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State aid

EU Member States express concerns regarding Clean Industry State Aid Framework proposal

On April 17, 2025, the Polish Presidency of the Council released from EU Member States on points of interest in the State aid field. The paper also includes feedback on the European Commission’s proposal on a new Clean Industry State Aid Framework (CISAF), released on March 11, 2025. The proposal aims to support clean technology investments through, among others, tax credits and shorter depreciation periods.

Key takeaways on the feedback provided by EU Member States include:

• Concerns over budgetary restraints: A number of EU jurisdictions expressed concerns that looser State aid rules would disproportionately benefit nations with large budgets. Belgium, Czechia, Estonia, and Finland advocated for a return to the regular State aid framework to prevent a subsidy race that could destabilize the EU's fiscal health. For more information, please refer to the summary below on the 2024 State aid Scoreboard.
• Competitive challenges: The Netherlands acknowledged EU competitiveness issues but suggests enhancement through various EU policy tools rather than over-relying on State aid measures.
• Matching non-EU subsidies: Concerns were raised by Finland and the Netherlands about matching subsidies from non-EU countries, as seen with the Temporary Crisis and Transition Framework (TCTF), which aims to counteract the U.S. Inflation Reduction Act's effects.
• Tax incentives for corporate investors: Greece proposed extending tax incentives to corporate investors, not just individuals, under article 21a of the General Block Exemption Regulation.
• SME definition review: Croatia, Cyprus, Italy, and Slovenia requested a review of the definition of small- and medium-sized enterprises (SMEs) under consideration of inflation causing more companies to exceed the current EUR 50 million turnover threshold. Additionally, Belgium, Italy, and the Netherlands sought clearer definitions for "undertaking in difficulty,". Furthermore, Italy suggested aid for micro and small enterprises which are not subject to insolvency proceedings.
• Flexible rules for island states: Malta advocated for more adaptable State aid rules to address challenges faced by island member states, particularly in strategic areas like transport and energy networks.

For more information on the CISAF, please refer to E-News Issue 208.

Commission releases 2024 State aid Scoreboard

On April 8, 2025, the European Commission released the , offering a detailed analysis of State aid spending across the EU for the year 2023. The report highlights a shift in focus towards long-term EU objectives, despite an overall decrease in spending.

Key takeaways include:

Overall spending decline: Total State aid expenditure fell to EUR 186.78 billion in 2023, a 23 percent decrease from EUR 243.27 billion in 2022. This accounts for 1.09 percent of the EU gross domestic product (GDP). The reduction in spending is attributed to the phasing out of crisis aid related to the COVID-19 pandemic and to the Russian invasion of Ukraine.

Increased spending with respect to EU priorities: 73 percent of State aid expenditures were directed towards key EU policy goals, such as environmental protection, energy savings, research, development, innovation, and regional development. This marks an increase from 49 percent in 2022, with spending on these objectives rising to EUR 136.78 billion from EUR 119.98 billion. The largest portion of spending was on environmental protection and energy savings, totaling EUR 55.32 billion, which represents about 30 percent of total State aid expenditures. Measures under the Temporary Crisis and Transition Framework (TCTF) to address the economic impacts of the Russian war against Ukraine and to promote a net-zero economy accounted for EUR 39.45 billion, or 21 percent of State aid spending.

Spending per country: The scoreboard provides a breakdown of State aid expenditures by country indicating that Germany, France, Italy, and Poland (as the first, second, third and firth biggest member states) have made the most use of State aid spending with respect to TCTF-related aid, COVID-related aid and non-crisis aid.

For further details, refer to the European Commission's .

EU Institutions

European Commission initiates targeted consultation on barriers to EU capital markets integration

On April 15, 2025, the European Commission a targeted consultation on barriers to EU capital markets integration. This process is part of implementing the savings and investments union (SIU) strategy, adopted on March 19, 2025 (for more details on SIU, please refer to E-News Issue 209).

