E-News from KPMG’s EU Tax Centre

• European Commission: Letters of formal notice for failure to notify the transposition of DAC8 and DAC9 into national law
• European Commission : KPMG feedback to EU public consultation on upcoming DAC recast proposal
• Belgium: Clarifications issued on 2026 advance payments for IIR purposes (Pillar Two)
• France: 2026 Finance Act adopted
• Germany: Pillar Two tax return forms published
• Ireland: 2025 Finance Act enacted
• Italy : Pillar Two tax return forms published
• Switzerland: Clarifications on GIR filing and notification requirements
• France (court decision): French Court of Appeal decision upholds French tax residency of Luxembourg holding company
• Netherlands (court decision): Supreme Court decision in Dutch anti-abuse case

CJEU referral on the compatibility with EU law of Germany’s former treatment of foreign dividends in loss years

On August 12, 2025, the German Federal Fiscal Court (the Court) referred a question to the Court of Justice of the European Union (CJEU) concerning the compatibility of Germany’s former corporate income tax treatment of dividends received from significant shareholdings with the EU Parent-Subsidiary Directive and the freedom of establishment (case C-546/25).

The plaintiff in the case at hand is a German company that, through a corporate restructuring, became the recipient of dividends from a Greek subsidiary. From 1993 to 2001, both the applicant and its predecessor – also a Germany company, consistently reported tax losses. During this period, dividends were received from the Greek company, which were distributed from profits that were subject to corporate income tax in Greece. The German tax authorities included the gross dividends in calculating the German companies’ taxable income and consequently decrease their tax loss. Moreover, the tax authorities refused to provide a tax credit for the tax paid in Greece in the first profitable year.

The plaintiff challenged the corporate income tax assessments for the years 1997 to 2002. In the plaintiff’s view, the German tax authorities infringed EU law by reducing its loss carry-forward through the inclusion of foreign dividends while simultaneously denying a credit for the foreign tax paid. As a result, the plaintiff sought either (i) to offset the Greek corporate income tax paid between 1993 and 2000 against its taxable income for 2002 or (ii), alternatively, to exclude the Greek dividends received in certain years from the tax base altogether.

Following several legal proceedings, the case was brought in front of the Court. The latter expressed doubts on the compatibility of the German imputation system for dividends received, applicable at that time, with EU law, and referred the following questions to the CJEU:

• Whether the indirect credit method under Article 4(1) of the Parent Subsidiary Directive¹ precludes national legislation under which dividends received by a loss-making resident parent company from an EU subsidiary reduce the parent company’s loss carry-forward, whilst the foreign corporation tax paid on those dividends cannot be credited either in the year of receipt or in a later year when the parent company becomes profitable.
• If the answer to the first question is yes, whether – where a Member State has chosen the indirect credit method when transposing the Parent-Subsidiary Directive, but limits tax credits to the year in which dividends are received, a direct right under the Directive arises for the taxpayer to claim a credit carry-over for the foreign tax that could not be credited due to losses.
• If no such direct right follows from the Parent-Subsidiary Directive, whether a right to a credit carry-over may nevertheless be derived from an infringement of the freedom of establishment.
• Whether the assessment of the first three questions differs for dividends received earlier by the wholly owned subsidiary and transferred (with its loss carry-over) to the applicant upon a merger by absorption.

Letters of formal notice for failure to notify the transposition of DAC9 into national law

On January 30, 2026, the European Commission (the EC or the Commission) announced its decision to launch infringement procedures by sending letters of formal notice to ten Member States that had not notified national measures transposing Council Directive (EU) 2025/872 (DAC9) into domestic legislation. These Member States are: Belgium, Bulgaria, Cyprus, Czechia, Greece, Malta, the Netherlands, Portugal, Romania and Sweden.

The purpose of DAC9 is to introduce a framework for the exchange of Top-up tax information returns filed by groups in scope of Pillar Two with the tax administration of an EU Member State. This allows MNEs to switch from local to central filing in the EU, where the EU UPE or designated filing entity files on behalf of the group in an EU Member State. Member States were required to transpose the Directive by December 31, 2025. 

The deadline for the Member States concerned to reply to the letters of formal notice and complete their transposition is two months. Otherwise, the Commission may decide to issue a reasoned opinion explaining why the Commission considers that the country is breaching EU law and requesting the country to inform the Commission of the measures taken, within a specified period (usually two months). If the country still does not comply, the Commission may decide to refer the matter to the Court of Justice of the EU (CJEU), which may impose penalties if it finds that the respective EU country has breached EU law.

