E-News from KPMG’s EU Tax Centre

• CJEU: General Court rules documents of the Code of Conduct Group not covered by general presumption of confidentiality
• OECD: List of signatories of the GIR MCAA updated
• Austria: Amendments to the Austrian Income Tax Act to increase investment allowance
• Belgium: Extension of QDMTT return filing deadline
• Belgium: Withholding tax exemption for certain royalty payments
• Italy: Guidance on local Pillar Two filing and payment requirements
• Liechtenstein: New Pillar Two registration requirement adopted
• Mauritius: Clarifications on application of QDMTT and related notification requirements
• Portugal: Gradual reduction in corporate income tax rates adopted
• South Africa (court decision): Court decision clarifying application of the South African general anti-avoidance rules
  

General Court rules documents of the Code of Conduct Group not covered by general presumption of confidentiality

On November 3, 2025, the General Court (the Court) published its judgment in case T-255/24 in the Official Journal of the EU. The Court annulled a decision of the Council of the European Union refusing access to certain documents of the Code of Conduct Group (Business Taxation) relating to the revision of the EU Code of Conduct.

The applicant had requested access to emails and documents exchanged between several Member States and the European Commission. The Council denied access on the basis of Article 4(1)(a) of Regulation (EC) No 1049/2001, citing protection of international relations and the financial, monetary, or economic policy of the Union and the Member States.

The General Court rejected the Council’s reasoning and held that no general presumption of confidentiality applies to documents of the Code of Conduct Group. The Court found that:

• The requested documents were not part of a file relating to ongoing administrative or judicial proceedings, and therefore could not automatically justify refusal of access.
• The Council had not demonstrated the existence of specific rules governing access to documents concerning the revision of the Code of Conduct capable of justifying a general presumption of confidentiality.
• The fact that the work of the Code of Conduct Group is confidential under Council conclusions cannot override the principle of public access to EU documents.

Nevertheless, the Court accepted that certain exceptions may apply, and partially upheld the Council’s refusal for specific passages of the documents where disclosure could:

• undermine the proper conduct of international relations, including negotiations with third countries;
• affect the EU’s position in international tax forums; or
• reveal sensitive elements of the financial, monetary, or economic policy of the Union or its Member States, particularly where Member State positions were not fully reflected in the final text adopted by the Code of Conduct Group.

The Court therefore ordered the Council to reconsider the access request, granting disclosure except for the limited passages where the identified exceptions apply.

List of signatories of the GIR MCAA updated

On November 5, 2025, the OECD updated the list of jurisdictions that have signed the GloBE Information Return Multilateral Competent Authority Agreement (GIR MCAA) to include Hungary, which signed the Agreement on October 31, 2025.

The list of 22 signatories now includes Austria, Belgium, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, South Korea, Liechtenstein, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Slovakia, South Africa, Spain, Switzerland and the UK.

For previous coverage on the GIR MCAA list of signatories, please refer to E-News Issue 219.

Amendments to the Austrian Income Tax Act to increase investment allowance

On November 3, 2025, an amendment to the Austrian Income Tax Act (ITA) was published in the Austrian Official Gazette, introducing an increase in the investment allowance for certain acquisition or production costs incurred after October 31, 2025, and before January 1, 2027.

According to Article 11 ITA, companies can claim a tax-deductible investment allowance for acquisition or production costs incurred with respect to certain depreciable assets. The amount of the investment allowance is determined at a specific rate of the acquisition or production costs. The investment allowance can be claimed for a maximum total acquisition or production costs of EUR 1,000,000 in the financial year.

Key amendments include:

• General rate: For eligible acquisition or production costs incurred within this period, the investment allowance is increased from 10 percent to 20 percent (i.e., maximum allowance of EUR 200,000).
• Green investments: For certain green investments, the allowance is increased from 15 percent to 22 percent (i.e., maximum allowance of EUR 220,000). Eligible investments include investments in assets to which the Austrian Environmental Promotion Act (UFG) applies or zero-emission vehicles.
• Timing Rules: If the acquisition or production of an asset spans more than one fiscal year and is completed after December 31, 2026, the increased allowance can only be claimed for those parts of the acquisition or production costs that are capitalized during the eligible period.
• Allocation flexibility: Costs incurred in November and December 2025 that exceed the proportional maximum amount of EUR 1,000,000 can be allocated either to earlier months of the fiscal year or to any month in 2026.

