures from a direct tax perspective include:

• Dividend tax exemption: From January 1, 2025, dividends are tax exempt if they relate to unlisted portfolio shares (i.e., shareholdings below 10 percent).
• Increased loss carry-forward: Tax losses carried forward are deductible up to DKK 20.8 million (approximately EUR 2.8 million) in 2025. This represents an increase from the previous DKK 9.8 million (approximately EUR 1.3 million).
• R&D tax credits: The limit for tax refunds on losses resulting from R&D expenses will increase from DKK 25 million (approximately EUR 3.35 million) to DKK 35 in 2027 (approximately EUR 4.7 million).

Previously, on December 10, 2024, an act abolishing the possibility of immediate depreciation of computer software, know-how and patent rights and increasing the deduction for expenses for experimental and research activities was also published in the Official Gazette.

The measures generally apply from January 1, 2025.

For more details, please refer our previous coverage in E-News Issue 202 and a report prepared by KPMG in Denmark.

Defense tax act enacted

On December 11, 2024, the Estonian Parliament approved the defense tax act, aimed at raising additional revenues to finance Estonia’s defense spending. The act was published in the Official Gazette on January 2, 2025.

The bill includes a temporary corporate tax at a rate of two percent levied on Estonian tax resident companies and permanent establishments in Estonia of non-resident companies.  For our previous coverage on the defense tax act, please refer to E-News Issue 203.

Besides the defense tax package, please note that as from January 2025, the corporate tax rate in Estonia will be increased from 20 percent to 22 percent (i.e., corporate tax in relation to distributed profits). In addition, the reduced corporate income tax rate of 14 percent on regularly distributed corporate profits and the related 7 percent withholding tax on dividends paid to individuals will be abolished. For more information, please refer to E-News Issue 179. 

Amendments to Pillar Two Legislation enacted

On December 19, 2024, the Finnish President ratified the law amending the Minimum Tax Act, which Pillar Two into Finnish law. The amendments apply retroactively to financial years beginning on or after January 1, 2024.

Key highlights include:

• Safe Harbours: The amended law introduces the UTPR Safe Harbor, the simplified calculation Safe Harbour for non-material Constituent Entities, as well as the amendments to the transitional CbyC Reporting Safe Harbour to incorporate the OECD December 2023 Administrative Guidance (including anti-hybrid arbitrage rules that would apply to transactions entered into after December 18, 2023). The law also amends the QDMTT Safe Harbour to align it with the OECD July 2023 Administrative Guidance.
• Transitional Penalty Relief: The transitional penalty relief, as provided for in the GloBE Implementation Framework released in December 2022, is introduced. According to the amended law, no penalties are imposed during the transitional period, if the Constituent Entity has made a diligent effort to understand the content of the rules and to comply with them in good faith.
• OECD Administrative Guidance: The amended law also introduces several other aspects from the OECD Administrative Guidance, such as the provisions related to the substance-based income exclusion as included in the OECD July 2023 Administrative Guidance.

For previous coverage, please refer to E-News Issue 200.

Final guidance on anti-hybrid mismatch rules published

On December 5, 2024, the German Ministry of Finance published the final guidance on the application of the German anti-hybrid rules (sec. 4k German income tax act (EStG)) based on the EU Anti-Tax Avoidance Directive (the ATAD).

The anti-hybrid rules provide for a denial of the deduction of business expenses (incurred after December 31, 2019) in the context of a hybrid mismatch. The rules only apply to cases where individuals or entities are related (e.g., ownership requirement of at least 25 percent or dealings between permanent establishments and their respective head offices).

Key elements of the guidance include:

• Definition of “tax mismatches”: tax mismatches are defined as situations where deductions are recognized in two jurisdictions (double deduction) or a deduction is recognized in one jurisdiction with simultaneous non-taxation in the other state (deduction/non-inclusion).
• Denial of deduction: the guidance clarifies various situations where deductions are denied. The regulation differentiates between several situations of hybrid mismatches, including interest expenses from hybrid financial instruments with corresponding earnings recognized as tax-free equity income. Same applies if the corresponding earnings are not recognized in any other jurisdiction because of a tax allocation deviating from the German allocation, or in cases of imported mismatches, where tax mismatches occur outside of Germany, but are imported through a German intragroup payment.
• Exceptions: the guidance clarifies several exceptions to the denial of deduction. Among others, if non-taxation or low taxation of the income corresponding to the expenses is due to causes outside the scope of sec. 4k EStG (e.g., personal tax exemption of the creditor), the denial of deductions does not apply. Similarly, if the earnings related to the expenses are included in controlled foreign corporation (CFC) taxation, no deduction denial is necessary.
• Other: the guidance also addresses the burden of proof for taxpayers and establishes the priority of anti-hybrid rules in relation to other deduction limitation regulations.

