E-News from KPMG’s EU Tax Centre

• CJEU: CJEU asked to clarify compatibility of the Romanian solidarity contribution with EU Law
• Infringement procedures: Infringement procedures regarding EU Minimum Tax Directive transposition closed
• Council of the EU: December ECOFIN report on tax issues released
• Council of the EU: ECOFIN Council approves December 2025 Code of Conduct Group conclusion
• Croatia: Amendments to local Pillar Two rules adopted
• Czechia: Amendments to R&D allowance enacted
• France: Additional Pillar Two guidance published
• Poland: Amendments to the corporate income tax (CIT) for banks and CIT exemptions for investment funds
• Türkiye: Extension of QDMTT return filing deadline
• Spain (court decision): Supreme Court rulings on Spanish wealth tax cap for non-resident taxpayers

CJEU asked to clarify compatibility of the Romanian solidarity contribution with EU Law

On December 8, 2025, a request for a preliminary ruling concerning the compatibility of the Romanian solidarity contribution with EU law was published in the Official Journal of the EU (case C-588/25).

In 2022, Romania introduced a solidarity contribution applicable to companies operating in the oil, natural gas, coal, and refinery sectors. This measure was adopted in response to EU Regulation 2022/1854 (the Regulation) on an emergency intervention to address high energy prices – see E-News Issue 161. Under Romanian law, the solidarity contribution applied to companies carrying out activities classified under the EU Nomenclature of Economic Activities (NACE) codes 0610, 0620, 0510, 1910, and 1920, provided that such activities account for more than 75 percent of the company’s total turnover.

The plaintiff is a Romanian company engaged in the manufacturing of combustible briquettes from hard coal and lignite, an activity classified under the NACE code 1920. The plaintiff challenged the applicability of the solidarity contribution with respect to its operations on the grounds that its specific line of business is not expressly covered by the Regulation. Following several legal proceedings, the case was brought in front of the Court of Appeal in Craiova. The latter referred the following two questions to the Court of Justice of the European Union (CJEU): 

• whether the concept of “activities in the crude petroleum, natural gas, coal and refinery sectors” within the meaning of Article 14(1) of the Regulation includes the manufacturing of combustible briquettes from hard coal and lignite, as classified under NACE Code 1920;
• if the first question is answered in the affirmative, whether Article 14 of the Regulation precludes national legislation that imposes the solidarity contribution solely based on the NACE code, without assessing whether the taxpayer’s activity genuinely falls within the exceptional objectives pursued by the Regulation.

Infringement procedures regarding EU Minimum Tax Directive transposition closed

On December 11, 2025, the European Commission announced that it has closed infringement procedures against Spain, Cyprus, Portugal, Lithuania, Estonia, Greece, Poland and Latvia for failures to transpose Council Directive (EU) 2022/2523 (the EU Minimum Tax Directive) into legislation.

All EU Member States were required to bring into force the laws necessary to comply with the EU Minimum Tax Directive by December 31, 2023.

In January 2024, proceedings were initiated and targeted a total of nine Member States that had failed to fully or partially notify the Commission of national measures transposing the Directive into domestic legislation. The Commission subsequently initiated the second stage of the infringement procedure and sent reasoned opinions to Cyprus, Latvia, Lithuania, Poland, Portugal and Spain in May 2024. On October 3, 2024, the Commission had decided to refer Cyprus, Poland, Portugal and Spain to the CJEU for failing to notify the national measures to transpose the EU Minimum Tax Directive into domestic legislation – see E-News Issue 201.

For information on the current status of implementation of the EU Minimum Tax Directive into the national law of Member States, please refer to the KPMG BEPS 2.0 Tracker in Digital Gateway.

December 2025 ECOFIN report on tax issues released

On December 12, 2025, the Economic and Financial Affairs Council (ECOFIN) approved a report to the European Council in its final meeting under the Danish Presidency of the Council of the European Union. The report details progress made with respect to various tax-related initiatives during the second half of 2025.