For more information, please refer to the dedicated webpage of the Austrian government.

Extension of QDMTT return filing deadline

On November 17, 2025, the Belgian tax administration announced an extension of the filing deadline for the Qualified Domestic Minimum Top-Up Tax (QDMTT) returns. As a reminder, the deadline for submitting the Belgian QDMTT return was initially 11 months after the end of the relevant fiscal year (i.e., November 30, 2025 for the fiscal year ending on December 31, 2024). According to the November 17, 2025, release, the filing deadline has been extended to June 30, 2026 with respect to fiscal years that begin on December 31, 2023 or later, and that end no earlier than January 1, 2024 and no later than June 30, 2025.

Note that the final QDMTT return template and the Belgian Tax Administration’s e-filing portal have not yet been made available for QDMTT return submissions.

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

Withholding tax exemption for certain royalty payments

On October 31, 2025, a Royal Decree was published in the Belgian Official Gazette exempting certain payments for the rental or leasing of movable property from withholding tax (WHT).

Under Belgian law, a 30 percent WHT generally applies to payments made for the leasing or rental of tangible assets. Exemptions apply when the beneficiary is a Belgian taxpayer, a supranational institution, or where the payment benefits from relief under the EU Interest and Royalties Directive (2003/49/EC) or a double tax treaty.

The Royal Decree introduces a domestic exemption from withholding tax on income from the rent, lease, use or concession of tangible movable property paid to a foreign company. The aim is to level the playing field for Belgian companies renting or leasing physical assets such as building material or industrial, commercial or scientific equipment on the international market. The exemption is subject to a number of conditions, including:

• The waiver applies only to tangible movable property (i.e., not to intellectual property).
• The payment must be made by a Belgian resident company or establishment for professional purposes to a foreign beneficiary as defined in Belgian income tax regulations.
• The transaction must be genuine, reflecting valid business reasons and economic reality (where the payment is made between related parties).
• If the recipient is in a jurisdiction with a significantly more advantageous tax regime, the waiver is only allowed if the effective income tax is at least half of the income tax that would be payable if that company was resident in Belgium.
• The debtor must complete a one-off certificate with details about the parties, the property, and the transaction; this must be updated if any information changes.

The Decree entered into force on the day following the publication in the Official Gazette.

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

Guidance on local Pillar Two filing and payment requirements

On November 7 and 10, 2025, respectively additional guidance on the content of the annual local Pillar Two returns and payment of Pillar Two top-up tax liability have been issued.

As a reminder, in addition to the GIR, the Italian Pillar Two rules require local group members to file a separate top-up tax return for Income Inclusion Rule (IIR) / Undertaxed Profits Rule (UTPR) / DMTT purposes within 15 months after the end of the Reporting Fiscal Year (18 months for the transitional year), i.e., same deadline as for the GIR. In addition, 90 percent of the top-up tax is payable within 11 months after the end of the financial year (i.e., by November 30, 2025 for calendar-year taxpayers) with the remaining payment to be made within 1 month of the deadline for filing the local top-up tax return.

Key takeaways from the guidance include:

• The guidance clarifies that no instalment payment is required within 11 months after the end of the fiscal year where the top-up tax amount is zero. However, according to the guidance, the local IIR/UTPR/DMTT return needs to be filed regardless of whether top-up tax liability arises (e.g., in cases where the transitional Country-by-Country Reporting Safe Harbour applies).
• In accordance with the OECD transitional penalty relief framework, administrative penalties will not be applied for fiscal years beginning on or before December 31, 2026 where groups fail to comply with the requirements for filing the Italian local top-up tax returns or paying the top-up tax due, except in cases of fraud or gross negligence. The regular administrative penalties for Italian corporate income tax purposes will be applicable in case of non-compliance after this date.
• The November 10 guidance further establishes specific tax codes that need to be included in the F24 Payment Form, alongside the top-up tax amount, the tax year and the instalment reference number.
• The content of the Italian local top-up tax return (including the relevant form) is yet to be published by the Italian tax authorities.

For previous coverage on Italian Pillar Two compliance obligations, please refer to E-News Issue 220.