The consultation process is structured into six key topics to encourage focused feedback and dialogue:

• Simplification: This topic focuses on removing barriers to enhance the integration and modernization of EU capital markets. It aims to simplify the regulatory framework affecting trade, post-trade, asset management, and funds sectors.
• Trading: This section seeks feedback on barriers to integration, modernization, and digitalization of liquidity pools. It covers issues such as cross-border operations in the trading space as well as liquidity aggregation and deepening.
• Post-trading: This topic addresses barriers related to cross-border settlement, the application of new technologies, and inefficient market practices. The consultation aims to identify specific barriers and understand current market practices and costs, seeking feedback on possible measures to achieve integrated and modern post-trading infrastructures.
• Horizontal barriers to trading and post-trading: This section focuses on barriers affecting trading and post-trading infrastructures, including operational synergies, issuance, and innovation. Amongst others, respondents are asked to rank several barriers according to the urgency of resolution, including Inefficient withholding tax collection procedures (the lack of a relief-at-source system) and non-harmonized procedures to collect transaction taxes.
• Asset management and funds: This section aims to identify obstacles for EU funds and asset managers in accessing the single market and managing cross-border investment funds. It seeks insights into the effectiveness of existing authorization and passport systems and possibilities for simplifying current requirements.
• Supervision: The final topic covers supervisory arrangements, focusing on the effectiveness of the current framework and exploring new direct supervisory mandates. It addresses specific sectors such as central counterparties, central securities depositories, trading venues, asset managers, and crypto-asset service providers. The consultation seeks feedback on governance models, supervisory convergence, data, and funding.

Stakeholders are invited to respond to the online questionnaires by June 10, 2025. The European Commission plans to propose legislative measures in the fourth quarter of 2025. For more details, please refer to the .

OECD and other International 

Public statement by the Inclusive Framework on BEPS

On April 11, 2025, the OECD/G20 Inclusive Framework on BEPS released a following its 17th Plenary Meeting, hosted in Cape Town, South Africa.

Key takeaways include:

• The Inclusive Framework reaffirmed its commitment to advance the BEPS implementation work and to continue the discussions on Pillar One and Pillar Two, with the goal of securing certainty and stability.
• The Inclusive Framework agreed to explore new areas of common interest using a phased evidence-based approach, including in relation to global mobility and the interaction between tax policy, inequality and growth.

For more information, please refer to the OECD .

Local Law and Regulations

Defensive tax measures targeting low-tax jurisdictions adopted by Parliament

On April 10, 2025, the Cyprus House of Representatives passed legislation introducing tax defensive measures against low-tax jurisdictions.

Currently, subject to certain conditions, withholding tax applies to dividends (17 percent), interest (17 percent) and royalties (10 percent) paid by a Cyprus corporate tax resident to its associated entities, which are resident in a jurisdiction featured on Annex I the EU list of non-cooperative jurisdictions or incorporated / registered in such jurisdiction and not a tax resident in another jurisdiction that is not listed on Annex I.�

The new legislation would supplement the current rules and require the application of withholding tax on dividend distributions (rate: 17 percent) to associated entities registered in any low-tax jurisdictions and not tax resident in another jurisdiction. Furthermore, interest and royalty payments to those associated entities would be non-deductible for corporate tax purposes. Low-tax jurisdictions are defined as jurisdictions with a corporate tax rate that is lower than 50 percent the corporate tax rate in Cyprus (currently 12.5 percent).

According to the new legislation, Cyprus intends to initiate treaty renegotiations with jurisdictions classified as low-tax or non-cooperative jurisdictions if existing treaties do not allow Cyprus to impose withholding tax on dividends, interest, and royalties.

The new measures targeting low-tax jurisdiction would apply from January 1, 2026.

For more details, please refer to a tax alert prepared by ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø in Cyprus.

For more details on defensive measures adopted by EU Member States against non-cooperative jurisdictions, please refer to our dedicated summary.Ìý

Consultation launched on amendments to interest deduction limitation rules

On April 9, 2025 the Finnish Ministry of Finance a public consultation on a draft proposal amending the interest deduction limitation rules.

Key takeaways from the proposal include:

• The proposed amendments would allow critical entities (as defined under the on the resilience of critical entities of December 14, 2022 (2022/2557)) to deduct exceeding borrowing costs resulting from loans related to financing long-term infrastructure projects deemed critical for security of supply.
• The proposal builds on the exemption of long-term public infrastructure projects under the Anti-Tax Avoidance Directive (ATAD). The exemption allows Member States to exclude from the scope of the interest limitation rules exceeding borrowing costs incurred on loans used to fund a long-term public infrastructure project, subject to conditions.
• Under the Critical Entities Resilience (CER) Directive, entities must be identified as critical operators by July 17, 2026.