Key takeaways from a direct tax perspective include:

• BEFIT Directive proposal: the report notes that discussions on the Directive proposal on a common EU corporate tax framework did not progress during the second half of 2025 due to prioritization of other tax initiatives.
• Tax decluttering and simplification: The report refers to the ECOFIN Council conclusions on a tax decluttering and simplification agenda, approved on March 11, 2025. The conclusions call for a review of existing legislation with the aim of reducing the reporting, administrative and compliance burdens for Member State administrations and taxpayers and eliminating outdated and overlapping rules. The conclusions further call for increasing the clarity of tax legislation and streamlining and improving the application of tax rules, procedures and reporting requirements. With reference to the Commission’s 2026 work program, the report notes that the Commission is expected to table a legislative proposal for an omnibus on taxation in the second quarter of 2026.
• Pending Directive proposals to be withdrawn: With reference to the Commission’s 2026 work program, the report also refers to the Commission’s decision to withdraw within 6 months the following proposals in the area of taxation:
  • Proposal for a Council Directive implementing enhanced cooperation in the area of financial transaction tax;
  • Proposal for a Council Directive laying down rules to prevent the misuse of shell entities for tax purposes (Unshell Directive proposal);
  • Proposal for a Council Directive on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes (DEBRA Directive proposal);
  • Proposal for a Council Directive on transfer pricing (Transfer Pricing Directive proposal).

With respect to the Unshell Directive proposal, the report refers to the Commission’s work on a recast of Directive 2011/16/EU on Administrative Cooperation (DAC) and the option being considered by the European Commission to include in the DAC recast reporting provisions to prevent the misuse of shell entities for tax purposes.

• Recommendations on tax incentives: The report refers to the ECOFIN Council conclusions on the European Commission recommendations regarding tax incentives (e.g., accelerated depreciation and tax credits) to support the Clean Industrial Deal. In the conclusions adopted on October 10, 2025, the Council welcomes the EC’s recommendations noting that tax incentives should be seen as one possible element to be considered by each Member State to support clean energy development, industrial decarbonization, and the advancement of clean technologies. At the same time, the conclusions emphasize that each Member State remains free to design, implement, and apply such incentives in line with its own national circumstances, while also taking into account possible budgetary impacts. Accordingly, the Conclusions stress that, in the absence of binding rules at EU level, competence in the field of taxation lies solely with the Member States.
• Pillar Two: With reference to the ongoing Pillar Two discussions at OECD/G20 Inclusive Framework (IF) level, the report notes that the main focus has been to discuss and develop a Side-by-Side solution on the principles presented in the G7-statement of June 28, 2025, which would be acceptable to and implementable by IF members.
• United Nations (UN) Tax Cooperation Framework: The report notes the progress made on the UN Framework Convention on International Tax Cooperation, including on the taxation of income from cross-border services, and the prevention and resolution of tax disputes. In addition, the report refers to a Commission recommendation for a Council decision authorizing the Commission to participate in the negotiations at the UN to ensure that the agreed provisions do not conflict with EU law. However, according to the report, no support for a negotiation mandate was secured at Council working party meetings in October and November 2025.
• Information exchange with non-EU countries: the report notes that a Council Decision was adopted on October 10, 2025, authorizing the opening of negotiations with the Kingdom of Norway for an agreement on administrative cooperation in the field of direct taxation. According to the Council Decision, the aim is to broaden the scope of reciprocal automatic exchange of information between the Member States and Norway with respect to certain elements of the DAC, namely the mandatory automatic exchange of information on non-financial categories of income and capital (DAC1), advance cross-border rulings and advance pricing arrangement (DAC3) and reportable cross-border arrangements (DAC6).

Cyprus will assume the Presidency of the Council on January 1, 2026. For more information on the Commission 2026 work program, please refer to E-News Issue 220.

ECOFIN Council approves December 2025 Code of Conduct Group conclusion

On December 12, 2025, the ECOFIN Council also approved the report on the conclusions on the progress of the Code of Conduct Group (Group) during the term of the Danish Presidency.

Update on the monitoring of the actual effects of individual measures

The Group’s report notes that the actual effects of local measures that have been put under annual monitoring were assessed in the second half of 2025 (with regard to data available until 2023). The report finds that Poland’s notional interest deduction regime, Poland’s Co-operative Compliance Programme for large taxpayers, Italy’s Cooperative Compliance Programme, Romania’s reduction of income tax for maintaining/increasing own capital regime and Portugal’s Madeira Free Trade Zone – IV do not seem to have affected in a significant way the location of business activity in the EU. ¹

In addition, the Group’s report notes that a meaningful conclusion regarding the actual effects of Ireland’s Digital games relief (tax credit) regime and its impact on the location of business activity could not be reached given the provisional nature of the data. Similarly, the Cypriot authorities were invited to improve the data collection and provide the relevant data for Cyprus’ Notional interest deduction regime.

