EU Tax Watch

The Council formally adopted amendments to the ETS2 market stability reserve on 9 October. The changes are intended to improve liquidity and contain excessive allowance-price increases ahead of the system's planned full launch in 2028.

T&M analysis: a larger allowance release can moderate a price surge, but it is not a guarantee that carbon costs remain below a fixed price. Businesses should retain more than one carbon-cost assumption in budgets and commercial contracts.

The important exposure question is where a business sits in the fuel supply chain and how costs could pass through. A company affected indirectly through purchased fuel is in a different position from the entity responsible for surrendering allowances.

Confirm Official Journal publication before recording legal commencement. Then review the amendment with the rules governing the business's actual ETS2 role. For GCC groups with EU operations, this is a European operating-cost and compliance issue. It does not create a new GCC tax or extend CBAM to fuel distributors.

The Council agreed key elements of its negotiating position on the market integration and supervision package on 9 October. The position still requires finalisation and formal adoption; negotiations can begin once Parliament adopts its own position.

T&M analysis: a more integrated market could alter the operating economics of exchanges, custody, clearing and cross-border fund servicing. Whether that benefit materialises depends on the final scope, transition arrangements and implementation.

GCC institutions with European investments or financial-service subsidiaries should map where national licensing and supervision currently create duplicate processes. That provides a concrete basis for assessing the eventual rules.

Track formal Council adoption, Parliament's position and the negotiated text. Avoid treating political agreement as a completed supervisory transfer. Commercial planning can test an integration scenario, but authorisations, outsourcing arrangements and reporting processes should continue to follow the rules currently applicable to each entity.

On 9 October 2026 the Council adopted the revised list, moving Panama and Viet Nam to Annex II. The Council states that the list becomes official upon Official Journal publication; that publication date was not established by this review.

EU listing and screening can influence tax-governance risk assessments, defensive measures and the conditions attached to certain EU policies and funding. The process is dynamic rather than a one-off designation.

The Council's current screening page shows Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates as cooperating jurisdictions with no pending commitments. Continued relevance remains high because the criteria and country assessments are monitored over time, and any future status change could affect EU-linked investment and compliance risk assessments.

Watch Official Journal publication and the February 2027 Council revision and any changes to screening criteria or defensive-measure linkages. Tax & Markets will distinguish Annex I listing, Annex II commitments and fully cooperative status rather than collapsing them into a single blacklist label.

On 24 June 2026 the Commission issued the two legislative proposals. The package includes changes touching withholding taxes between EU companies, CFC/Pillar Two interaction, interest limitation, dispute resolution and duplicate DAC reporting obligations.

If adopted, the package could change the compliance and financing environment for multinational groups operating across EU member states, including groups headquartered or financed from the GCC.

GCC groups with material European operations may be exposed to the EU rules being simplified, including CFC, interest-limitation and administrative-cooperation requirements. The proposal may also alter the tax-friction and certainty profile of EU investment structures, but it is not yet binding law and should not be presented as such.

The proposals go to the European Parliament for consultation and to the Council for adoption. No final adoption date is stated on the Commission page, so Tax & Markets will track institutional progress without inventing a timetable.

The Council adopted DAC9 on 14 April 2025. Member states were required to transpose it by 31 December 2025, and the first top-up tax reporting deadline identified by the Council was 30 June 2026.

The rules affect how large multinational groups organise Pillar Two information reporting across EU entities and how tax authorities exchange the data needed for risk assessment and top-up-tax administration.

A GCC-headquartered group within the Pillar Two threshold can have EU constituent entities subject to the EU reporting framework even though the parent is outside the EU. DAC9 therefore matters to data flows, central filing strategy and coordination between GCC headquarters and European subsidiaries.

Monitor practical application across member states and the June 2026 DAC recast proposal, which would simplify duplicate DAC4/DAC9 notifications if adopted. The proposed simplification is tracked separately from the DAC9 rules already in force.

Council Directive (EU) 2025/50 was adopted on 10 December 2024 and published in the Official Journal on 10 January 2025. Member states now have a transposition period before application from 2030.

Withholding-tax friction is a practical cost of cross-border portfolio investment. Faster relief and more standardised intermediary processes can affect the after-tax return and administration of investments in EU shares and bonds.

The Commission's FASTER framework expressly contemplates proof of residence in a non-EU country. GCC investors in EU securities may therefore benefit from more standardised relief procedures while intermediaries serving them may face certification, due-diligence and reporting requirements.

Member states must transpose the directive by 31 December 2028 and apply the national rules from 1 January 2030. Tax & Markets will monitor implementation details that materially affect GCC investors and intermediaries.

Regulation (EU) 2026/2108 was signed on 16 September, published on 19 September and entered into force on 20 September. Article 287 separates general application and specific exceptions.

The reform reallocates customs responsibility toward the platforms controlling online sales and product data, while centralising EU customs information and strengthening enforcement across member states.

GCC businesses selling goods directly to EU consumers, or through non-EU marketplaces, may face new importer, data, duty, fee and product-compliance expectations. The commercial effect will depend on route-to-market, platform contracts, product classification and whether the seller uses EU warehousing or direct shipment.

Map obligation-specific application dates and verify the fee-setting delegated act. The separate EUR 3 customs duty should not be confused with the handling fee. The fee applies ten days after its delegated act enters into force; this review did not establish that act or amount.

The Commission published a 2026 implementation work programme and, in July 2026, revised OSS guidance and implementing rules ahead of changes beginning on 1 January 2027.

The package changes how businesses report cross-border VAT, how certain platforms account for VAT and how businesses can manage VAT registrations across the EU.

GCC businesses selling goods or services into the EU, operating relevant platforms or maintaining EU VAT registrations may be affected by the phased changes. The Single VAT Registration measures and rules for non-identified suppliers can also change the compliance model for businesses established outside the EU.

Minor OSS/IOSS changes take effect from 1 January 2027. Major platform and Single VAT Registration measures begin on 1 July 2028, followed by cross-border B2B digital reporting requirements from 1 July 2030.