Note that, in the meantime, several of the abovementioned Member States (including the Netherlands and Romania) have published/ adopted DAC9 implementing legislation.

For more previous coverage, please refer to E-News Issue 224.

Letters of formal notice for failure to notify the transposition of DAC8 into national law

On January 30, 2026, the European Commission (the EC or the Commission) announced its decision to launch infringement procedures by sending letters of formal notice to twelve Member States that had not notified national measures transposing Council Directive (EU) 2023/2226 (DAC8) into domestic legislation. These Member States are: Belgium, Bulgaria, Cyprus, Czechia, Estonia, Greece, Luxembourg, Malta, the Netherlands, Poland, Portugal and Spain.

The purpose of DAC8 is to introduce, amongst others, provisions for the exchange of information on crypto-assets. DAC8 further extends the scope of the exchange of information on cross-border rulings to those involving the tax affairs of high-net-worth individuals. Other changes brought by DAC8 include the extension of the automatic exchange of information to cover non-custodial dividend income and requirements to report the Tax Identification Number (TIN) for certain elements where this was not previously prescribed – including, inter alia, for certain categories of income and capital under DAC1, advance cross-border rulings and advance pricing agreements (DAC3), CbyC reports (DAC4) and reportable cross-border arrangements (DAC6). With the exception of the provisions related to the TIN² Member States need to transpose DAC8 by December 31, 2025.

The deadline for the Member States concerned to reply to the letters of formal notice and complete their transposition is two months. Otherwise, the same procedure applies as described above.

Note that, in the meantime, several of the above mentioned Member States (including Romania) have published/ adopted DAC8 implementing legislation.

For more previous coverage, please refer to E-News Issue 224.

European Commission approves German State aid scheme to support cleantech manufacturing capacity

On February 5, 2026, the European Commission approved a EUR 3 billion German scheme to support strategic investments that add clean technology (cleantech) manufacturing capacity in line with the objectives of the Clean Industrial Deal. The scheme, approved under the Clean Industrial Deal State Aid Framework (CISAF), is set to run until December 31, 2030.

The purpose of the scheme is to provide support for investments that expand manufacturing capacity for the production of net-zero technologies and their main specific components, including through the use of secondary raw materials. This support excludes nuclear fission energy technologies and certain related components, and applies to the technologies listed in Annex II of the CISAF. The scheme also covers the production of new or recovered critical raw materials that are necessary for the manufacture of the eligible final products or their main specific components.

Under the scheme, aid will be granted in the form of direct grants, tax advantages, interest rate subsidies for new loans, or guarantees for new loans. The Commission’s release does not include details on the tax advantages to be granted. However, more details will be available under the case number SA.121215 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. 

KPMG feedback to EU public consultation on upcoming DAC recast proposal

On February 10, 2026, the deadline to provide feedback to the European Commission (EC) call for evidence and public consultation on the upcoming DAC recast proposal ended – see E-News Issue 224 for more details.

The EC received a total of 60 written responses to the call for evidence, including a response letter submitted by KPMG member firms in the EU. Key points highlighted in the KPMG submission include:

• General remarks: KPMG welcomes the EC's initiative to clarify, simplify and improve the functioning of EU rules on administrative cooperation in the field of taxation, with the aim of reducing the administrative burden for relevant stakeholders and supporting the growth and competitiveness of the EU.
• Streamlining the application of the DAC6 rules: KPMG believes that any future amendments to Council Directive (EU) 2018/822 (DAC6) should focus on streamlining the reporting obligation to focus only on those arrangements that are at high risk of leading to tax avoidance or tax evasion. As a matter of priority, this could be achieved by eliminating certain hallmarks that do not meet these conditions and by extending the Main Benefit Test to all remaining hallmarks. Where it is not feasible to remove a certain hallmark, KPMG recommends that the EC consider amendments to existing hallmarks in form of safe harbors to exclude by default certain types of arrangements. KPMG notes, however, that any amendments to the existing reporting obligations should not result in additional complexity and uncertainty.
• Reducing procedural complexity under DAC6: KPMG also believes that the DAC recast should focus on reducing the existing procedural complexity under DAC6. On a priority basis, KPMG supports an extension of the reporting timeframe to 90 days, which should be complemented by limiting the reporting obligation to implemented arrangements. In addition, the KPMG feedback includes a number of suggestions to further simplify coordination of DAC6 reporting between the arrangement participants (e.g., by giving taxpayers the option to take on the primary reporting obligation, removing the obligation imposed on secondary intermediaries, etc.).
• Simplifying DAC4 and DAC9 notification obligations: KPMG believes that notification forms for (non-public) Country-by-Country Reporting purposes (Council Directive 2016/881/EU – DAC4) and Pillar Two purposes (Council Directive (EU) 2025/872 – DAC9) should be combined where this relates to notifying tax authorities of the identity and location of the entity that is filing the County-by-Country (CbyC) Report and GloBE Information Return (GIR). KPMG also believe that a new notification should only be required where the previously submitted data changes (i.e., no annual notification obligation). At the same time, KPMG stresses that combining the schemas for the CbyC Report and the GIR would require substantial adjustments, which would represent an unnecessary administrative burden for taxpayers that have already set up for compliance with each of these obligations.