Updated list of non-cooperative jurisdictions

On December 30, 2024, a decree was published in the German Official Gazette to update the list of non-cooperative jurisdictions for the purposes of the German law to combat tax avoidance and unfair tax competition.

The update is in line with the conclusions adopted by the Council of the EU on October 8, 2024 (see E-News Issue 201). The updated list now includes the following eleven jurisdictions: Anguilla, American Samoa, Fiji, Guam, Palau, Panama, the Russian Federation, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.

For more details on the EU listing exercise, please refer to KPMG’s summary of defensive measures applied by EU Member States against non-cooperative jurisdictions.

Pillar Two legislation enacted

On December 23, 2024, Gibraltar enacted the Global Minimum Tax Act 2024. The final law introduces a DMTT that applies to MNE groups and domestic groups meeting the revenue threshold for financial years starting on or after December 31, 2023, and an IIR that applies for financial years starting on or after December 31, 2024.

For previous coverages, please refer to E-News Issue 204

Tax reform bill enacted

On December 5, 2024, Greece published in the Official Gazette Law 5162/2024, which includes measures to support business reorganizations/transformations, tax incentives in relation to R&D and start-ups, and new participation exemption rules. The measures generally apply from January 1, 2025.

For more details, please refer to a report prepared by KPMG in Greece and our previous coverage in E-News Issue 203.

Update of Greek list of non-cooperative jurisdictions

On January 4, 2025, the Greek Public Revenue Authority published a decision prescribing its list of non-cooperative jurisdictions for 2023. Compared to the previous list, i.e., valid for 2022, the Greek government decided to add Belize, Fiji, Sierra Leone, Zambia, and Zimbabwe, and to remove Sint Maarten.

As a result, the 2023 list includes the following jurisdictions: Algeria, Angola, Anguilla, Antigua and Barbuda, Belarus, Belize, Benin (until May 1, 2023), Botswana, British Virgin Islands, Burkina Faso (until April 1, 2023), Cambodia, Chad, Congo (Republic of), Djibouti, Dominica, Fiji, Gabon, Ghana, Guatemala, Guinea, Guyana, Haiti, Honduras, Ivory Coast (Cote d' Ivoire), Kazakhstan, Lesotho, Liberia, Madagascar, Mali, Nicaragua, Niger, Palau, Panama, Papua New Guinea (until December 1, 2023), Philippines, Seychelles, Sierra Leone, Tanzania, Togo, Trinidad and Tobago, Vanuatu, Vietnam (until December 1, 2023), Zambia, and Zimbabwe.

Under Greek law, payments to tax residents of non-cooperative jurisdictions or tax residents of jurisdictions with a preferential tax regime are not deductible for tax purposes. Exceptions apply where the taxpayer can prove that these expenses relate to actual and usual transactions that do not result in tax avoidance.

For more details on the EU listing exercise, please refer to KPMG’s summary of defensive measures applied by EU Member States against non-cooperative jurisdictions.

Decree to amend and terminate extra-profit taxes

On November 21, 2024, the Hungarian Government issued a decree amending previous guidance on extra profit taxes. For our previous coverage, please refer to E-News Issue 179.

Key changes include:

• Financial institutions: Financial institutions will continue to be subject to the extra-profit tax in 2025. The 2025 tax base will start with the pre-tax profit recognized in the 2023 financial statements, with certain adjustments, e.g. dividends received in 2023 to decrease the tax base and financial transaction tax included in the pre-tax base to increase the tax base. In 2025, the tax rate will be 7 percent on the tax base up to HUF 20 billion (approximately EUR 48 million) and 18 percent on amounts exceeding this threshold. The decree also includes provisions for tax liability reduction in the case of purchasing government bonds.
• Insurance companies: The additional insurance premium tax is extended to 2025. For the part of the tax base not exceeding HUF 48 billion (approximately EUR 116 million), the tax rate is 3 percent for non-life insurance premiums and 2 percent for life insurance premiums. The part of the tax base exceeding HUF 48 billion (approximately EUR 116 million) will be taxed at a rate of 14 percent for non-life insurance premiums and 6 percent for life insurance premiums. Insurance companies must determine, pay and declare the surtax in two instalments by January 31 and July 31, 2026. Furthermore, the insurance premium tax advance will be due by December 10, 2025. Similar to the financial institutions extra profit tax, the tax liability can be reduced by purchasing government bonds.
• Energy suppliers: The income tax rate (the so-called Robin Hood tax) for energy suppliers remains 41 percent in 2025.
• Retail tax: The regulations from 2024 are extended to 2025. Retailers operating in Hungary are subject to a progressive retail tax on gross revenues derived from retail sales. When calculating the tax base, the turnover of associated companies must be added-up. The Commission had decided to start an Infringement Procedures on the retail tax – see E-News Issue 201.