Update on the workstreams relating to Special Economic Zones (SEZ)

The Group continued the discussion on the application of the nexus requirement² to expenditure-based tax incentives in SEZ, with a view to promoting EU competitiveness. In addition, the Group’s report refers to a particular focus on the performance of highly mobile activities in SEZ. In this context, the Group’s report notes that it was decided to terminate examining three Spanish, three Italian, one Polish and one Hungarian SEZ measure. At the same, it was agreed to continue monitoring the Polish Investment Zone (PIZ) regime and to ask Lithuania to provide the relevant data for the tax years (2022 and 2023) to consider whether the monitoring of their SEZ should be terminated.

Update on the EU listing exercise and defensive measures against non-cooperative jurisdictions

The Group’s report further details the work performed with regards to the EU list of non-cooperative jurisdictions, including the most recent update that was approved by the ECOFIN Council on October 10, 2025, and published in the Official Journal on October 17, 2025 (for more details, please refer to Euro Tax Flash Issue 569).

Additional takeaways from the Group’s report in relation to the EU listing exercise include:

• New Criterion 1.4 (beneficial ownership information): Whilst the Group acknowledged the importance of beneficial ownership transparency, the report notes that no viable solutions have been identified at this stage. It was agreed that the Group would periodically review international developments and revisit the matter at a later stage. According to the Group’s report, the Commission performed a mapping exercise of jurisdictions in scope of the EU list regarding the existence of beneficial ownership registers and access to same. The EC’s findings were presented at the Group’s meeting in November 2025, and it was agreed that the Commission services should continue keeping track of any developments in this context.
• Criterion 3.2 (implementation of Country-by-Country (CbyC) Reporting minimum standard): The Group’s report notes that a letter was to be sent to Viet Nam requesting a commitment on criterion 3.2, to be recorded at the update of the EU list in February 2026. In addition, the Group’s report refers to letters to be sent to Fiji and Kuwait requesting information about the presence of resident UPEs of MNEs above the CbyC Reporting threshold in 2025.

Furthermore, the annex of the Group’s report provides a revised state of play of the implementation by Member States of defensive measures against non-cooperative jurisdictions (as at September 30, 2025). In this context, the report notes that the Group exchanged views on the expected and measured effects of the EU list and its tax defensive measures based on a note prepared by the Presidency.

For more details on defensive measures adopted by EU Member States against non-cooperative jurisdictions, please refer to a KPMG’s dedicated webpage.

Report on tax gaps to support competitiveness and fairer tax systems

On December 11, 2025, the European Commission published a report on Challenges and opportunities for tax compliance and tax expenditures in the EU – the “Mind the Gap” report.

The report focuses on two main components of the tax gap:

• Compliance gap: estimating the amount of uncollected tax revenues due to non-compliance. The compliance gap includes estimates of tax revenues forgone due to tax evasion, tax avoidance, bankruptcies or errors in reporting or payment. It reflects the revenue lost due to taxpayers not fulfilling their obligations under the current tax rules.
• Policy gap: reflecting revenue foregone due to policy choices, including tax expenditures such as exemptions, reduced tax rates or thresholds that narrow the tax base.

With respect to the compliance gap, the report is accompanied by two technical reports estimating tax gaps for Value Added Tax (VAT) and Corporate Income Tax (CIT). The latter provides a detailed analysis of the CIT compliance gap across 23 EU Member States, Norway, and Iceland. Key takeaways include:

• The (unweighted) average CIT gap amounts to 10.9 percent of collected CIT revenues across the EU Member States.
• The CIT gap is estimated to be below 3 percent in Denmark, Finland and the Netherlands, while other Member States with relatively small gaps include Sweden (3.5 percent), Austria (4.2 percent), and Estonia (5 percent).
• Larger EU economies such as Germany and France reported moderate gaps of 6–7.5 percent.
• Eight Member States recorded CIT gaps above the EU average: Czechia (11.1 percent), Spain (11.9 percent), Hungary (12.3 percent), Latvia (17.9 percent), Italy (19.9 percent), Poland (20.2 percent), Slovakia (26.7 percent), and Romania (43.6 percent).
• Estimates are not available for Ireland, Lithuania, Luxembourg and Malta.