For more information on the DAC recast proposal, please refer to Euro Tax Flash Issue 572.

European Parliament adopts resolution on new legal framework for innovative companies (28^th legal regime) 

On January 20, 2026, the European Parliament adopted a resolution setting out its views and recommendations to the European Commission in relation to the forthcoming proposal on the 28^th legal regime for innovative companies.

Based on the EU’ Competitiveness Compass released in January 2025, the 28^th legal regime aims to create a unified legal framework that would apply across the EU, operating alongside the 27 national legal systems. The framework seeks to simplify compliance for businesses and reduce administrative burdens operating across multiple Member States by offering a single set of rules in areas such as corporate law, insolvency procedures, labor regulations, as well as tax law.

Key takeaways from the resolution include:

• Ambitious legislative design: the European Parliament welcomed the Commission’s initiative on the 28^th legal regime and stressed that the proposal should be “ambitious in substance and in form”.
• Uniform application: the resolution emphasised the need for uniform application, noting that implementation through a Regulation, or alternatively a Directive adopted by qualified majority, would ensure consistent rules across all EU Member States.
• New EU company form: the European Parliament advocated for the establishment of a new EU-wide company form, the Unified European Company (S.EU), conceived as a non-listed limited liability company with a registered seat in an EU Member State and automatic recognition throughout the Union. The S.EU would be reserved for innovative companies, registered digitally within 48 hours, and subject to a minimum paid-in capital requirement of EUR 1.
• Investor legal certainty: the resolution highlighted the importance of legal clarity for investors, underlining that the 28^th legal regime should facilitate cross-border investment for both European and third-country investors through harmonised corporate rules.
• Improved access to capital: the European Parliament called for measures to enhance access to capital, urging Member States to introduce a harmonised equity-like debt instrument allowing investment without conferring control rights, such as profit participation rights, silent partnerships, or profit-linked loans.
• Tax treatment of employee financial participation: the European Parliament stressed the role of talent attraction, recommending harmonised rules on employee financial participation in S.EUs, including employee stock incentive plans, with related tax issues to be addressed in the Commission’s proposal.
• Specialised dispute resolution: the resolution supported faster dispute resolution, proposing the creation of a specialised alternative dispute resolution mechanism for S.EUs, potentially conducted in English, subject to the agreement of all parties.

In its 2026 Work Programme, the European Commission committed to proposing the 28^th legal regime by Q1 2026. For further background, please refer to E-News Issue 220.

Public exchange of views on ‘tackling tax obstacles in the Single Market’

On January 27, 2026, the European Parliament’s Subcommittee on Tax Matters (FISC) held a public exchange of views on ‘tackling tax obstacles in the Single Market’ with representatives from academia, business and EU institutions. During the discussion, Benjamin Angel, Director for ‘Direct taxation, tax coordination, economic analysis and evaluation' in DG TAXUD of the European Commission outlined the Commission’s position on several direct tax initiatives. Key takeaways include:

• 28^th legal regime / BEFIT: according to Mr. Angel, the upcoming EC proposal for an optional unified legal framework for innovative companies will focus primarily on company law, with tax measures limited to the deferral of taxation on employee stock options. Mr. Angel noted that further harmonized tax measures will not be included in the 28^th legal regime proposal as this is already covered by the Business in Europe: Framework for Income Taxation (BEFIT) Directive proposal, which has not yet made progress at Council level.
• The Transfer Pricing (TP) Directive: Mr. Angel expressed regrets that the TP Directive proposal failed to gain support by Member States despite its aim to reduce disputes by making agreed OECD Transfer Pricing Guidelines binding across the EU. The TP Directive proposal is expected to be withdrawn by the EC in 2026.
• Withholding taxes on intragroup transactions: according to Mr. Angel, many Member States continue to levy withholding tax on interest, royalties and dividends. Whilst the proposed Faster and Safer Tax Excess Relief (FASTER) Directive aims to accelerate withholding tax relief and refund procedures, Mr. Angel indicated considerations on whether withholding taxes could be removed within the internal market.
• Digital taxes: Mr. Angel noted that there remains willingness among jurisdictions to restart negotiations at OECD level on a global approach to taxing the digital economy. In light of the stalled discussions on Amount A of Pillar One to reallocate profits of multinational enterprises to market jurisdictions, Mr. Angel indicated that discussions would start with a reassessment of the objectives of digital taxation and, in a second step, the development of potential solutions. According to Mr. Angel, those solutions may take a different form compared to the design features of Amount A.

For more information on the FISC discussion, please refer to the event page and the recording of the meeting.

Joint ECON and FISC exchange of views with Commissioner Wopke Hoekstra

On February 9, 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) and the Subcommittee on Tax Matters (FISC) held an exchange of views with Commissioner Wopke Hoekstra. The dialogue was focused on the tax aspects of the Commission’s Work Programme for 2026, including the tax-related legislative proposals that the EC intends to withdraw. Key takeaways include:

• Digital taxes: Commissioner Hoekstra emphasized that before considering the introduction of an EU-wide digital services tax, the priority should be to fully explore all available options to preserve as much of Pillar One as possible. In his remarks, Commissioner Hoekstra also emphasized the importance of continuing with the current process at OECD level, noting that reaching a clear conclusion – whether positive or negative, has value. If the multilateral OECD solution ultimately fails, the Commissioner indicated that an EU-wide approach to taxing the digital economy would be preferable to fragmented national measures.
• Proposals pending withdrawal: Several members of the European Parliament (MEPs) voiced frustration over the Commission’s decision to withdraw several tax-related proposals. Some suggested that a strong public endorsement from the Commission President could help reinforce the proposals and make it harder for Member States to oppose them. Commissioner Hoekstra reiterated the Commission’s rationale for announcing the withdrawal in 2025 of several proposed EU tax directives, including the proposals on rules to prevent the misuse of shell entities for tax purposes (Unshell), an EU Transfer Pricing Directive, the debt-equity bias reduction allowance (DEBRA), and enhanced cooperation on a financial transaction tax (FTT). In this context, Commissioner Hoekstra noted that some of these initiatives have been on the table for a long time, and the current environment has reduced Member States’ appetite for advancing them. The Commissioner did, however, explain that the Commission would be seeking to keep alive the fundamentals of some of these files through other proposals that are yet to be put forward.
• Priorities of the Commission for 2026: From a direct tax perspective, Commissioner Hoekstra confirmed that the EC would prioritize in 2026 the simplification agenda and the recast of the Directive on administrative cooperation.

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

List of signatories of the GIR MCAA updated and launch of database showing activated bilateral exchange relationships

On February 2, 2026, the OECD updated the list of jurisdictions that have signed the GloBE Information Return Multilateral Competent Authority Agreement (GIR MCAA) to include the most recent signatures by Australia, Gibraltar and Slovenia.

The list of 26 signatories now includes Australia, Austria, Belgium, Denmark, Finland, France, Germany, Gibraltar, Hungary, Ireland, Italy, Japan, South Korea, Liechtenstein, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland and the UK.

In addition, the OECD published a database showing currently activated bilateral exchange relationships between jurisdictions for the automatic exchange under the GIR MCAA. As a reminder, the exchange relationships under the GIR MCAA are relevant in the context of Article 8.1.2 of the Model Rules, which provides the option for the Ultimate Parent Entity (UPE), or a Designated Filing Entity appointed by the MNE Group, to file the GIR on behalf of other group members. In that case, other group members are discharged from the requirement to file a GIR provided that a Qualifying Competent Authority Agreement has been activated between the jurisdiction in which the Filing Constituent Entity is located and the jurisdiction in which the respective Constituent Entity is located. Importantly, the fact that one country has unilaterally signed up to the GIR MCAA is not sufficient to rely on this reporting relief.

For previous coverage on the GIR MCAA, please refer to E-News Issue 224.

Clarifications issued on 2026 advance payments for IIR purposes (Pillar Two)

On February 9, 2026, the Belgian tax administration announced changes to the advance payment requirements for Belgian minimum taxation purposes.