Several special and extra profit taxes will be phased out as of January 1, 2025, including the taxes on: net sales revenue of petroleum product suppliers’, renewable energy producers and balancing control capacity; pharmaceutical manufacturer's (extra profit tax and special tax) and distributor's; manufacturers in the processing industry (Robin Hood tax); telecommunications; airlines; the extra mining fee; and the utility tax.

For more details, please also refer to a report prepared by KPMG in Hungary.

Various guidance on measures introduced by Finance Act 2024 published

The Irish Revenue published several e-Briefs on updates to tax and duty manuals and other guidance regarding amendments introduced by the Finance Act 2024. Among others, updates have been made to the following eBriefs:

• Guidance on interest limitation (eBrief 292/24): the updated document provides additional guidance on the interaction of the interest limitation rule with leasing transactions and on the long-term public infrastructure project exemption.
• Corporation tax relief for new start-up companies (eBrief 311/24): new and updated examples and information on the tax relief have been included, and the content has been restructured for easier reading.
• Global minimum level of taxation for multinational enterprise groups and large-scale domestic groups (eBrief 322/24): the update reflects certain amendments related to the administration of Pillar Two and provides guidance on the operation of Pillar Two.

For our previous coverage on the Finance Act 2024, please refer to E-News Issue 204.

Updated guidance on the anti-hybrid rules published

On December 10, 2024, the Irish Revenue published eBrief 303/2024 which includes updated guidance on the anti-hybrid rules. The new guidance provides additional clarifications on the relationship between the anti-hybrid rules under the EU ATAD2 and the OECD BEPS rules on hybrid mismatches. Key changes include:

• A clarification that the purpose of the Irish anti-hybrid rules implementing the ATAD is to prevent tax advantages arising from mismatches due to a different tax treatment of an instrument or entity by different jurisdictions, and not due to the status of the payee or the application of special tax regimes. The guidance further clarifies that the OECD guidance on hybrid mismatches should not be used to disapply the Irish ATAD2 provisions but can offer guidance on their application.
• New definitions are added for the terms ‘deduction’ and ‘structured arrangement’.
• Further guidance on loss-making branches with trapped losses.

New guidance on leasing ringfences published

On December 10, 2024, the Irish Revenue published eBrief No 307/24, which includes new guidance and examples on the application of the leasing ringfences. These ringfences aim to prevent the creation of tax benefits through leasing structures by restricting the use of excess capital allowances that arise from leased machinery and plant by a leasing company or group.

Budget Law for 2025 enacted

On December 30, 2024, Italy gazetted its State Budget Law for 2025 amending its digital services tax (DST) provisions and various other tax provisions. Key takeaways from a direct tax perspective include:

Expansion of digital service tax (DST)

Prior to 2025, the Italian DST applied to digital services provided by taxpayers that met the following conditions (individually or group-wide): (i) total worldwide revenues of at least EUR 750 million, and (ii) revenues from digital services earned in Italy of at least EUR 5.5 million. The DST was due on May 16 of the year following the one in which the taxable revenue was earned.

The Budget Law for 2025 introduced two significant amendments. Firstly, the national revenue threshold of EUR 5.5 million was eliminated. As a result, all multinationals with a worldwide revenue of at least EUR 750 million may be subject to DST on its revenue from digital services in Italy. Secondly, taxpayers are required to perform an advance payment by November 30 with respect to the tax year for which the DST is computed. The advance payment is to be computed as 30 percent of the previous year’s DST liability. The actual tax liability must be settled through a final statement by May 16 of the following year.

For more details, please also refer to a report prepared by KPMG in Italy.

Other measures include:

• reduced 20 percent corporate tax rate (currently 24 percent) for companies that reinvest at least 80 percent of their earnings into qualifying new assets, with at least 30 percent of that amount going towards advanced technologies and sustainable development.
• extended deduction of costs for new permanent hired personnel (from 120 percent to now 130 percent) to qualifying enterprises for 2025, 2026 and 2027.
• extension of the tax credits for investments made in the Special Economic Zone for Southern Italy (zona economica speciale unica, ZES unica) to fiscal year2025.
• extension of the tax credits for consultancy expenses incurred by SMEs to obtain a listing in qualifying regulated markets or multilateral trading facilities for fiscal years 2025, 2026 and 2027.

