EU / US Trade Deal

On 27 July 2025, the US and EU announced a framework trade agreement for a baseline tariff of 15% to apply to “the vast majority of EU exports” and a 0% tariff for certain specific types of goods. The 50% tariff for steel and aluminium remains in place for now. The full details of the agreement are yet to be published.

In a statement by the President of the Commission, Ursula von der Leyen, it notes that the 15% rate is a ceiling and will apply across most sectors including cars, semiconductors and pharmaceutical products (which are subject to an ongoing trade investigation by the US Department of Commerce). It is also noted that the zero-for-zero tariffs for certain strategic products includes all aircraft and component parts and certain agricultural products but that the EU will “keep working to add more products to this list”.

In response to the trade deal, the Irish Taoiseach, Micheál Martin, noted: “We will now study the detail of what has been agreed, including its implications for businesses exporting from Ireland to the US, and for different sectors operating here. The agreement is a framework and there will be more detail to be fleshed out in the weeks and months ahead.”

Matheson LLP’s dedicated Customs and Trade Law team are monitoring developments closely in this area and assisting businesses to navigate the potential impact of new US and EU tariffs.

Pillar Two Negotiations

As noted in our June update, the G7 issued a joint statement on global minimum taxes outlining the shared understanding to allow US tax laws to sit “side-by-side” with the Pillar Two rules. Our Matheson Insight (here) sets out further details on the shared understanding, what the main points of negotiation are likely to be and what the next steps are.

EU Developments - the Corporate Rescue for Europe

On 16 July 2025, as part of the draft budget proposal for 2028 – 2034, the Commission outlined a new own resource proposal to impose an annual lump-sum contribution on all companies operating and selling in the EU with a net turnover exceeding €100 million (the Corporate Rescue for Europe, (the “CORE”)). It is proposed that the contribution would be capped at €750,000 for companies with net turnover exceeding €750 million. The budget must be approved unanimously by all EU Member States and the negotiation is expected to take up to two years. The timing of the CORE proposal jars with the Commission’s purported focus on competitiveness. The German government has publicly criticised the proposal.

Tax Strategy Group Papers - Budget 2026

On 24 July 2025, the Department of Finance issued the Tax Strategy Group (“TSG”) papers for Budget 2026. The TSG is chaired by the Department of Finance and its members comprise senior officials and political advisers from a number of civil service departments and offices. Papers on various options for tax policy changes are prepared for the group annually by Department of Finance officials. The TSG is not a decision making body and the papers produced are simply a list of options and issues to be considered in the Budgetary process.

The Corporation Tax paper includes:

Discussion on the on-going OECD work:

• It notes that the path forward on Pillar One remains challenging and that progress in the near term also appears unlikely given the recent statements from the US in relation to the OECD agreement. However, Ireland remains committed to this approach and continues to engage positively in discussions on Pillar One notwithstanding the current challenges.
• On Pillar Two, it notes discussions are ongoing at both the OECD and the EU with regard to potential next steps for Pillar Two and how to best address the concerns raised by the US. Ireland believes it is essential that a global solution is found through the OECD to ensure a level playing field globally that does not leave Ireland and the EU in a position whereby its competitiveness is seriously harmed.

An update on the work related to the Irish participation exemption:

• This work follows a commitment in the Budget speech last year to consider elements of the Irish participation exemption for foreign dividends, including the geographic scope. Work is also being undertaken to consider the possibility of introducing a participation exemption for foreign branch profits into the Irish corporation tax code.

An update on the 2025 review of the R&D tax credit:

• It notes that the feedback received from the public consultation will help to shape and inform policy considerations for potential enhancements to the R&D regime and will similarly inform any policy considerations regarding potential measures to support innovation.

Tax Controversy and Dispute Resolution Updates

The Susquehanna Case: The Court of Appeal Rules on Tax Residence of Disregarded US LLC

As noted in our May update, the Court of Appeal recently affirmed a previous decision of the High Court that a disregarded US LLC was not a resident of the US for the purposes of the US-Ireland double tax treaty and, consequently, the taxpayer's claim for group loss relief was denied. Our Matheson Insight (here) considers this decision in further detail and looks at distinguishing factors that may be relevant for other multinational group structures.