As a reminder, the Belgian Pillar Two rules provide the option to make quarterly advance payments for the Qualified Domestic Minimum Top-up Tax (QDMTT) and the Income Inclusion Rule (IIR) top-up tax to alleviate the application of tax surcharges.

Currently, advance payments are to be made at group level for both QDMTT and IIR top-up tax (i.e., a designated entity can make the advance payments on behalf of other local group members). The announced changes provide that groups that choose to make IIR top-up tax advance payments will be required to make these payments at the entity level (i.e., the entity that is required to collect IIR top-up tax in accordance with the general Pillar Two rule order).

Note that this change applies only to advance payments in respect of the IIR top-up tax. For QDMTT advance payments the current procedure remains unchanged.

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

2026 Finance Act adopted

On February 2, 2026, the French Parliament adopted the 2026 Finance Act. Key measures from a direct tax perspective include:

• Surtax on corporate income tax: The exceptional surtax on corporate income tax, which was introduced by the 2025 Finance Act, is extended by one year such that it applies to the first two financial years ending on or after December 31, 2025. The 2026 surtax will only apply to companies with a turnover greater than or equal to EUR 1.5 billion for the financial year in question, i.e. 2026 (EUR 1 billion for the 2025 surtax). This means that the threshold will only be assessed for the financial year in which the contribution is due (2026), and not over two financial years as was the case for the contribution due in 2025.
• Pillar Two: the Act introduces into existing legislation elements from the OECD June 2024 Administrative Guidance, including updated guidance on DTL recapture rules. In addition, the Act establishes rules for allocating QDMTT liability between the constituent entities, rules relating to the taxation of certain Investment Entities and Insurance Investment Entities under the QDMTT and reporting obligations for Joint Ventures. The Act also transposes the information exchange requirements under DAC9 into domestic law.

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

Pillar Two tax return forms published

End of 2025, the German tax administration made available the forms for the minimum tax return on the “Elster” e-filing platform. The single returns for QDMTT, IIR and the Undertaxed Profits Rule (UTPR) are to be filed alongside the GIR and require the following data points:

• General information: identification of the entity liable for top-up tax (generally, the minimum tax group leader) including information on the legal form, whether it qualifies as a permanent establishment and a characterization for GloBE purposes (UPE, local minimum tax group leader, stand-alone local Constituent Entity).
• Notification of top-up tax liability: total amount of IIR, UTPR, QDMTT and Additional Top-up Tax liability for the fiscal year (no calculation required) with an option to provide additional free form comments.
• GIR-related information: fiscal year of the UPE, date when GIR was filed, indication whether GIR was filed in Germany or in foreign jurisdiction, indication whether stated top-up tax liability is aligned with the information submitted in the GIR.
• Information on each Constituent Entity:
  • identification of respective local Constituent Entity including the name, tax identification number, legal form and an indication whether it qualifies as permanent establishment;
  • total amount of IIR, UTPR and QDMTT and Additional Top-up Tax liability allocable to the respective entity;
  • indication whether respective local CE has joined the group in the fiscal year.
• Notification of cross-border arrangement (DAC6):
  • DAC6 registration number (Arrangement ID) of respective disclosed arrangement;
  • DAC6 disclosure number (Disclosure ID) of respective disclosed arrangement;
  • identification of cross-border arrangement (if Arrangement ID and Disclosure ID are not available yet).

The local tax return for IIR, UTPR and DMTT purposes must be filed within 15 months after the end of the Reporting Fiscal Year (18 months for the transitional year), i.e. same deadline as for GIR.

According to the parliamentary explanatory notes, the return needs to be filed even where there is no top-up tax liability for the respective fiscal year (so-called "zero return").

For more information on German Pillar Two compliance requirements, please refer to the KPMG BEPS 2.0 tracker in Digital Gateway.

2025 Finance Act enacted

On December 23, 2025, the Irish government published the Finance Act 2025 in the Official Gazette.