Ministerial decrees providing further clarifications on the application of the Italian Pillar Two rules

End of December, Italy published ministerial decree of December 20, 2024 and ministerial decree of December 27, 2024 in the Official Gazette. The two Ministerial Decrees provide clarifications on the application of the Italian Pillar Two rules:

• The first ministerial decree of December 20, 2024, incorporates clarifications provided in the OECD Commentary, and the OECD Administrative Guidance of February 2023, July 2023 and December 2023,  respectively, including guidance on sovereign wealth funds, the treatment of hedging instruments, the treatment of debt releases, currency conversion rules, and the transitional regime for the allocation of taxes arising under a blended CFC tax regime.
• The second ministerial decree of December 27, 2024 provides clarifications on the treatment of existing deferred tax attributes in the transition year and for calculating the effective tax rate.

Previously, Italy had published Ministerial Decrees on the application of the transitional CbyC Reporting Safe Harbour (see E-News Issue 196), the application of the QDMTT (see E-News Issue 198), and the application of the Substance Based Income Exclusion (see E-News Issue 202).

Guidance on documentation requirements for special penalty protection for hybrid mismatches

On December 6, 2024, the Italian Ministry of Economy and Finance issued a decree with regards to the documentation requirements for special penalty protection on hybrid mismatches. The regime allows taxpayers to avoid penalties arising from hybrid-mismatch disputes if they provide adequate documentation describing and supporting their positions.

The documentation must be prepared annually, structured according to the decree's regulations, written in Italian, and electronically signed before the corporate income tax return filing deadline. For fiscal years 2023 and 2024, this deadline aligns with the 2024 tax return filing. For earlier years, it must be prepared within six months of the decree's approval.

Taxpayers are required to indicate in their tax returns that the documentation has been prepared. If requested, the documentation must be submitted electronically within 20 working days.

For more information, please refer to a report by KPMG in Italy.

Decree published to implement DMTT

On December 30, 2024, Kuwait published Decree-Law 157 of 2024 implementing a 15 percent DMTT as from January 1, 2025. The DMTT closely follows the OECD Model Rules.

Key highlights include:

• Safe Harbour: The law includes the transitional CbyC Reporting Safe Harbour and a reference to the permanent Simplified Calculation Safe Harbour for Non-Material Constituent Entities.
• Registration: Taxpayers in scope are required to register with the tax administration within 120 days of becoming subject to the law. Changes to their activity or registration data, as well as deregistration (in case the group falls out of the scope of the rules) must also be notified within 120 days. For 2025, the registration deadline has been extended to September 30, 2025.
• Tax Return: Taxpayers must submit a tax return within 15 months of the end of the tax period.

Whilst the decree law covers the definition of the IIR, additional details on its application are expected to be clarified in future Executive Regulations, which are expected to be issued within six months.

For more information, please refer to a report by KPMG in Kuwait.

Amendments to tax laws published, including solidarity contribution for credit institutions

On December 19, 2024, Latvia published the 2025 Budget and related amendments to tax laws in the Official Gazette. Among others, these amendments introduce a temporary solidarity contribution for credit institutions, effective January 1, 2025.

For our previous coverage, please refer to E-News Issue 201.

Pillar Two amendments enacted

On December 23, 2024, the amended Pillar Two Law was published in the Official Gazette of Luxembourg. The amended law incorporates several elements from the OECD Administrative Guidance published in February 2023, July 2023, December 2023, and June 2024, respectively, and provides clarifications on certain technical aspects.

On the same day, Luxembourg also enacted the following two Grand-Ducal decrees:

• A Grand-Ducal decree outlining the rules regarding tax credits and qualified participations for the application of the Pillar Two law, in line with the OECD February 2023 and July 2023 Administrative Guidance.
• A Grand-Ducal decree establishing the rules on currency for DMTT purposes under the Pillar Two law, in line with the OECD July 2023 Administrative Guidance.

The amended Pillar Two law, as well as the Grand-Ducal decrees, will apply to financial years starting on or after December 31, 2023.

For more information, please refer to a June report and October report prepared by KPMG in Luxembourg.

New package of tax measures enters into force

On December 23 and December 24, 2024, Luxembourg published several new tax laws and related Grand-Ducal decrees in the Official Gazette. These new laws introduce a range of tax measures for both individual and corporate taxpayers and aim to modernize Luxembourg’s tax administration procedures.