New Pillar Two registration requirement adopted

On November 7, 2025, Liechtenstein’s Parliament approved Pillar Two amendments to introduce an additional registration requirement for Liechtenstein-based Constituent Entities that will submit the GIR. The deadline for this registration requirement is 15 months after the end of the fiscal year (18 months for the transition year). According to the release, Ultimate Parent Entities and Designated Filing Entities located in Liechtenstein need to comply with this registration requirement to have access to the online filing portal.

Note that this new registration requirement complements the one already in place. All local Constituent Entities and local Excluded Entities in Liechtenstein are still required to register within twelve months from the end of the fiscal year during which the group is subject to the GloBE Model Rules. According to the release, this already existing registration requirement serves to identify those local Constituent Entities that are subject to the Liechtenstein QDMTT and IIR top-up tax and are therefore required to file a local top-up tax return in Liechtenstein.

In addition, the amendments establish rules on the submission of the GIR and the exchange with other jurisdictions that have signed the GIR Multilateral Competent Authority Agreement (MCAA). Liechtenstein signed the GIR MCAA on September 29, 2025.

The amendments take effect from January 1, 2026.

For more information on Pillar Two implementation in Liechtenstein, please refer to E-News Issue 214.

Clarifications on application of QDMTT and related notification requirements

On October 29, 2025, the Mauritius Revenue Service issued a Communique providing clarifications on the application of the QDMTT and the QDMTT notification requirement in Mauritius. Key takeaways include:

• QDMTT application: The Communique clarifies that the QDMTT applies to a resident company forming part of an in-scope multinational enterprise group (MNE) with a fiscal year ending on or after January 1, 2025 (e.g., the DMTT would apply for the entire fiscal year April 1, 2024 to March 31, 2025). This is a shift from previous announcement where it was indicated that the DMTT would apply on income derived as from July 1, 2025, in the first year of assessment.
• QDMTT notification: Under Mauritius Pillar Two rules, local group members are required to notify the Mauritius Revenue Service of the identity of the designated local entity that is responsible for filing the DMTT return and for paying the tax due. The notification is generally to be submitted within six months following the end of the MNE Group’s fiscal year (e.g., by July 30, 2025 for a fiscal year that ends on January 31, 2024). However, the Communique notes that for notifications that have already been due, the deadline has been extended to November 30, 2025.

For previous coverage on the Pillar Two implementation in Mauritius, please refer to E-News Issue 216.

Gradual reduction in corporate income tax rates adopted

On November 7, 2025, Portugal’s Parliament approved a reduction in the statutory corporate income tax (CIT) rate from 20 percent to 17 percent through Law No. 64/2025. The CIT rate will be reduced in stages, as follows:

• 19 percent for tax periods starting in 2026,
• 18 percent for tax periods beginning in 2027, and
• 17 percent for tax periods that commence on or after January 1, 2028.

In the case of small or medium-sized enterprises or small-mid-cap companies, the CIT rate on the first EUR 50,000 of taxable income will be reduced from 16 percent to 15 percent, while a 17 percent rate will apply to income above that threshold, provided the company carries out agricultural, commercial, or industrial activities. The 15 percent rate will apply immediately to tax periods beginning on or after January 1, 2026. 

Updated tax rules for Derivative Financial Instruments and Alternative Investment Funds

On November 6, 2025, several changes to Slovenian tax laws were published in the Slovenian Official Gazette, including amendments affecting the taxation of Derivative Financial Instruments and Alternative Investment Funds (AIFs). Key takeaways include:

• Derivative Financial Instruments: The tax rate on profits from the disposal of derivative financial instruments is reduced from 27.5 percent to 25 percent. Previous exemptions and reduced rates for long-term holdings are removed, and new provisions clarify penalties for tax offenses.
• Alternative Investment Funds: The Corporate Income Tax Act now regulates the taxation of AIFs, introducing a zero percent tax rate for certain funds if they distribute at least 75 percent of the previous year’s profits by November 30. The zero percent tax regime excludes income from leasing and lending activities and is extended to include certain EU-regulated funds.

The amendments will enter into force on November 21, 2025, and apply from January 1, 2026.

HMRC updates CARF guidance on reporting obligations and penalties

On November 11, 2025, HM Revenue & Customs (HMRC) updated several sections of the International Exchange of Information Manual and of the Crypto-assets Manual relating to the implementation of the OECD Crypto-Asset Reporting Framework (CARF).