From a Pillar Two perspective, key amendments include:

• January 2025 Administrative Guidance: Incorporation of the OECD’s Administrative Guidance issued in January 2025, including the treatment of certain deferred tax assets and liabilities, existing prior to a company coming within the scope of the GloBE rules.
• Treatment of orphan entities: Amendment of the definition of Minority-owned Constituent Entity to clarify that the definition should include an orphan entity that is a Constituent Entity of an MNE Group. At the same time, the Act includes an amendment to the definition of UPE to clarify that it excludes an orphan entity where that orphan entity is included in the consolidated financial statements of another entity in the group that meets the definition of a UPE.
• Accounting standard for QDMTT purposes: the QDMTT computation generally needs to be based on a local financial accounting standard, provided that all of the local entities in the group prepare accounts using a local accounting standard and that the Fiscal Year of such accounts is aligned with the Fiscal Year of the Consolidated Financial Statements of the MNE Group. The Act allows the continued use of local financial accounting standards when an Irish entity is incorporated, liquidated, undertakes a merger or division (cross border or domestic) or acquired during a relevant period. A grace period is effectively provided to allow MNE Groups to bring the accounting period of the acquired entity into line with the group’s fiscal year to avoid the risk of groups “flip-flopping” between accounting standards for QDMTT calculation purposes.

In addition, the Act provides for a number of other key direct tax amendments, including:

• The rate at which companies can avail of the R&D tax credit (RDTC) is increased from 30 percent to 35 percent. 
• Amendments to the general anti-avoidance rules (GAAR) to widen the circumstances in which Irish Revenue can remove the tax advantage.
• Amendments to dividend participation exemption that was introduced as part of Finance Act 2024 and applies to subsidiaries resident in the EEA or a country with which Ireland has concluded a Double Taxation Agreement.
• Introduction of reporting obligations for Crypto-Asset Service Providers in accordance with DAC8.
• Amendments to non-public Country-by-Country Reporting (CbCR) to reference revised guidance issued by the OECD in May 2024.

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

Pillar Two tax return forms published

On February 6, 2026, the Italian tax administration made available the forms and related instructions for the minimum tax return on their dedicated e-filing platform. Such single return for IIR, UTPR and QDMTT is to be filed alongside the GIR and requires the following data points:

• Cover page: certain general data points, including the identification of the entity filing the return and its role within the group, the start and end date of the financial year, identification of the legal representative, indication which sections of the return (schedules A–F) are completed;
• Schedule A: information about the group and the Ultimate Parent Entity (e.g. name, tax identification number) and indication whether the group benefits from Safe Harbours or other exclusions for each country / local blending group;
• Schedule B: High-level calculation of the top-up tax liability for each jurisdiction / local blending group (including indication of the amount of GloBE Income and Adjusted Covered Taxes, Effective Tax Rate, Excess Profits and Substance-based Income Exclusions reductions);
• Schedule C and D: Allocation of top-up tax liability for IIR and UTPR purposes among Italian Constituent Entities;
• Schedule E: High-level determination of GloBE Income and Adjusted Covered Taxes for each Italian Constituent Entity (including joint ventures and stateless entities), high-level top-up tax calculation for each Italian blending group, allocation of QDMTT liability among Italian Constituent Entities (including joint ventures and stateless entities);
• Schedule F: Indication of the total Pillar Two taxes due (IIR, UTPR, QDMTT) including credits from earlier payments (e.g., advance payments).

According to the instructions, the return needs to be filed even where there is no top-up tax liability for the respective fiscal year.

For more information on Italian Pillar Two compliance requirements, please refer to the KPMG BEPS 2.0 tracker in Digital Gateway.

Clarifications on GIR filing and notification requirements

In December 2025, the Swiss Federal Council amended the Swiss minimum tax ordinance (MTO) to include a GIR filing requirement for each Swiss CE on a dedicated digital platform on the federal government’s ePortal to be operated by the Swiss Federal Tax Administration. For Fiscal Year 2024, the GIR is to be submitted by June 30, 2026.

Based on the updated wording of the MTO, the respective Swiss (lead) Constituent Entity is required to file a GIR, except where (i) another Constituent Entity has already filed a GIR on that dedicated digital platform, or another non-Swiss Constituent Entity has already filed a GIR with a jurisdiction (partner state) where the respective exchange relationship under the GIR-MCAA has been activated.

If filed in another jurisdiction, a notification must be submitted to inform the Swiss tax authorities on the identity and location of the entity submitting the GIR on behalf of other group members. Such notification is to be made within the same deadline as for the GIR.

As a reminder, Switzerland has introduced a QDMTT with effect from January 1, 2024, and an IIR with effect from January 1, 2025.

For more information on Swiss Pillar Two compliance requirements, please refer to the KPMG BEPS 2.0 tracker in Digital Gateway.