With respect to the policy gap, key takeaways include:

• The report notes that there are several thousand tax exemptions across the EU Member States (e.g., more than 1,000 tax expenditure provisions in Greece, more than 700 provisions in Portugal, more than 600 in Italy, and more than 400 in France and Poland). At the same time, the report stresses that some Member States have reported only a very low number of tax expenditure provisions and that several other Member States have not provided any information on the number of tax relief provisions.
• According to the report, only a few Member States (e.g., the Netherlands and Austria) have legislation in place that requires regular reviews and assessments of tax expenditures. Some Member States include tax expenditures reviews in their general spending review (e.g., Belgium). In some Member States, the respective independent fiscal council reviews and evaluates tax expenditures (e.g., Spain). Seven Member States report that they review specifically environmentally harmful tax expenditures in the context of their respective green budgeting approaches (Finland, France, Ireland, Italy, Netherlands, Slovakia, Sweden).
• The report concludes that in times of strained public finances, it is vital that these are regularly reviewed to check whether they serve their purpose and deliver value for money.

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

DAC8 implementing regulation adopted

On November 12, 2025, the European Commission adopted Implementing Regulation (EU) 2025/2263, amending Implementing Regulation (EU) 2015/2378 and laying down detailed rules for the application of certain provisions introduced by Directive (EU) 2023/2226 (DAC8).

The implementing regulation sets out practical arrangements for the reporting and automatic exchange of information for tax purposes, in particular in relation to crypto-asset transactions. Among other aspects, it requires Member States to submit an annual assessment to the European Commission, by May 1 each year, on the effectiveness of the automatic exchange of information for the preceding calendar year. The assessment is to cover, inter alia, organisational arrangements, resources, the quality of information exchanged and the practical outcomes achieved.

In addition, the regulation prescribes a computerised format to be used for the mandatory automatic exchange of information in relation to DAC8.

Implementing Regulation (EU) 2025/2263 was published in the Official Journal of the European Union on November 26, 2025. It is binding and directly applicable in all Member States, and will apply from January 1, 2026.

DMTT guidance updated

On December 1, 2025, the National Bureau for Revenue (NBR) in Bahrain released updated guidance providing clarifications on different aspects of the Domestic Minimum Top-up Tax (DMTT) rules in Bahrain, including:

• Scope of the DMTT law: the guidance provides clarifications on how to identify in-scope group entities and their location, how to apply the EUR 750 million revenue threshold, and how to identify excluded entities.
• Safe Harbours and exclusions: the guidance provides clarifications on the application of the transitional Country-by-Country Reporting Safe Harbour, the permanent Simplified Calculation Safe Harbour, the exclusion for the initial phase of international activity, and the De-Minimis Exclusion.
• Administration: the guidance provides clarifications on how to appoint the Filing Constituent Entity and how to comply with registration requirements for DMTT purposes.

For more information on the DMTT rules in Bahrain, please refer to our previous coverage in E-News Issue 215 and the KPMG BEPS 2.0 Tracker in Digital Gateway.

DAC8 transposed into national law

On December 3, 2025, Croatia published in the Official Gazette a bill to transpose Council Directive (EU) 2023/2226 (DAC8) into domestic law. Key takeaways include:

• In accordance with DAC8, the bill would introduce rules on due diligence procedures and reporting requirements for crypto-asset service providers. In-scope crypto-asset service providers would be required to collect and verify information from EU clients, in line with specific due diligence procedures. Subsequently, certain information would be reported to the relevant competent authorities. This information would then be exchanged by the tax authorities of the recipient Member State with the tax authorities of the Member State where the reportable user is tax resident.
• In accordance with DAC8, the bill expands the scope of the automatic exchange of advanced cross-border rulings issued to individuals (DAC3).
• In line with DAC8, the bill requires disclosures of cross-border arrangements (DAC6) to include a description of the relevant arrangements and any other information that could assist the competent authority in assessing a potential tax risk. Furthermore, the bill modifies the DAC6 law to reflect the CJEU judgement from December 8, 2022 (see Euro Tax Flash Issue 497). The consequence of this adjustment is that intermediaries are no longer obligated to inform other intermediaries, who are not their clients, about their reporting duties. However, they must still notify their own clients regarding DAC6 reporting obligations.