Key highlights include:

• Reduction of the corporate income tax rate from 17 percent to 16 percent as from tax year 2025. The new aggregate tax rate (corporate income tax rate and municipal business tax rate) is now 23.87 percent (compared to the previous 24.94 percent rate).
• Amendments to the minimum net wealth tax to align the tax for all types of taxpayers, irrespective of the proportion of financial assets held.
• Clarification that the repurchase (or withdrawal) and cancellation of shares (including classes of shares) followed by the reduction of the share capital within a period of maximum six months qualifies as a partial liquidation, subject to conditions.
• Introduction of a waiver for the participation exemption regime as from tax year 2025 for income arising from certain participations.
• Technical amendment to the interest limitation rules to provide for the application of the existing so-called "equity escape clause" in the context of a single entity group.
• Exemption of actively managed UCITS ETFs from subscription tax.
• Modernization of certain direct tax administrative procedures.

Most measures are effective as from 2025. For more information, please refer to reports prepared by KPMG in Luxembourg on measures for corporate taxpayers and measures for individual taxpayers.

Tax Plan Package for 2025 enacted

On December 18, 2024, the Netherlands enacted the 2025 Tax Plan Package.

The 2025 Tax Plan Package includes the Minimum Taxation Act (Amendment) 2024, which includes changes to the DMTT to bring it in line with the OECD July 2023 Administrative Guidance to ensure that the DMTT receives qualified status under the OECD peer review. The bill further incorporates into law the remaining elements from the OECD Administrative Guidance from February 2023 and July 2023 and some elements from the December 2023 OECD Administrative guidance.

Moreover, as of January 1, 2025, the net borrowing costs of a taxpayer may be deducted up to the highest amount of either 24.5 percent of the fiscal EBITDA (instead of the earlier proposed 25 percent) or EUR 1 million.

As compared to the previous version, the proposed anti-fragmentation rule for real estate companies for the generic interest deduction limitation will not be introduced. The original 2025 Tax Plan included a proposal to exclude real estate companies from using the tax-exempt threshold of EUR 1 million, in order to prevent it being used more than once.

For previous coverage on the 2025 tax plan and the amendments to the minimum taxation rules under Pillar Two, please refer to E-News Issue 201.

For more information, please refer to a report prepared by KPMG in the Netherlands.

Evaluation of anti-avoidance measures and overview of international developments published

On December 11, 2024, the Dutch Deputy Minister of Finance send a letter (Dutch only) to the Lower House of the Parliament, which included an evaluation of anti-avoidance measures and an overview of international developments. Key updates are as follows:

• Effectiveness of anti-abuse measures: the Government's assessment indicates that several key anti-avoidance measures effectively reduce tax avoidance. These measures include the conditional withholding tax on dividends, interest and royalty payments to low-tax jurisdictions, the general interest deduction limitation rule, the anti-hybrid mismatch rules, and the limitation on the deductibility of losses upon cessation of business activities or liquidation. The letter notes, however, that the effectiveness of the CFC rules could not be determined due the prohibitive character of the rules. Additionally, it was not yet possible to evaluate the effectiveness of the rules addressing mismatches in the application of the arm's length principle.
• Pillar One: the government indicated that it will take measures to prevent or eliminate double taxation arising from the application of Amount B, rather than implementing Amount B into Dutch legislation.
• Unshell: the letter notes that the Netherlands supports the Unshell Directive proposal. If no agreement can be reached at EU level on a common set of substance requirements, the Netherlands might consider implementing certain anti-conduit company measures unilaterally.

Updated decree on participation exemption

On December 19, 2024, the updated Decree on participation exemption (Decree) was published in the Official Gazette of the Netherlands. One of the key amendments made to the Decree concerns the Dutch Supreme Court decision of October 25, 2024. In light of the Supreme Court’s findings, the paragraph of the decree stating that the scheme for participations falling below the five percent threshold does not apply in cases where a taxpayer holds an option right on shares that qualifies for the participation exemption has been abolished. For previous coverage on this case, please refer to E-News Issue 203.

For our previous coverage on the Decree on the participation exemption, please also refer to E-News Issue 201. 

Pillar Two law enacted

On January 3, 2025, the Law to introduce the Minimum Global Corporate Income Tax was published in the Official Gazette of North Macedonia. The law closely follows the EU Minimum Tax Directive and introduces a DMTT and IIR for fiscal years starting on or after January 1, 2024, and a UTPR for fiscal years starting on or after January 1, 2025.

