EU Response to US Tariffs

On 3 April 2025, President of the European Commission, Ursula von der Leyen, issued a statement in response to the ‘reciprocal’ 20% tariff announced by the US on imports from the EU. It confirmed that the Commission wants to negotiate with the US and believes that tariffs are bad for consumers, business and trade. It also noted that if negotiations fail, the EU will respond. Subsequently, the Commission finalised a package of countermeasures on 9 April 2025 some of which were due to come into effect on 15 April 2025. Broadly, Member States have remained aligned in their response to the US tariffs. Only Hungary voted against the tariff package agreed on 9 April 2025.

Later on 9 April 2025, the US announced a ninety day suspension of all ‘reciprocal’ tariffs (including the 20% tariff on imports from the EU) although a baseline 10% tariff remains in place on most imports to the US. On 10 April 2025, President von der Leyen made a further statement suspending the proposed EU tariffs agreed on 9 April 2025 to allow for negotiations with the US. That statement also noted that if negotiations failed, the EU countermeasures would begin to apply and that “all other options remain on the table”.

There has been some speculation about what other options the EU might be considering. One option that has been reported as being under consideration is an EU digital levy. As a tax measure, any such proposal would require unanimity which would be challenging to achieve. The Taoiseach confirmed that Ireland would resist any move by the EU to introduce such a levy and similarly, Sweden confirmed they would be opposed to an EU wide levy or DST. In addition, Hungary is unlikely to support any proposal that might be regarded as a direct attack on US businesses.

With respect to EU tariffs, the Commission has adopted two implementing acts: (i) one that adopts the EU countermeasures; and (ii) another act that immediately suspends them until 14 July 2025.

Our Customs and Trade Law team are monitoring developments closely in this area and advising businesses on how best to manage their obligations.

Update on Pillar Two

On 11 April 2025, the OECD Inclusive Framework (the “IF”) issued a short statement following the conclusion of the IF meeting. This was the first meeting attended by a US delegation from the new Trump Administration. Therefore, the meeting would have provided the opportunity for the US to articulate its position on Pillar Two. However, the statement gives no indication of what that position is.

Notably, the attendance of the US at the meeting and that the US does not appear to have withdrawn from the talks on Pillar Two is, of itself, a cause for optimism. The statement (which would have been agreed by all members of the IF, including the US) notes that members of the IF “recognised the critical importance of securing certainty and stability in the international tax system, in particular with respect to the implementation of Pillar Two and the ongoing Pillar One negotiations, agreeing to continue discussions in furtherance of this objective.” The members also “agreed to take stock of the BEPS work to date and contributed initial observations and ideas that will shape an anticipated report to be shared with the G20 later in 2025”.

More recently, it has been reported that the EU Council’s Polish presidency has proposed three options to address the US concerns on Pillar Two:

• revisit the Pillar Two rules on what is a qualified refundable tax credit – certain US tax credits do not qualify under the current definition and a change could be made to address that;
• limit the application of the UTPR by, for example, extending the safe harbour – there has been an on-going discussion about making the safe harbour permanent which may address some of the US concerns; or
• treat the US global intangible low-taxed income regime as a qualified IIR.

These options were due to be discussed first by the EU high-level working party on tax questions on 29 April 2025.

Tax Appeals Commission Annual Report 2024

On 30 April 2025, the Tax Appeals Commission (“TAC”) issued its Annual Report for 2024 (the “Report”). It includes data on the number of appeals received and closed by the TAC in 2024.

• 1,711 appeals closed during 2024, of those 628 were withdrawn by the appellant, 595 were settled and determinations were issued in respect of 220.
• Of the determinations issued, 86% were found in favour of the Irish Revenue.
• 11 cases stated were issued for appeal to the High Court (eight requested by taxpayers, three by Irish Revenue).
• There were 711 appeals on hand at the end of 2024, compared to 1,141 at the end of 2023.
• The Report notes that in the first two weeks of January 2025, TAC received 15 appeals with a combined value of €417 million - this more than doubled the quantum of tax under appeal.
• Many of the high value appeals continue to relate to corporation tax although the highest number of appeals relate to income tax.

Public Consultation on the Research & Development Tax Credit and on Options to Support Innovation

On 2 April 2025, the Department of Finance issued a Public Consultation on the Research & Development (“R&D”) Tax Credit and on Options to Support Innovation (see here).

Public consultations on the R&D tax credit are held every three years and this consultation is in line with that pattern.

The consultation paper includes a number of questions, including questions regarding sub-contracting R&D both to universities and third parties. It also seeks information from stakeholders on the type of R&D they are engaged in and whether the recent changes introduced to the regime have encouraged further R&D activity in Ireland.

Section 6.2 of the paper also seeks to explore the concept of ‘innovation’ with a view to possibly introducing an additional relief for innovative activities. The paper is clear that any such relief if introduced would operate separately to the R&D tax credit.

Responses to the consultation are due by 19 May 2025. Please contact us if you wish to discuss any feedback in response to the consultation.

Publications

Public Country-by-Country Reporting for Multinationals Commencing Imminently

Public country-by-country reporting obligations are due to commence shortly for certain multinationals and it is important to be prepared for these public filings. In this article, Tax partner Philip Tully and Tax advisor Luis Pita, provide an overview of the publication requirements for in-scope multinationals.