DAC9 transposed into national law

On December 3, 2025, Croatia published in the Official Gazette a bill to transpose Council Directive (EU) 2025/872 (DAC9) into domestic law. Key takeaways include:

• the bill clarifies that in-scope groups should submit the Top-up tax information return in accordance with the standard template as provided in Annex VII of DAC9. The standard template closely follows the GIR template published by the OECD on January 15, 2025.
• The bill further clarifies that the exchange of received Pillar Two information will follow the dissemination approach as outlined in DAC9 to ensure that each country only receives the information they need based on their role in the MNE group.
• The bill clarifies that there is a requirement to notify the Croatian tax administration of the identity and location of the UPE or Designated Filing Entity that submits the GIR on behalf of other group members. The notification deadline is 15 months after the end of the Fiscal Year (18 months for the transitional year).
• Note that the proposed amendments do not address any further registration and return filing requirements in Croatia.

For more information on DAC9, please refer to Euro Tax Flash Issue 558.

Amendments to local Pillar Two rules adopted

On December 5, 2025, the Croatian Parliament adopted a bill proposing further changes to the Croatian minimum taxation rules (Pillar Two), which include amendments to the accounting standard that must be used for DMTT purposes. Under the current rules, the calculation can be based on a national accounting standard (subject to adjustments to prevent any material competitive distortions) in cases where the group is not obliged to apply IFRS. The amendments require the DMTT to be determined based on information from financial statements prepared in accordance with the UPE’s Financial Accounting Standard, except where it is not reasonably practicable to use such accounts.

The amendments come into force on the eighth day following the publication in the Official Gazette.

For more information on Pillar Two rules in Croatia, please refer to the KPMG BEPS 2.0 Tracker in Digital Gateway.

Amendments to R&D allowance enacted

On October 1, 2025, Czechia published in the Official Gazette legislative changes to the research and development (R&D) allowances. Under the current rules, a taxpayer may deduct up to 100 percent of eligible costs associated with the projects of R&D as a special tax allowance (in addition to standard tax deductibility of costs incurred). Furthermore, a taxpayer may increase the deduction to 110 percent where R&D expenses exceed the amount of expenses incurred in the previous period.

Key changes include:

• The allowance will be increased from 100 percent to 150 percent of eligible R&D expenses incurred in a given year, with the deduction being capped at CZK 50 million (approximately EUR 2 million). If the CZK 50 million limit is exceeded, the allowance will be 100 percent of eligible expenses per tax year.
• Notably, the cap does not apply to a single taxpayer but to the entire so-called ‘allowance group’, which comprises group entities that are related through control.
• At the same time, the possibility to claim 110 per cent of the R&D expenses will be abolished.
• If the R&D allowance cannot be utilized in the year it is claimed, it may be carried forward and utilized within the next five taxable periods (currently limited to three years).

The amendments will take effect from January 1, 2026.

For more information, please refer to a report prepared by KPMG in Czechia and the KPMG Global R&D Incentives Guide.

Law implementing DAC8 crypto-asset reporting rules published

On December 1, 2025, Finland published legislation implementing amendments to Directive 2011/16/EU on administrative cooperation in taxation (DAC8), introducing new reporting obligations for crypto-asset service providers and intermediaries.

Key takeaways include:

• In accordance with DAC8, the law includes due diligence and reporting requirements for crypto-asset service providers, requiring in-scope entities to collect and verify information on reportable persons and crypto-asset transactions.
• The reported information is to be submitted to the Finnish tax authorities and subsequently exchanged with the competent authorities of other EU Member States in line with the Directive on Administrative Cooperation.
• The law includes provisions on the registration, notification and deregistration of reporting crypto-asset service providers.
• The legislation does not introduce amendments to DAC6 or DAC3, and does not affect the existing mandatory disclosure rules regime.

The law entered into force following its publication in the Official Gazette on December 1, 2025, and new rules will apply from January 1, 2026. For more information, please refer to the tax alert from KPMG Finland and E-News Issue 215.