Key takeaways include:

• DMTT: the DMTT should be calculated based on the general provisions of the law for calculation the top-up tax. The law also provides that the calculations should be based on IFRS accounts, or otherwise under a local accounting standard that has been adjusted for material competitive distortions. The calculation and collection of DMTT are to be clarified through separate ministerial regulations.
• Safe Harbours: The law includes a general reference to the Safe Harbours as developed by the OECD Inclusive Framework. In addition, the law also specifically states that groups may apply, upon election, the transitional CbyC Reporting Safe Harbour.
• Filing requirements: The law requires the submission of a GIR within 15 months after the end of the fiscal year (18 months for the transition year). An option is provided to transfer the obligation to file the GIR to another Constituent Entity (along with the requirement to indicate the identity of the foreign Entity that is filing the GIR and the jurisdiction in which it is located). Such notification must be filed within the same deadline as for the GIR. Additionally, local tax returns must be filed covering the top-up tax liability under the IIR and UTPR as well as the DMTT liability due by local Constituent Entities. The deadline for the IIR and UTPR return is within 30 days from the deadline for filing the GIR, while the deadline for the DMTT return is the same as that for the GIR.

For more information, please refer to a report prepared by KPMG in North Macedonia.

Budget Bill for 2025 enacted

On December 31, 2024, the 2025 Budget Law was published in the Portuguese Official Gazette.

This includes reductions in applicable corporate income tax rates as well as amendments to the Portuguese equity allowance and increased deduction for employment costs.

For more information, please refer to E-News Issue 202.  

Clarifications on the reporting form for public CbyC disclosures

On December 13, 2024, the Romanian Ministry of Finance issued a press release with regards to the reporting template to be used for public CbyC disclosures.  

The European Commission had previously published in the Official Journal the final implementing regulation providing the common template and electronic reporting formats for the application of the EU Public CbyC Reporting Directive (the Regulation). However, the reporting forms are only applicable for CbyC reports prepared for financial years starting on or after January 1, 2025. Romania has nevertheless opted for early implementation of the EU Public CbyC Reporting Directive, with effect from financial years starting on or after January 1, 2023.

In this context, the Romanian Ministry of Finance clarified that until the Regulation becomes applicable, entities that are subject to public CbyC requirements in Romania can report based on either one of:

• the reporting format and instructions used for non-public CbyC reporting; or
• the template and formats introduced through the Regulation; or
• any other format, provided that all required information under the EU Public CbyC Reporting Directive is disclosed.

For more information on public CbyC reporting, please refer to KPMG’s EU Tax Centre dedicated webpage.

Proposal to extend solidarity contribution on surplus profits through 2025 withdrawn

On December 12, 2024, the proposal to extend the law on the solidarity contribution for the oil, gas, coal, and refinery industries by one year was withdrawn. This law was initially adopted in accordance with the Regulation on Emergency Intervention to Address High Energy Prices (2022/1854).

For our previous coverage, please refer to E-news Issue 177.

Financial transaction tax introduced

On December 17, 2024, the bill amending the Slovakian Financial Transaction Tax Act was published in the Official Gazette.

Under the Financial Transaction Tax Act, legal entities, Slovak branches of foreign entities, self-employed individuals, and entrepreneurs are subject to a financial transaction tax. Banks and other financial institutions based in Slovakia, or those with branches in Slovakia, are generally responsible for collecting this tax. However, if taxpayers conduct transactions using foreign bank accounts or non-business accounts, they are required to collect and remit the tax themselves.

The tax base is the total value of each individual financial transaction or recharged expense. The applicable tax rates vary depending on the type of taxable transaction. Certain financial transactions are exempt from the tax, including payments of taxes and social security contributions, as well as various other specific financial operations.

Key amendments include:

• The inclusion of certain public benefit organizations among entities that are not be subject to that tax.
• Clarification and expansion of exemptions from the tax.
• Application of a maximum tax of EUR 40 per transaction, limited to recharged costs that the taxpayer can clearly attribute to individual transactions.
• Requirement to notify the tax collector if a person is not considered a taxpayer.
• Requirement to notify the tax collector of a designated account used exclusively for financial transactions that are exempt from the tax.

On December 27, 2024, the Slovakian tax authorities published guidance on the new financial transaction tax including frequently asked questions and clarifications on the “taxpayer" definition, transactions that are excluded from the tax, the tax calculation mechanism and compliance obligations.

For more information, please refer to a November report and December report prepared by KPMG in Slovakia.