According to the consultation page, Finland plans to engage with the European Commission to ensure that the proposed measure does not constitute unlawful State aid.

Stakeholders are invited to provide feedback by May 30, 2025.

Gibraltar publishes revised anti-avoidance rules in Income Tax Amendment Bill 2025

On April 10, 2025, the Government of Gibraltar the Income Tax (Amendment) Act 2025, proposing changes to the existing anti-avoidance rules under section 40 of the Income Tax Act 2010. According to the revised rules, the Commissioner of Income Tax has the authority to nullify or disregard any tax benefit that a person has gained through a tax avoidance arrangement.

Key takeaways include:

• Definition of an “arrangementâ€�: The term encompasses structures, agreements, contracts, plans or understanding, regardless of enforceability, including all steps and transactions involved.
• Criteria for a “tax avoidance arrangementâ€�: An arrangement is considered tax avoidant if it (i) primarily aims to secure a tax advantage, or (ii) results in a tax advantage inconsistent with legislative intent, or (iii) undermines the objectives of the Income Tax Act. In determining whether a person has engaged in a tax avoidance arrangement, the Commissioner shall apply a substance-over-form approach, considering but not limited to (i) the economic reality of the arrangement, (ii) the artificiality of the arrangement, or (iii) whether the arrangement is designed primarily for obtaining a tax advantage.
• Definition of a “tax advantageâ€�: A tax advantage refers to a financial benefit where the Commissioner suspects that an arrangement reduces or eliminates taxable income.
• Burden of proof: The responsibility lies with the taxpayer to prove to the Commissioner that the arrangement was not implemented with the intent of tax avoidance.
• Assessment and modification: Tax charges arising from counteracting or disregarding tax advantages can be imposed through assessments, modifications, amendments, or disallowance of claims.

For more information on the application of the General Anti Abuse Rule (GAAR) in EU countries, please refer to our summary.

Joint Statement issued by Italian and US administrations

On April 18, 2025, a was published by the Italian and US administrations following the meeting between the US President and the Italian Prime Minister on April 17, 2025. The statement reaffirms both countries� commitment to strengthening their strategic alliance across security, economic, and technological domains.

From a tax perspective, key takeaways include:

• The document stresses that a non-discriminatory environment in terms of digital services taxation is necessary to enable investments from cutting-edge tech companies. For more information on recent Italian DST developments, please refer to E-News Issue 205.
• The document indicates that the US will consider investment opportunities offered by the Italian business environment, including through the incentives granted by the new Single Special Economic Zone (SEZ) established in Italy. For more information on Italian tax incentives, please refer to E-News Issue 203.

A package of tax proposals announced by Lithuanian Ministry of Finance

On April 16, 2025, the Lithuanian Ministry of Finance a package of tax proposals aimed at ensuring the financing of the State Defence Fund and enhancing the efficiency and progressivity of the tax system.

Key takeaways from a corporate tax perspective include:

• Corporate tax increase: Proposed increase in corporate income tax rates by 1 percentage point, affecting rates currently at 16 percent (standard corporate income tax rate) and 6 percent, a reduced corporate income tax rate, that may be applied:
  • by small businesses with a maximum of ten employees and an annual income of up to EUR 300,000,
  • by cooperatives entities that receive at least 50 percent of their total income from agricultural activities during the taxable period, and
  • to taxable income derived from the commercialization of assets developed through R&D activities, calculated using a special formula.
• Tax incentives for asset depreciation and support for small enterprises: Proposals include immediate expensing of fixed assets, such as equipment, computer equipment, and software in the tax period in which the assets were put into use.
• Support for Small Enterprises: Proposed extension from one to two years of the period during which the profits earned by newly registered companies would be subject to a nil corporate income tax rate.

The proposed package of legal acts on tax amendments is submitted for discussion with the political community, social partners and the public, with opinions on the amendments expected by May 2, 2025. Once approved by the, the Lithuanian Parliament, the planned implementation date is January 1, 2026.

Lithuania plans expansion of tax reliefs for small and medium enterprises

On April 14, 2025, members of the Lithuanian Parliament amendments to the law on Corporate Income Tax aimed at expanding tax relief for small and medium-sized enterprises (SMEs). The proposed changes are designed to support entities with varying revenue levels and introduce new provisions for tax rate calculations and exemptions.