Additional Pillar Two guidance published

On December 3, 2025, the French tax authorities issued new guidance providing clarifications and examples on the transition aspects of the Pillar Two rules in France. Key takeaways include:

• Clarifications on the treatment of pre-regime deferred tax attributes in the transition year and subsequent fiscal years (in accordance with Article 9.1.1 of the Model Rules). For example, the guidance clarifies the treatment of a tax loss that is generated before the date of application of the GloBE Rules and is recognized in the accounts in the transition year or in a later year (e.g., when the forecasts change and the recognition criteria are met).
• Clarifications on the type of pre-regime deferred tax attributes that are not allowed to transition into the Pillar Two regime (in accordance with Article 9.1.2 of the Model Rules). For example, the guidance refers to certain types of DTAs that relate to items excluded from the computation of GloBE Income or Loss.
• Clarifications on the treatment of intra-group asset transfers before the date of application of the GloBE Rules (in accordance with Article 9.1.3 of the Model Rules). For example, the guidance provides clarifications on the type of transactions that are to be considered as “asset transfers” and that do not benefit from a step-up in the carrying value of the asset. The guidance also includes examples for when in-scope groups are allowed to take into account a deferred tax asset attributable to the gain or loss from the disposition of the asset.
• Clarifications with respect to the application of the exclusion for the initial phase of international activity (in accordance with Article 9.3 of the Model Rules).

The French tax authorities have previously announced that additional guidance is being drafted, focusing on, for example, the application of Safe Harbour rules, calculation of the Effective Tax Rate, calculation of Top-up Tax liability, application of charging mechanisms, and clarifications on filing and payment.

For previous coverage, please refer to E-News Issue 219.

Guidance on Pillar Two registration and filing requirements released

On December 3, 2025, the Gibraltar tax authorities issued guidance on registration and filing requirements under the local minimum taxation rules (Pillar Two). Key takeaways include:

Registration:

• MNE Groups which are within the scope of the Pillar Two Rules in Gibraltar in relation to a Fiscal Year ending in the period from December 31, 2024 to August 31, 2025, must register by February 28, 2026.
• Going forward, MNE Groups must register within six months of the end of the first Fiscal Year that it is within scope of the Pillar Two Rules. For example, if the first Fiscal Year within scope of the Pillar Two Rules ends on September 30, 2025, registration would be required by March 31, 2026.
• Information to be provided as part of the registration includes:
  • name, registered office address, TIN and jurisdiction of the Ultimate Parent Entity;
  • name and Gibraltar taxpayer reference number of the Designated Local Entity;
  • start and end date for the first Fiscal Year which the Group is within the scope of the Pillar Two Rules in Gibraltar;
  • name and taxpayer reference number of each Gibraltar Constituent Entity;
  • whether the MNE Group is within scope of the IIR or the DMTT in Gibraltar.

Annual notification:

• Groups are required to notify the Commissioner of Income Tax if the GIR will be filed in a jurisdiction that has a Qualifying Competent Authority Agreement in place with Gibraltar.
• The notification must be filed annually, and no later than 3 months before the filing due date of the GIR (e.g., March 31, 2026, for Fiscal Year 2024 in case of a calendar year group).
• Information to be provided as part of the notification includes:
  • name of the MNE Group;
  • start and end date of the Fiscal Year;
  • name, address and taxpayer reference number for each Gibraltar Constituent Entity ;
  • identification of the Designated Local Entity and contact details for a representative of the Designated Local Entity;
  • identification of the UPE (name, address, jurisdiction, taxpayer reference number and confirmation if the GIR will be filed in the UPE jurisdiction);
  • identification of the Designated Filing Entity (only required if the GIR will not be filed in the UPE jurisdiction).
• Changes following registration should also be reflected in the annual notification (e.g., a Gibraltar Constituent Entity has joined or left the Group, the Designated Local Entity changes).

For more details on the Pillar Two rules in Gibraltar, please refer to E-News Issue 208 and the KPMG BEPS 2.0 Tracker in Digital Gateway.

Amendments to the corporate income tax (CIT) for banks and CIT exemptions for investment funds

On November 28, 2025, Poland published the Act of November 6, 2025, amending the Corporate Income Tax Act and the Act on the Tax on Certain Financial Institutions. The act introduces several changes affecting the taxation of banks and investment funds.

The amendments increase the corporate income tax rate applicable to banks from 19 percent to 30 percent as from January 1, 2026. For small taxpayers with annual turnover (including VAT) below EUR 2 million, the applicable rate will be 20 percent. The rate applicable to banks will subsequently be reduced to 26 percent in 2027 and 23 percent in 2028 (16 percent and 13 percent, respectively, for small taxpayers). At the same time, the tax on certain financial institutions (the so-called bank asset tax) will be gradually reduced from 0.0366 percent to 0.0329 percent as from 2028.