The EU Public Country-by-Country Reporting Directive implemented

On December 3, 2024, Slovenia published a Decree implementing the EU Public CbyC Reporting Directive (the Directive) into domestic law. Key takeaways include:

• The provisions of the Slovenian bill are largely aligned with the text of the Directive.
• Slovenia adopted the “safeguard clause,” which allows in-scope groups to temporarily omit information for up to five years if disclosing it would cause significant competitive disadvantage to the companies concerned, provided they can justify the omission.
• Slovenia opted for the website publication exemption, which exempts companies from publishing the report on their own websites, if the report is already made publicly available to any third party in the EU, free of charge, on the website of the Slovenian commercial register.
• A requirement to translate the public CbyC reports into the Slovenian language.
• Entities in scope will have to submit the report to the Slovenian commercial register within 11 months as of the balance sheet date. The commercial register will then have one month to make the report available to the public.

The new provisions apply to financial years beginning on or after June 22, 2024.

For more information on public CbyC reporting, please refer to KPMG’s EU Tax Centre dedicated webpage.

Pillar Two legislation enacted

On December 24, 2024, the Global Minimum Tax Act 2024 was published in the Official Gazette of South Africa. The law introduces a DMTT and IIR for fiscal years starting on or after January 1, 2025.

On January 9, 2025, the Global Minimum Tax Administration Act 2024 was published in the Official Gazette, providing for the administration of the new law.

For a previous coverage, please refer to E-News Issue 203.

Pillar Two law enacted

On December 21, 2024, legislation implementing the EU Minimum Tax Directive was published in the Spanish Official Gazette. The legislation largely aligns with the provisions of the Directive and introduces the IIR and a DMTT for financial years starting on or after December 31, 2023, and the UTPR for financial years starting on or after December 31, 2024.

For more information, please refer a report prepared by KPMG in Spain and E-News Issue 204.

Spain is one of the countries that has failed to transpose the EU Minimum Tax Directive into domestic legislation by December 31, 2023. Therefore, Spain, together with Cyprus, Poland, and Portugal, were referred by the European Commission to the CJEU on October 3, 2024. For previous coverage, please refer to E-News Issue 201.

Amendments to Swedish Top-up Tax Act enacted

On December 11, 2024, amendments to the Swedish Top-up Tax Act (which implemented the EU Minimum tax Directive into Swedish law) were published in the Official Gazette.

Key takeaways include:

• Safe Harbours:  The amended law introduces the UTPR Safe Harbor, the simplified calculation Safe Harbour for non-material Constituent Entities, as well as the amendments to the transitional CbyC Reporting Safe Harbour to incorporate the OECD December 2023 Administrative Guidance (including anti-hybrid arbitrage rules that would apply to transactions entered into after December 15, 2022). The law also amends the QDMTT Safe Harbour to align it with the July 2023 OECD Administrative Guidance.
• OECD Administrative Guidance: The amended law also introduces several other provisions from the February 2023, July 2023, and December 2023 OECD Administrative Guidance, such as the provisions related to blended CFC regimes, treatment of marketable transferrable tax credits, and the election to include portfolio shareholding income.

The amendments entered into effect on January 1, 2025. However, there is a possibility for groups to elect to apply the amendments retroactively for fiscal years starting on or after December 31, 2023.

For previous coverage, please refer to E-News Issue 200.

Ministry of Finance announces plans to introduce a DMTT and tax incentives

On December 9, 2024, the UAE Ministry of Finance announced plans to introduce a 15 percent DMTT on multinational enterprise groups with consolidated group revenues of EUR 750 million or more in at least two of the four preceding financial years. According to the release, the DMTT is applicable for financial years starting on or after January 1, 2025.

The Ministry of Finance further announced plans to incorporate into its new 9 percent corporate tax system (applicable with respect to tax periods commencing on or after June 1, 2023) a new package of tax incentives. According to the Ministry’s release, this would include a tax credit of 30 percent to 50 percent of qualifying R&D expenditures. The R&D tax credit would apply to fiscal years starting on or after January 1, 2026, and would be refundable depending on the revenue and number of employees of the business in the UAE. Furthermore, the UAE is considering the introduction of a refundable tax credit linked to high-value employment activities. This would be available from January 1, 2025, and would be provided as a percentage of eligible salary costs for employees that have high-value positions.

Local courts

Supreme Administrative Court rules winter car testing activities do not lead to a permanent establishment

On November 25, 2024, the Swedish Supreme Administrative Court upheld the decision of the Administrative Court of Appeal, denying the Swedish tax authorities' appeal (KRS 4140-23, dated April 12, 2024). The Administrative Court of Appeal had held that winter car testing activities in Sweden do not create a permanent establishment (PE).