French Court of Appeal decision upholds French tax residency of Luxembourg holding company

On the January 8, 2026, the Administrative Court of Appeal of Versailles (the Court) issued a ruling regarding the tax residence of a Luxembourg-incorporated holding company. The Court upheld the findings of the French tax authorities who had assessed additional corporate income tax liabilities, as well as penalties with respect to a Luxembourgish holding company on the grounds that it was effectively resident and taxable in France.

The case concerned a company incorporated in Luxembourg in 2012, which acted as a holding company and managed patents and shares for a French group. Despite having a registered address in Luxembourg, the company relied exclusively on domiciliation services, using a service provider’s address as its registered office. Following search and seizure operations in 2018 at the group’s Paris offices and the French residence of its controlling shareholder, the French tax authorities concluded that the company’s Luxembourgish registered office was fictitious and that the company’s effective management was exercised from France. A tax audit covering the 2012–2017 tax year resulted in additional corporate income tax assessments and the application of the French 80 percent penalty for concealed activity.

The Court rejected the taxpayer’s claim that its place of effective management was in Luxembourg. In this context, the Court noted that the Luxembourgish holding company had no real substance in Luxembourg since it had no dedicated premises, employees, or autonomous decision-making capacity, and was merely domiciled with service providers lacking authority to manage the company. By contrast, strategic decisions, approvals, and day-to-day management were exercised by a French-based director, who was also the controlling shareholder.

The Court held that under the France – Luxembourg double tax treaty, the company was to be regarded as a French resident, as its place of effective management was in France, thereby granting France taxing rights over its profits. In parallel, under French domestic law, the company was deemed to carry on business in France through its seat of management, constituting a permanent establishment. In light of these findings, the Court ruled that the profits were subject to tax under French corporate income tax rules. Furthermore, the Court also upheld the applicability of the French 80 percent penalty in light of the Court’s views that the arrangement had an artificial and tax-driven nature. 

Supreme Court decision in Dutch anti-abuse case

On January 16, 2026, the Dutch Supreme Court (Supreme Court) ruled in a long-running case concerning the applicability of the Dutch interest deduction limitation anti-profit shifting regime. This ruling relates to the CJEU’s ruling in case C-585/22 – see E-News Issue 201.

The plaintiff, a Dutch subsidiary (Company X) of a Belgian entity (Company A), acquired shares of an unrelated Dutch entity (Company F), thereby becoming its majority shareholder. The acquisition was financed by a loan granted by another group company (Company C), which was tax resident in Belgium and had received the funds shortly before, through a capital injection from Company A. Following the acquisition, the two Dutch companies established a fiscal unity. A dispute arose between Company X and the Dutch tax authorities over the deductibility, for Dutch corporate income tax purposes, of interest expenses related to the intra-group loan.

Under the provisions of the Dutch Tax Code applicable at that time (i.e., Section 10a of the Dutch Corporate Income Tax Act), the deductibility of interest expenses incurred with respect to loans contracted from related parties – particularly for internal reorganizations or external acquisitions, was restricted (subject to certain conditions). Two exceptions applied:

• a rebuttal provision allowed taxpayers to deduct the intra-group interest if they could demonstrate that the debt and the related transactions were primarily business-motivated; or
• if the taxpayer could demonstrate that the ‘compensatory tax test’ has been met. Compensatory tax is considered to exist if the creditor is subject to corporate income tax or income tax on the loan interest, with that tax being regarded as fair under Dutch standards. A tax is deemed fair if it results in a tax rate of at least 10 percent on profits calculated in accordance with Dutch standards.

Under settled case-law in the Netherlands, the interest deductibility restriction applied regardless of whether the interest rate was set at a level which would have been agreed between independent parties on an arm’s length basis. The dispute reached the Dutch Supreme which tentatively agreed with the position of the Court of Appeal that the rule under dispute was justified and proportionate in light of the aims of combating tax avoidance and preserving the Dutch tax base. However, the Supreme Court expressed doubts as to whether this conclusion was in line with the CJEU’s decision in case C-484/19, concerning the Swedish interest deduction limitation rules³. Consequently, the Dutch Supreme Court referred the case to the CJEU to clarify whether the rule under dispute was compatible with EU law.

The CJEU found that, whilst the Dutch interest limitation rule represents a de facto restriction on the freedom of establishment, this restriction is justified as it aims to combat tax fraud and evasion. The CJEU further held that the restriction does not go further than necessary to achieve its purpose, on the grounds that: i) it only targets wholly artificial arrangements, and ii) the consequences of a transaction being characterized as such are not excessive. In light of the above, the CJEU concluded that legislation such as that in the case under dispute is permissible under EU law⁴.