The guidance includes clarifications on due diligence obligations, reporting requirements and penalties. As a reminder, CARF obligations apply in the UK from January 1, 2026. The first reporting period will relate to the 2026 calendar year, with data due in May 2027. 

HMRC will exchange CARF information with partner jurisdictions under the UK’s international exchange agreements.

Court decision clarifying application of the South African general anti-avoidance rules

On September 30, 2025, the Tax Court of South Africa (the Court) issued a judgment that clarified the application of the domestic general anti-avoidance rules (GAAR). Under the South African income tax code, the South African Revenue Service (SARS) has broad discretionary powers in investigating transaction and determining the relevant tax consequences for each party to an ‘impermissible avoidance arrangement’¹. The SARS also generally bears the onus to prove the existence of an ‘impermissible avoidance arrangement’.

The case concerned a complex scheme in which distributable reserves and secondary tax on companies (STC) credits were generated and then “sold” to third-party investors. The plaintiff was involved in arranging the underlying transactions that formed part of the scheme and, in return, received tax-exempt dividends. The SARS challenged the tax treatment of the dividends received under the local GAAR and reclassified the dividends as taxable service fee income.

The Court rejected the plaintiff’s claim that no tax advantage could arise because no tax liability was expected prior to the agreement. Instead, the Court ruled that a tax advantage exists if a transaction results in avoidance, deferral, or reduction of tax liability compared to a reasonable alternative. The Court also clarified that determining the main purpose of an agreement is an objective test that considers all facts and circumstances, including the appellant’s subjective intent. In the case at hand, the Court held that the scheme’s main purpose was to receive tax-free dividends.

The Court also confirmed that a ‘tainted element’ must be present for a scheme to constitute an ‘impermissible avoidance arrangement’; the mere fact that a transaction is undertaken solely or primarily to obtain a tax benefit is not sufficient. The Court held that the scheme displayed both abnormality and non-arm’s-length characteristics, particularly given that it was implemented through journal entries and involved atypical rights between the taxpayer and other parties². Although only one tainted element is required, the Court further observed that the scheme lacked commercial substance for the taxpayer, as it generated a substantial tax benefit without materially affecting the taxpayer’s business risks or net cash flows.

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

EU Tax perspectives – November 26, 2025

European tax policy continues to evolve in response to a changing global policy and economic landscape. As policymakers continue to focus on simplification and competitiveness, businesses will be watching closely to understand the direction of EU tax reform and how it may impact them.

As the Cypriot presidency prepares to take office in January 2026, our upcoming EU Tax Perspectives discussion will bring together experts to consider key themes emerging across the EU tax agenda and what this could mean for multinational groups operating in Europe.

Join a panel of KPMG experts who will review the following developments and explore their potential implications for EU tax and international cooperation:

• The evolving direction of EU tax policy and the implications of the upcoming Cypriot presidency of the European Council.
• The European Commission’s agenda on tax simplification, competitiveness, and regulatory coherence.
• Insights on the tax aspects of the EU Savings and Investments Union (SIU).
• The future of BEPS 2.0 and cooperation on international tax frameworks.

Please access the event page to register. 

European financial services tax perspectives – October 22, 2025 (replay now available)

On October 22, 2025, a panel of KPMG professionals shared their insights on some of the latest EU proposals that are likely to affect (A) asset managers, banks and insurers. 

The European tax landscape is shifting fast and financial services institutions are feeling the impact. With BEP Pillar 2 implementation underway, firms are facing new challenges around global minimum taxation, substance requirements, and much more. At the same time, EU directives are reshaping compliance expectations, while local tax authorities ramp up enforcement. Add to that the growing focus transformation and digitalization it’s clear that tax leaders should be seeking to stay agile. 

KPMG tax specialists took a closer look at: 

• Regional landscape – with several governments across the region looking to set out their fiscal plans for the year ahead, what is the potential impact on future tax policy across financial services 
• EU Savings and Investment Union (SIU): the impact of the SIU and its strategies to boost retail investor participation across the EU. Key insights from Luxembourg, Ireland and the UK. 
• Beneficial ownership and substance: key insights from a recent KPMG survey on trends across the EU and the practice of local tax authorities. Spotlight on France, Ireland and Germany. 

The replay of the webcast is available on the event page. 

Key links

• Visit our website for earlier editions.