The case concerned a non-resident company (the Plaintiff), which conducted winter car testing activities in Sweden for several years. The Swedish tax authority argued that these activities lead to a permanent establishment of the Plaintiff in Sweden and consequently to a corporate income tax liability in Sweden. 

The Administrative Court of Appeal had previously agreed that the Plaintiff has a fixed place of business in Sweden but noted that in order for a PE to exist, the taxpayer's core business must be conducted from that location. In that regard, the court noted that the Plaintiff’s core business is to develop, produce, and distribute cars, whilst its activities in Sweden are mainly limited to testing and collecting data from these tests. The data is then sent to the Plaintiff’s headquarters for further analysis and product development. Some adjustments of software and hardware are carried out in Sweden to optimize the testing, but the test objects include prototypes and pre-series cars that are several years from production. The court also noted that the car testing in winter conditions is also carried out in other countries. Furthermore, the Swedish operations only form a small part of the Plaintiff's resources for research and development.

Based on the above, the Administrative Court of Appeal found that the testing activities are of limited significance for the Plaintiff’s overall operations. Therefore, in the court’s view, the testing activities do not constitute core activities but are rather considered activities of a preparatory or auxiliary nature. Based on these findings, the Administrative Court of Appeal held that the testing activities do not lead to a permanent establishment, and that the Plaintiff should not be subject to corporate income tax in Sweden.

The Plaintiff was assisted by KPMG. For more information, please refer to a report prepared by KPMG in Sweden. 

EU Tax Perspectives webcast – December 10, 2024

On December 10, 2024, a panel of KPMG professionals took a deep dive into the state of play on EU direct tax initiatives, discussed what can be expected from the next Commission and explored future trends in global direct tax policy.

The session focused on:

• BEPS 2.0 in the EU: state of play on the implementation of the EU Minimum Tax Directive (Pillar Two, practical issues such as registration requirements, proposal for exchange of Pillar Two information between EU Member States (DAC9),
• Incentives: The impact of Pillar Two on incentives and recent country developments,
• Tax transparency: EU public country-by-country reporting forms, practical insights on upcoming publishing deadline for MNEs present in Romania, and trends and best practices in tax transparency,
• State of play of key EU direct tax initiatives: the Withholding Tax Relief Framework (FASTER), the Unshell Directive proposal, BEFIT, the Transfer Pricing Directive, review of the Directive for Administrative Cooperation.

Please access the event page for a replay of the session.

The state of tax transparency in Europe

On December 2, 2024, the European Business Tax Forum (EBTF) published a study on The state of tax transparency in Europe. The report was prepared by the KPMG member firms in Europe. The report features:

• The results of a comprehensive benchmark analysis covering key European multinationals: conclusions and trends on qualitative and quantitative disclosures made by 185 European groups. This analysis was conducted using a set methodology developed based on the requirements of the GRI-207: Tax standard and covers tax disclosures for both 2022 and 2023. Sector-specific insights are provided for the energy & natural resources, financial services, consumer goods & retail, and industrial manufacturing sectors.
• Insights from the questionnaire: insights from a survey completed by 75 multinational groups representing 40 percent of the European groups included in the scope of the project. These insights relate to a number of topics, including the rationale behind the decision to report/ not to report comprehensively on tax, stakeholder reactions, the approach to the EU public country-by-country reporting and the role of tax under the Corporate Sustainably Reporting Directive (CSRD).
• Best practices: a collection of best practices gathered through the one-on-one interviews conducted with a selection of questionnaire respondents. These best practices represent key themes that emerged in multiple interviews and cover a range of topics, from how to build a culture of responsible tax behavior within the organization to how to approach the tax transparency journey and make use of tax transparency reports.

Please access the event page for a recording of the session.

Talking tax series

With tax-related issues rising up board level agendas and developing at pace, it’s more crucial than ever to stay informed of the developments and how they may impact your business.

With each new episode, KPMG Talking Tax delves into a specific topic of interest for tax leaders, breaking down complex concepts into insights you can use, all in under five minutes. Featuring Grant Wardell-Johnson, KPMG’s Global Head of Tax Policy, the bi-weekly releases are designed to keep you ahead of the curve, empowering you with the knowledge you need to make informed decisions in the ever-changing tax landscape.

Please access the dedicated KPMG webpage to explore a wide range of subjects to help you navigate the ever-evolving world of tax.