Key takeaways include:

• Entities with annual revenues of up to EUR 300,000 would continue to benefit from a reduced corporate income tax rate, set at nil for the first tax period and six percent for subsequent periods. The benefit is contingent on the entity's owners being individuals and the entity not undergoing suspension, liquidation, reorganization, or transfer during three consecutive tax periods.
• The reduced tax rate would not be applicable if the revenues of related entities combined exceeded EUR 300,000.
• Qualifying entities with revenues of up to EUR 300,000 can independently determine depreciation or amortization rates for fixed asset groups. This is subject to the condition that the assets are not newly constructed or reconstructed buildings and cultural heritage sites and meeting specific conditions.
• A new tax rate formula is proposed for qualifying entities with revenues between EUR 300,000 and EUR 500,000, as follows:
  • Tax rate = 16 â€� 10 × (500,000 â€� annual revenues) / 200,000.
• Qualifying entities with taxable income not exceeding EUR 500,000 in the previous period would be exempt from the obligation to pay advance corporate income tax.

If the proposed amendments are approved, they will take effect on January 1, 2026.Ìý

Budget Implementation Act published

On April 17, 2025, the  was published in the Official Gazette, introducing Article 22B in the Maltese Income Tax Act. The new article has the nature of an enabling provision only, with the rules yet to be published. Key takeaways include:

• The law allows for the establishment of regulations for an elective or optional tax.
• The provision would be effective retroactively as of January 1, 2024.
• MNEs in-scope of the Pillar Two rule can opt to subject profits to tax in Malta under these rules. The elective tax is presumed to result in a 15 percent effective tax rate.
• The marginal note clarifies that the tax is elective, not mandatory. MNEs not opting for the higher rate would not be subject to these rules.

For more information, please refer to ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø’s Tax News Flash.

Note that Malta partially transposed the EU Directive implementing the Pillar Two rules in February 2024, opting for a delay of the entry into force of the income inclusion rule (IIR) and the undertaxed payments rule (UTPR), and choosing not to introduce a domestic minimum top-up tax (DMTT). For more information on the Malta Pillar Two rules, please refer to E-News Issue 191.Ìý

Public consultation on STTR implementing regulation launched

On April 9, 2025, the Ministry of Finance of Romania launched a  on a , ratifying the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule (STTR MLI). The draft implementing regulation aims to develop a multilateral instrument to facilitate the implementation of the STTR in certain existing tax treaties and to ensure the swift, coordinated and consistent implementation of the STTR. The STTR allows developing countries to tax certain outbound intra-group payments if the recipient's jurisdiction has a corporate tax rate below 9 percent, with some preferential tax adjustments. Romania previously signed the STTR MLI on September 19, 2024.

As included into the  on the legislation to ratify the STTR MLI regulation, the current lists the required notifications and includes 23 tax treaties that should be covered by the STTR MLI.

Interested stakeholders were invited to provide comments by April 20, 2025. The Ministry of Finance of Romania will gather all feedback and conclude the public consultation by May 10, 2025. For more information on the STTR, please refer to E-News Issue 201.

UAE incorporates Pillar Two guidance

On April 16, 2025 the UAE Ministry of Finance , incorporating the OECD / Inclusive Framework Commentary and Agreed Administrative Guidance into local legislation, including the:

• April 2024 Consolidated Commentary,
• June 2024 Administrative Guidance,
• January 2025 Administrative Guidance on Articles 8.1.4/8.1.5 and 9.1 of the GloBE Model Rules,
• January 2025 (updated in March 2025) Administrative Guidance on the central record of legislation with transitional qualified status, and
• GloBE Information Return release published in January 2025.

The Commentary and Administrative Guidance apply with a retroactive effect as of January 1, 2025.

The Ministerial Decision complements , which introduced a DMTT for fiscal years starting on or after January 1, 2025. The UAE is currently not implementing the IIR, nor the UTPR. For previous coverage, please refer to E-Newsâ€�Issue 207.Ìý

Local courts

Restriction of the prohibition of deduction for intragroup interest and license fee payments

Under Austrian tax law, intragroup interest and license fee expenses are non-deductible if the recipient company is subject to a tax rate of less than 10 percent. However, in two recent rulings, the Austrian Federal Finance Court clarified that this restriction does not apply to payments made to entities established in the EU or EEA, except in cases involving tax abuse or excessively high interest rates.

