On September 25, some of the world’s top tax professionals gathered for a day of thought leadership and discussion on the evolving complexities of international tax law. The one-day summit, FUSION 2025, featured panelists from three different continents and seven countries — covering topics such as Pillar 2 updates, the impact of global trade wars, and trends among auditors in various regions of the world.
Below, we’re sharing insights from the final panel discussion, which covered many recent international tax developments affecting multinational companies, along with practical considerations for tax, finance, and accounting teams. Each panelist took turns analyzing the tax impact of recent legislative changes within their respective countries. The panelists for this session were Raymond Wynman, Managing Director of GTM’s International Tax Practice; Thomas Schänzle, an International Tax Partner at WTS Global (Germany); Séverine Lauratet, a Tax Partner at WTS Global (France); and Benedict Teow, an Associate at Taxise Asia (Singapore).
Germany: Anti-Treaty Shopping Rules
There are growing indications that German tax authorities are reconsidering their longstanding practice of providing relief from the country’s domestic withholding tax. Although the policy shift is not yet certain, it could potentially affect German companies currently treated as disregarded entities for U.S. tax purposes. Their dividend distribution could be newly subject to a hefty German withholding tax rate of 26.375%.
Despite how that may sound, the shift in practice would provide welcome relief for many multinational companies, especially those involving EU holding companies. German tax authorities have recently clarified that specific common structures — such as those involving disregarded entities or income inclusion under CFC or GILTI regimes — should not result in denied deductions. However, imported hybrid mismatch rules remain complex and continue to require careful analysis across global structures.
German federal tax authorities have also issued updated guidance affecting the availability of reduced withholding tax (WHT) rates under the Germany-U.S. double tax treaty for certain dividend payments. Specifically, tax authorities now take the position that when a German subsidiary is treated as a disregarded entity for U.S. tax purposes (i.e. its income is treated as that of the U.S. parent), dividends paid by that subsidiary to its U.S. parent may no longer qualify for the treaty’s reduced WHT rates, because the payment isn’t considered income “derived” by the U.S. recipient. Under the new anti-treaty shopping rules, a company can still qualify for treaty withholding tax relief on dividends/royalties. Still, it must pass specific anti‑abuse tests in addition to having a treaty/directive on paper.
While the updated administrative guidance may reduce access to zero-withholding tax rates, the clarified stance should also reduce uncertainty about refunds and simplify the process overall.
France: Pillar Two and Participation Exemption Mismatches
Next, the panel addressed Pillar Two and its interaction with domestic and regional tax exemptions in Europe, using France as a case study. For multinationals, there can often be unexpected mismatches between local tax exemptions and Pillar Two rules, due to variables like differences in ownership thresholds, holding period requirements, and varying definitions of qualifying dividends.
In France, along with many other EU nations, for a company to benefit from an exemption at the level of a parent company, several conditions must typically be met:
- The French parent company must be subject to corporate income tax at a standard rate.
- The French parent company should hold at least 5% of the subsidiary’s capital, not its voting rights.
- The French parent company should keep the qualifying shares for at least two years.
Consider how a mismatch could arise in this hypothetical scenario: a French parent company holding more than 5% of the capital of a UK subsidiary and receiving dividends from that subsidiary would be eligible for a domestic exemption. At the same time, based on Pillar Two, they could not exclude this income from the computation of the effective 15% tax rate. In other words, there’s a mismatch at the level of the parent company. Conversely, there are situations in which Pillar Two taxes may not be recognized as creditable corporate income taxes under local law, creating the risk of double taxation.
All of these developments reinforce the need for coordinated tax, accounting, and structuring analyses inside multinationals as Pillar Two continues to be implemented across jurisdictions.
Singapore: Tax Updates and Regional Considerations
Singapore is known as one of the most R&D-friendly tax regimes in the world. With generous deductions and exemptions for multinationals already in place, the country remains an attractive location for global companies, despite the government’s recent efforts to increase alignment with international tax standards.
The government of Singapore continues to offer no withholding tax on dividends, even as a range of legislative efforts have been made to improve Pillar 2 compliance, such as:
- Qualified Domestic Minimum Top-up Tax (QDMTT): Singapore has recently signaled a willingness to implement a QDMTT in order to raise the effective tax rate on multinational companies and ensure they pay the agreed-upon 15% minimum.
- Income Inclusion Rule (IIR): Along with the QDMTT, the government recently passed the Multinational Enterprise Act, which is designed to align its tax regime closely with the OECD model.
- Alternative Incentives: While Singapore has traditionally relied on tax incentives to attract investment, many of these measures are no longer compatible with Pillar Two. To adapt, the country has introduced alternatives such as a refundable investment credit, which offsets higher income taxes without breaching global rules.
Benedict Teow also noted increased audit activity by government tax officials regarding GST refunds, cross-border supplies, and documentation as key concerns for companies operating in or through Singapore.
How GTM Can Help
There are many moving parts in this new international tax and trade landscape. The need for contingency planning, modeling, and reviewing global structures is at an all-time high.
At GTM, we offer a range of tax solutions and industry-leading expertise. Our team is available to walk clients through policy shifts, technology and automation solutions, and tax filings on your behalf or through a collaborative structure.
Learn more about the tax solutions we’ve brought to clients here. Reach out to us today to discuss how to prepare effectively for your tax future.