Following the CJEU’s ruling, the plaintiff argued that the evidentiary standard for demonstrating that a transaction is “primarily business-motivated” under Section 10a is more stringent than what EU law requires. According to the plaintiff, EU law would merely require that the transaction show ‘some connection to economic reality’. The Supreme Court rejected this argument, holding that a proper interpretation of EU law requires it to be convincingly established that tax considerations were not the decisive reason for entering into the transaction. The existence of (even more compelling) commercial considerations therefore does not preclude a finding that a transaction forms part of a wholly artificial arrangement. In the Supreme Court’s view, the CJEU’s wording should not be interpreted narrowly in this respect; the decisive question is whether tax motives prevailed, irrespective of whether commercial considerations were also present. 

The Supreme Court ruled that tax motives were the basis for providing the group loan via the group financing entity and therefore the interest was non-deductible pursuant to Section 10a. The Supreme Court also clarified that, in terms of the business-motivation test, the rebuttal provision in Section 10a CITA 1969 is in line with EU law. 

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

Dutch Supreme Court holds that rate of interest on tax due for corporate income tax must be reduced

On January 16, 2026, the Dutch Supreme Court (Supreme Court) ruled in a case concerning the interest on corporate income tax due in the Netherlands. The plaintiff was assisted by KPMG in the Netherlands.

Interest on tax due becomes payable when tax is owed and a provisional tax assessment was not requested on time, a tax return was not filed on time, or a tax return that was filed on time is subsequently adjusted. Until January 1, 2024, the interest on tax due for corporate income tax purposes was set at 8 percent of the tax payable. This relatively high rate resulted from its linkage to the statutory interest rate for commercial transactions. As of January 1, 2024, the interest on tax due is no longer linked to the statutory interest rate for commercial transactions but is instead tied to the European Central Bank interest rate.

The Supreme Court ruled that the rate of interest on tax due for corporate income tax payable in 2022 and 2023 is contrary to the principle of proportionality and must be reduced. The Supreme Court also held that charging corporate income taxpayers a higher rate cannot be justified and that the rate of interest on tax due must be aligned with the lower rate applicable to other taxes. The Court also ruled that this lower rate of interest on tax due is proportionate.

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

The tax impact of remote work: state of play and future horizons

Global workforce mobility remains a key issue for multinational groups, both from the perspective of retaining and attracting talent and in responding to the increased flexibility now expected by employees. These developments have driven a significant transformation in how international workforces are managed. In many regions, remote work – whether temporary or permanent, has increased substantially in recent years, both in scale and in permanence.

Against this background, the OECD has released its highly anticipated update to the Commentary on the Model Tax Convention (MTC). One of the most significant developments addressed in this update is the permanent establishment impact of cross-border remote working.

On March 25, 2026, a panel of KPMG tax specialists will share their insights on the impact of the update and what can be expected next, including a closer look at:

• clarifications brought by the revised Commentary, as well as remaining unresolved tax issues relating to remote working;
• expected approaches to the application of the revised Commentary by jurisdictions across the globe;
• industry best practices and practical challenges for businesses in managing the global mobility of individuals, including personal income tax and transfer pricing considerations;
• potential future OECD initiatives in this area and their anticipated impact on multinational groups.

Please access the event page to register.

Navigating the first wave of EU public country-by-country reporting

The regulatory landscape for multinational groups operating in the European Union has become more complex with the implementation of the EU public country-by-country (CbyC) reporting requirements across all Member States. Whilst for most in-scope multinational enterprises (MNEs) the first round of disclosures under these new rules will be due by the end of 2026, with respect to financial year 2025 (for calendar year taxpayers), others have already published their first disclosures.

Specifically, non-EU groups with significant operations in Romania and MNEs headquartered in Romania were required to publish their first reports by the end of 2024. Similarly, MNEs with a qualifying presence in Croatia are subject to a reporting obligation with respect to financial years starting on or after January 1, 2024, with these reports due by the end of 2025.

With the public CbyC reporting rules now in effect across all EU Member States, aside from the exceptions mentioned, 2025 is the first year for which that compliance is required across the full range of EU countries in which these groups have a qualifying presence. As a result, non-EU MNEs will now need to consider differences in national implementation when preparing their public CbyC reports.

To help multinational groups understand the practical implications of these new requirements, KPMG’s EU Tax Centre (ETC) conducted an internal survey in December 2025 across the network of KPMG member firms² in Europe. The results of the survey were summarized in a dedicated blog post. 

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