For more details, please refer to a tax alert prepared by ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø in Austria.

Clearance opinion issued on the neutrality of a group restructuring 

On March 11, 2025, the Head of the Polish National Revenue Administration (NRA) issued an in a case related to the neutrality of a reorganization consisting in a share exchange followed by a cross-border merger (DKP16.8082.9.2024).

The NRA acknowledged that the restructuring resulted in a tax benefit � namely, corporate income tax neutrality. However, it determined that this benefit was not the main, or one of the main purposes of the reorganization. In the NRA’s view, the primary goal of the restructuring operation was to streamline the group’s corporate structure by eliminating a Maltese intermediary and transferring ownership of key Polish entities directly to a Polish company. The NRA noted that the new structure would reduce administrative complexity while enhancing operational control and investment efficiency within Poland.

The NRA also took the view that the restructuring operation was motivated by genuine economic and business considerations, such as cost savings, simplified governance, and positioning the group for a potential future asset sale. While the resulting tax neutrality is a result of applying the relevant corporate income tax rules, the NRA concluded that it was not the main purpose, or one of the main purposes of the way in which the reorganization was structured. The NRA also examined an alternative approach of achieving the same structure � i.e., liquidating the Maltese company, and found that this option would have led to higher costs and would have resulted in a misalignment with strategic business goals.

The NRA also took the view that the selected method for the restructuring was a reasonable and economically motivated approach, not an artificial construct. Consequently, the NRA concluded that the restructuring qualifies as tax neutral.

For more details, please refer to a tax alert prepared by ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø in Poland.Ìý

EU public county-by-country reporting (CbyC) reporting - a new era for tax transparency webcast � replay now available

On April 22, 2025, ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø held its latest webcast on EU public CbyC reporting.

The EU has made tax transparency mandatory for multinational groups with a qualifying European presence. Australia has gone a step further, requiring multinationals to disclose not only their CbyC reports to the public but also a description of the group’s approach to tax. This is a game changer in the tax transparency landscape.

To explore these findings further, a panel of ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø tax specialists shared the details of the new regulations. The team zoomed in on the EU disclosure rules, including differences between EU-headquartered companies and non-EU headquartered companies, as well as the particularities of the Australian regime. This webcast included a closer look at:

• An overview of the existing EU public CbyC reporting regulations
• Practical examples of implementation strategies and steps towards meeting the various local requirements
• Insights on lessons learnt from early adopter Romania: what did corporates do?
• An update on Australian public CbyC reporting and the overlap and differences with EU public CbyC reporting
• Insights into the state of play of tax transparency beyond the rules in force and future perspectives
• A solution to data challenges â€� ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø’s Tax Footprint Analyzer.

The replay of the webcast is available on the .

EU Tax Perspectives webcast � May 6, 2025

On May 6, 2025, a panel of ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø professionals will explore the implications of today’s geopolitical climate on EU tax policy, including the future of BEPS 2.0, EU simplification efforts, and recent developments in public CbCR and other direct tax initiatives.

The session will focus on:

• Tax Policy: The potential impact on EU tax policy of the current geopolitical climate, including considerations on the position of the US administration on international tax cooperation, the rise of tariffs, and the future of BEPS 2.0.
• Simplification efforts: The EU Competitiveness Compass, the European Commission work program and the EU tax decluttering and simplification agenda.
• Tax transparency: An update on EU Public Country-by-Country Reporting, including insights from the experience with reporting in Romania, where the first reports were due by December 31, 2024 and a discussion on key steps that in-scope MNEs should be taking now.
• State of play of other EU direct tax files: The Unshell Directive proposal, BEFIT Directive proposal, the Transfer Pricing Directive proposal, DEBRA Directive proposal.

Please access the  to register.

Talking tax series

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

With each new episode, ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø Talking Tax delves into a specific topic of interest for tax leaders, breaking down complex concepts into insights you can use, all in under five minutes. Featuring Grant Wardell-Johnson, ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø’s Global Head of Tax Policy, the bi-weekly releases are designed to keep you ahead of the curve, empowering you with the knowledge you need to make informed decisions in the ever-changing tax landscape.

Please access the dedicated ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø webpage to explore a wide range of subjects to help you navigate the ever-evolving world of tax.