The Act also extends the corporate income tax (CIT) exemption available to Polish and EU/EEA investment and pension funds to comparable funds established in non-EU/EEA countries. In addition, the exemption is extended to self-managed investment funds, aligning Polish law with the jurisprudence of the CJEU in case C-18/23, where the Court held that the Polish requirement for EU/EEA-based funds to be managed by external entities in order to benefit from the tax exemption (so called ‘ManCo condition’) is contrary to the free movement of capital. For more details please refer to E-News Issue 214.

The amendments will apply from January 1, 2026.

Amendments to Swedish Pillar Two rules enacted

On December 10, 2025, Sweden published amendments to its Top-up Tax Act in the Official Gazette. The amendments introduce into existing legislation additional elements of the OECD Administrative Guidance published in June 2024. Key takeaways include:

• OECD June 2024 Administrative Guidance: The bill implements the OECD June 2024 Administrative Guidance on the allocation of cross-border current and deferred taxes, as well as on the allocation of profits and taxes in structures such as flow-through entities, hybrid entities, and reverse hybrid entities.
• Securitization entities: In line with the OECD June 2024 Administrative Guidance, DMTT liability arising from securitization entities is allocated to other group entities located in Sweden. If there are no other non-securitization entities in Sweden, the top-up tax liability remains with the securitization entity.
• Joint Ventures (JV): Under current legislation, the top-up tax liability arising from a JV under the DMTT in Sweden is generally allocated to the MNE group of the JV owner. In line with the OECD July 2023 Administrative Guidance, the bill reduces the DMTT liability by 50 percent at the level of each JV owner in cases where both JV owners are in scope of Pillar Two. 

The changes will enter into force on January 1, 2026, and generally apply to fiscal years beginning after December 31, 2025. However, an option is provided to groups to apply the new provisions retroactively for fiscal years starting after December 31, 2023.

For previous coverage on the Swedish Pillar Two rules, please refer to E-News Issue 205.

Extension of QDMTT return filing deadline

On December 1, 2025, the tax administration in Türkiye announced an extension of the filing deadline for the QDMTT returns.

As a reminder, the deadline in Türkiye for submitting the QDMTT return and paying QDMTT due was initially 12 months after the end of the relevant fiscal year (i.e., December 31, 2025, for the fiscal year ending on December 31, 2024). According to the December 1, 2025, release, the filing deadline has been extended to January 15, 2026, with respect to fiscal years ending on December 31, 2024.

Note that filing QDMTT returns via the relevant e-filing portal is not yet possible. However, on December 1, 2025, the tax administration announced that a test environment has been launched for taxpayers to familiarize themselves with the QDMTT return filing process and to submit questions to the tax administration.

Also note that in order to submit a Turkish QDMTT return, the group must appoint and register one local designated filing entity for QDMTT purposes.

For more information on local Pillar Two filing requirements, please refer to the KPMG BEPS 2.0 Tracker in Digital Gateway.

DMTT clarifications published

The UAE Ministry of Finance has published a dedicated webpage and separate FAQs outlining and clarifying aspects of the DMTT rules in the UAE. Key takeaways include:

• Accounting standard: According to the FAQs, the rules have been drafted with the intention that the DMTT meets the Local Financial Accounting Standard Rule for the purposes of complying with the requirements of the QDMTT Safe Harbour.
• Investment entities: The guidance notes that Constituent Entities that meet the requirements to be classified as an investment entity will not be subject to the UAE DMTT rules.
• Groups in the initial phase of international activity: The guidance also clarifies that MNE Groups in the initial phase of international activity are excluded from scope of the UAE DMTT where no IIR is being applied to any Constituent Entity located in the UAE in the group structure.
• Administrative Guidance: The FAQs note that a Ministerial Decision will be issued to adopt the relevant provisions of the OECD Administrative Guidance and Commentary for the purposes of implementing a QDMTT.
• CIT exempt taxpayers: The FAQs clarify that all UAE taxpayers, whether they are Exempt Persons or Qualifying Free Zone Persons under the UAE Corporate Tax Law, will need to assess whether they are within scope of the UAE DMTT. If they are in scope, they must comply with the respective administrative requirements, including calculating and paying any top-up tax due and making the associated filings and notifications, where required.

