This week the OECD published the details of the Pillar Two Side-by-Side Package, which paves the way for US cooperation with the Pillar Two initiative. The agreement exempts US headquartered multinationals from most of the Pillar Two rules (implemented in Ireland under the EU Minimum Taxation Directive). The compromise reached will see countries that operate a minimum tax system with similar policy objectives and overlapping scope as Pillar Two granted ‘Side-by-Side’ status (SbS).   Importantly from an Irish perspective, the report notes that qualified domestic minimum top-up taxes (QDMTTs) aligned with the Pillar Two rules will continue to apply to Irish subsidiaries of US-headquartered companies. As such, QDMTTs should continue to be collected in Ireland and an even playing field should be maintained as a result.  The Inflation Reduction Act in the US introduced a new corporate alternative minimum tax (CAMT) of 15 percent effective for tax years beginning after 2022. As such, the same minimum tax rate that applies to US and Irish headquartered entities. This is naturally key to ensuring that the compromise agreement does not immediately provide a competitive advantage to companies headquartered in the US over similar entities headquartered in Europe and other jurisdictions implementing Pillar Two.  In addition to the SbS Safe Harbour, the package also brings broader simplifications, including a simplified effective tax rate safe harbour, the extension of the transitional country-by-country reporting (CbCR) safe harbour, as well as a substance-based tax incentive safe harbour. 

Over a year ago Mario Draghi presented his competitiveness report to the European Commission and the European Parliament. Since then, along with defence and security, we have heard of little else from the EU, which is welcome. We have to improve EU competitiveness; we are losing ground to our competitors and businesses are too laden with regulation to innovate and grow. These are all arguments we have heard repeatedly from commentators and politicians alike over the past year. This was turbo charged in April when US president Donald Trump announced a series of tariffs on what he termed ‘liberation day’. Despite subsequent agreement between the EU and the United States, the stakes now could not be higher for Europe and all member states. The Draghi Report showed in clear terms that regulations, while well intentioned, have significant costs which are ultimately borne by businesses. This holds businesses back, prevents them from growing and scaling and hinders investment. It is one of the many reasons why companies go to other countries like the United States to grow and scale. If an Irish start-up wishes to expand into European markets, they need to learn, not only European rules but also the individual rules and regulations that are unique to each member state. In many cases this is an impossible task. The issue is not confined to small companies. Large companies also have to deal with complexity. Take tax, for example. Companies across Europe, including in Ireland, are implementing the EU Minimum Tax Directive which arose out of the OECD two pillar process. While that directive is locked in, many other countries, most notably the US, have yet to implement what were supposed to be global rules. Companies are spending thousands of hours and a lot of cash implementing an agreement that our main competitor jurisdictions are not. These are just some of the examples of the regulatory complexity facing companies in Europe, there are many more. One piece of regulation, in itself, may not add to the administrative burden, but it is the cumulative impact that can bury a business in red tape. Chartered Accountants Ireland fully endorses the Draghi Report and in particular the rallying call for regulatory simplification. As we move into 2026, what do we have to show for all the commentary on competitiveness? Well, progress has been made, but, as ever, tangible progress is slow. At a European level, throughout 2025, the Commission has proposed numerous omnibus proposals and other simplification initiatives in areas from digitalisation to small mid-caps to even the simplification of chemical legislation. From a tax perspective we have seen the Omnibus on Taxation which aims to simplify the increasingly complex tax environment across Europe. A 28th Regime, proposing a consistent company rulebook throughout the EU for small and medium-sized companies, has also been launched and is being led by Ireland’s EU Commissioner Michael McGrath. The Capital Markets Union which aimed to simplify the regulatory environment for capital and equity markets has been revived in the newly labelled Savings and Investment Union. The problem is that it is easy to talk about simplification, it is much harder to do it in practice. Each of these policy areas are monumental in their own right. Does the Commission have the capacity to really advance these well-meaning proposals through the Council and the Parliament? We know how long it can take to get proposals through the system, and some can lose momentum and get completely bogged down. The previously mentioned Capital Markets Union trundled along for many years with little to show for it at the end. As we move into 2026, Ireland has a unique opportunity to drive the competitiveness and simplification agenda forward with its Presidency of the Council of the European Union which is set to commence in July. A Council Presidency is not simply about hosting high-profile meetings and putting on a good show. A member state holding the presidency can set the agenda and outline the priorities for the European Union for six months. Chartered Accountants Ireland believes that Ireland, as a small open economy, with trade links throughout the world, is uniquely placed to significantly move the dial on the competitiveness and simplification agenda. That is one of the key messages in our recent submission to the public consultation on Ireland’s upcoming presidency undertaken by the Department of Foreign Affairs and Trade. Simplification is no simple task. It takes patience and determination, and it is for that reason we need politicians and policymakers to fully embrace the principal and to advance the competitiveness and simplification agenda. Ireland can do just that as it takes up the presidency in July. Director of Members & Advocacy, Cróna Clohisey.

Today’s announcement by the UK Government of significant changes to its proposed inheritance tax reforms is a significant step in safeguarding rural communities and supporting succession planning for future generations according to Chartered Accountants Ireland. Following strong lobbying efforts in 2025, including from Chartered Accountants Ireland, the threshold for 100% relief on agricultural and business property combined will increase from £1 million to £2.5 million from 6 April 2026. Beyond this threshold, a 50% relief rate will apply, meaning couples can pass on up to £5 million of agricultural or business assets between them, in addition to existing allowances such as the nil-rate band. According to the Government, these changes mean only a small number of estates with agricultural and business assets will pay additional inheritance tax. Leontia Doran, UK Tax Manager, Chartered Accountants Ireland said "Chartered Accountants Ireland has consistently highlighted that the original proposals would have disproportionately impacted farmers in Northern Ireland. We strongly advocated for changes to ensure that genuine farming activity and family-owned businesses were not unfairly penalised. Today’s announcement is a significant step in safeguarding rural communities and supporting succession planning for future generations not just in Northern Ireland but across the UK." ENDS