EU Response to US Tariffs

The European Commission (“Commission”) is actively preparing its response to US tariffs should the ongoing negotiations not reach a successful outcome and has launched a public consultation on the categories of products which could be subject to the proposed tariffs and export restrictions.

The public consultation runs until 10 June 2025 and based on the input from the consultation, the Commission will finalise its proposal for the adoption of countermeasures. The potential countermeasures begin to come into force on 15 July 2025 if negotiations with the US fail.

In our latest Insight article, Matheson’s dedicated Customs and Trade Law team consider the EU response to the US tariffs.

Pillar Two Negotiations

As noted in our April update, there are on-going negotiations at OECD level to address the US concerns on Pillar Two.

From an EU perspective, the European Parliament Sub-committee on Tax Matters hosted a public hearing on 15 May 2025 regarding the implementation of the Two-Pillar Solution in view of international developments and the EU-US relations.

As part of this hearing Manal Corwin, Director of the OECD’s Centre for Tax Policy and Administration, noted that there is a “shared interest in preserving policy gains associated with the minimum tax, and seeking a path forward that addresses concerns, resolves challenges, and clarifies the interaction of multiple minimum tax regimes (recognising that the US has had the GILTI regime in place for many years, and that many countries have already adopted the Pillar Two global minimum tax)”. While, there appears to be a broad willingness to seek to facilitate the US position (that the US tax system would sit side-by-side with the Pillar Two system), many countries that have implemented Pillar Two, including Ireland, remain concerned that any solution should not put those jurisdictions at a competitive disadvantage.

It is understood that negotiations on Pillar Two will continue throughout the summer months. The US has included retaliatory tax measures in their draft US tax reform bill which is currently making its way through the US legislative process. The inclusion of those measures adds further impetus to conclude the Pillar Two negotiations before the end of the year.

Finance Bill 2025: Matheson Submission

Matheson made a submission to the Irish Department of Finance outlining changes that should be made in Finance Bill 2025. While the main focus of the submission was to address glitches in Irish tax legislation that persistently raise issues in practice, it also called for improvements to the participation exemption introduced last year. The submission includes suggested solutions to address the issues identified. The first draft of the Finance Bill is expected in October 2025 and it is expected to be signed into law before the end of the year.

Tax Controversy and Dispute Resolution Updates

Court of Appeal Decision in Susquehanna International Securities Limited v The Revenue Commissioners

On 27 May 2025, the Irish Court of Appeal issued its decision in Susquehanna International Securities Limited, Susquehanna International Group Limited and Susquehanna Atlantic Limited v The Revenue Commissioners ([2025] IECA 123) in which it dismissed the appeal by Susquehanna against the judgment of the High Court.

The taxpayer had sought to rely on a US LLC to form an Irish corporate tax group to facilitate the surrender of losses between Irish group companies.

As outlined in a prior update, the High Court found in favour of Revenue by holding that a US LLC that was disregarded for US tax purposes could not be considered to be liable to tax and therefore, could not be treated as a resident of the US for the purposes of the Ireland / US double tax treaty (the “Treaty”) (a requirement that it had to satisfy in order to be treated as a member of the Irish corporate tax group). Further, the High Court held that as the LLC was not a resident of the US for the purposes of the Treaty, the taxpayer group could not rely on the non-discrimination article in the Treaty to be treated as a member of a corporate tax group for the purposes of claiming group loss relief under section 411 of the Taxes Consolidation Act 1997 (“TCA”).

The Court of Appeal concluded that the High Court was correct in finding that the US LLC, by reason of its fiscal transparency, was not liable to tax in the US and accordingly, was not a resident of the US for the purposes of the Treaty; and in finding that the taxpayers were not entitled to group relief under section 411 TCA.

Tax Appeals Commission Annual Report 2024

As noted in our April update, the Tax Appeals Commission (“TAC”) issued its Annual Report for 2024. The report offers valuable insights into the impressive performance of TAC.

In this article, the Matheson Tax team, provide an overview of the report and its key statistics for 2024.

Publications

Key Insights From Irish Revenue’s 2024 Annual Report

The Irish Revenue Commissioners (“Revenue") recently published their 2024 Annual Report. The report highlights Revenue’s continued focus on international tax dispute resolution and the evolving role of data analytics and information exchange in Revenue’s risk analysis processes.

In this article, the Matheson Tax team examine the key elements of the report on Advance Pricing Agreements, Mutual Agreement Procedures and compliance interventions.