As a reminder, the DMTT in the UAE applies for fiscal years starting from January 1, 2025.

For more information, please refer to E-News Issue 211 and the KPMG BEPS 2.0 Tracker in Digital Gateway.

Finance Bill includes amendments affecting corporate taxation

On December 12, 2025 the UK Finance Bill was published, setting out a number of measures affecting corporate taxpayers, including amendments relating to Pillar Two, corporate interest restriction rules and research and development (R&D) reliefs.

Key takeaways include:

• Pillar Two: The Finance Bill includes amendments to the Multinational Top-up Tax (MTT) and Domestic Top-up Tax (DTT) provisions. The changes reflect feedback received during consultation and are intended to ensure continued alignment of the UK rules with OECD Administrative Guidance. Amendments address the application of the QDMTT Safe Harbour, transitional arrangements for qualifying non-UK Pillar Two taxes, and the treatment of certain securitisation vehicles under the UTPR.
• Corporate Interest Restriction: Administrative requirements for CIR are to be simplified, including the removal of the obligation to submit an appointment notice to HMRC within twelve months of the end of the relevant accounting period. The changes allow appointments to be made retrospectively, subject to time limits, reducing the risk of inadvertent invalidation of CIR returns. Further amendments affect the calculation of tax-EBITDA for certain businesses, including adjustments to address mismatches arising from specific reliefs.
• R&D reliefs: The Finance Bill includes amendments clarifying the application of the overseas restrictions exemptions, including the circumstances in which the exemptions apply to companies with a registered office in Northern Ireland. Further clarification is provided on the tax treatment of certain intra-group payments connected with the surrender of R&D credits.

For more information, please refer to the following tax alert prepared by KPMG in the UK. 

Supreme Court rulings on Spanish wealth tax cap for non-resident taxpayers

On November 3, 2025, and October 29, 2025, the Spanish Supreme Court issued two rulings addressing the applicability of Spanish wealth tax to non-resident taxpayers. In these decisions, the Court held that non-residents are entitled to apply the same limitation on wealth tax liability based on income as that available to Spanish resident taxpayers.

Spanish wealth tax legislation distinguishes between taxpayers who have their habitual residence in Spain and those who do not. Residents are subject to tax on their worldwide net assets, irrespective of where those assets are located. By contrast, non-residents are taxed only on the assets and rights they own that are located in, or can be exercised or fulfilled within, Spanish territory.

For both resident and non-resident taxpayers, the rules governing the valuation of assets and rights, the determination of the net taxable base, the applicable tax scale, and the calculation of the gross tax liability are identical. However, for taxpayers subject to unlimited tax liability (i.e., Spanish residents), the Spanish law provides for a combined cap on wealth tax and personal income tax liabilities. Under this rule, the aggregate amount of wealth tax and personal income tax cannot exceed 60 percent of the taxpayer’s taxable income for personal income tax purposes. If this threshold is exceeded, the wealth tax liability may be reduced to bring the total tax burden down to the 60 percent limit, subject to a maximum reduction of 80 percent of the wealth tax due. This mechanism operates as an overall cap on taxation. By contrast, this combined limitation did not apply to non-resident taxpayers.

The Supreme Court held that all taxpayers subject to wealth tax in Spain, whether resident or non-resident, are in a comparable situation with respect to the object and purpose of the tax. In the Supreme Court’s view, the distinction between residents subject to unlimited tax liability (taxed on worldwide assets) and non-residents subject to limited tax liability (taxed only on Spanish-situated assets) does not justify a difference in the application of the combined tax cap. Consequently, the Court concluded that restricting the benefit of the combined wealth tax and income tax limitation to resident taxpayers infringes the principle of free movement of capital enshrined in Article 63 of the Treaty on the Functioning of the European Union (TFEU).

For more details, please refer to a tax alert prepared by KPMG in Spain. 

EU Tax perspectives – November 26, 2025 (replay now available)

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 EU Tax Perspectives discussion brought together specialists to consider key themes emerging across the EU tax agenda and what this could mean for multinational groups operating in Europe.

A panel of KPMG professionals reviewed the following developments and explored 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.

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

Key links

• Visit our website for earlier editions.