Greetings,
As we step into the promising year of 2026, it is the perfect time to reflect on the key international tax trends that will shape the banking and financial sector. This year, we are already witnessing some significant shifts that will undoubtedly influence the financial services strategies and operations.
One of the most notable trends is the continued evolution of the Organisation for Economic Co-operation and Development (OECD) principles and guidelines. These continuing changes, which are designed to promote international taxation standards and transparency, aim to ensure that banks, insurers and asset managers contribute their fair share to the tax base, a move that is expected to bring additional substantial compliance and reporting adjustments in the cross-border environment where they operate. These OECD changes may potentially entail some double taxation in specific debt leverage situations.
Some financial institutions may also see constraints in tax litigation while others may see opportunities to reclaim some of the tax paid based on some of the European Court (EC) decisions rendered recently.1
Finally, setting up the 2026 budget has been and still is, for a number of OECD countries, a difficult and risky process, governments trying to increase taxes while keeping the economy afloat. The financial services industry will need to understand, comply and navigate this ever-changing environment while at the same time continuing to develop its businesses organically and/or through acquisitions.
In essence, 2026 promises to be a transformative year for the banking and financial sector with increased digitalisation and international tax trends at the forefront.
As we navigate these changes, staying informed and adaptable will be key to leveraging these developments to your advantage.
Looking forward to an exciting year ahead!
Jérôme Labrousse
Group Financial Services Tax Leader
1. See for example the litigation opportunities around the decision rendered by the Court of Justice of the European Union, Judgment of 1 August 2025, Joined Cases C‑92/24, C‑93/24 and C‑94/24, Banca Mediolanum SpA v Agenzia delle Entrate – Direzione Regionale Lombardia, ECLI:EU:C:2025:599 “
Budget agreement introduces higher bank taxes, a new capital gains regime and increased securities account charges.
The Belgian "Arizona" government has reached an agreement on the national budget after extended negotiations. Grounded in the principle of "broadest shoulders," several key fiscal measures have been outlined.
One of the notable changes is the planned increase in the existing bank tax. Starting in 2026, the government expects to raise an additional €150 million annually from the existing bank tax, which currently generates around €1 billion annually, according to the Federation of the Belgian Financial Sector (Febelfin).
Further details are still awaited, yet this move has raised concerns within the financial sector, as banks are already preparing for the new capital gains tax, despite the absence of a fully defined legal framework.
A new 10% capital gains tax will apply starting from 1 January 2026 and beyond, realised by private individuals when selling investments. An annual €10,000 exemption protects smaller investors. The tax applies to:
Losses may only be offset within the same year and category of the financial assets. Additionally, capital gains accrued up to, and including, 31 December 2025 will remain tax-exempt, making year-end valuations critical; the higher the value at that date, the lower the potential tax burden on future gains.
The existing Reynders tax, which levies a 30% tax on capital gains from certain funds or ETFs with (partial) bond exposure, is expected to remain in place, but will only apply to interest. However, its scope will be limited to the interest component. Consequently, gains that were not taxed under the Reynders tax may now fall within the scope.
Generally, banks will withhold the tax automatically. Taxpayers seeking exemptions, or to offset capital losses, must substantiate these claims in their tax return. In addition, the draft legislation introduces an opt-out mechanism at the level of each account. This enables taxpayers to avoid upfront withholding and settle the tax through their personal return instead.
Although the new capital gains tax has not yet been definitively voted on, the government has confirmed that the tax will be introduced in Belgium as of January 1 2026. Implementation will demand the highest level of precision with significant IT upgrades and close coordination with tax authorities. The estimated six-month implementation timeframe has raised significant concerns within the financial sector and has been strongly criticised by Febelfin.
The annual tax on securities accounts will double to 0.30% for accounts with an average value above €1 million and is expected to generate approximately €462 million by the end of the legislative term. The draft Programme Law of July 18 2025 also introduced special anti-abuse provisions, relevant to this tax on securities accounts.
Marwa Behhar, Corporate Tax Manager, Forvis Mazars, Belgium
Joeri De Ceuleneire, Partner, Forvis Mazars, Belgium
New VAT grouping rules, stamp duty relief and refinements to participation exemption
On 19 November 2025, Irish Revenue published a new Tax and Duty Manual (TDM), introducing a significant shift to an “establishment only” VAT grouping model. The changes introduced will have a significant impact on how cross‑border supplies are treated and will alter VAT outcomes for organisations operating across multiple jurisdictions. The changes align Ireland with CJEU case law (Skandia and Danske Bank) and the approach in most EU Member States.
Previously, Ireland applied a ‘whole entity’ approach, meaning foreign branches or head offices were treated as part of the Irish VAT group. Ireland now applies an “establishment only” VAT grouping model; only the Irish establishment of an entity can be part of an Irish VAT group. Overseas establishments of the same legal entity, whether a branch or head office, cannot be part of the Irish VAT group. Services supplied between an Irish establishment (inside the group) and overseas branches/head offices (outside the group) are no longer disregarded for Irish VAT purposes. Instead, these supplies of services between establishments of the same legal entity may now be regarded as supplies between two separate establishments for VAT purposes. This may now lead to a reverse-charge VAT liability on the receipt of services in Ireland by the Irish VAT group or an increase in VAT recovery for the group where it is making supplies to establishments outside Ireland.
Under the new rules, only Irish establishments may join the group. Cross-border supplies between Irish establishments and overseas branches/head offices are no longer disregarded and may now trigger reverse‑charge VAT or increased VAT recovery for the group where it is making supplies to establishments outside Ireland.
The rules apply immediately for new VAT groups formed on or after 19 November 2025. Existing groups have a transitional period until 31 December 2026. The new rules will apply to all Irish VAT groups from 1 January 2027.
Effective 1 January 2026, the Irish government has introduced a new stamp duty exemption which applies to acquisitions of shares in Irish‑incorporated companies with a market capitalisation below €1 billion. Introduced as part of the Finance Act 2025, it replaces the previous Euronext Growth Market relief and aims to make Irish listed equities more appealing across various trading platforms.
Exemption eligibility requires:
The Finance Act 2025 refines the participation exemption for foreign dividends introduced in Finance Act 2024. The updates, which aim to enhance certainty and make Ireland more attractive as a holding company location, include:
These changes apply retrospectively from 1 January 2025.
Oonagh Carney, Partner and Head of Indirect Tax, Forvis Mazars, Ireland
Joe Walsh, Director, Financial Services Tax, Forvis Mazars, Ireland
Budget measures affecting VAT grouping, investment incentives for leasing, and tax compliance and investor taxation.
On 26 November 2025, the Chancellor of the Exchequer delivered her Autumn budget for 2025. We analyse below the impact the budget will have on the financial services sector.
An opportunity for VAT recovery arises from a Budget announcement, relevant to financial services businesses, which are often partly exempt. From 26 November 2025, the UK has reversed its previous position (based on the CJEU judgment in the Skandia case), which could require VAT to be accounted for between branches and/or head offices of the same legal entity, where the overseas establishment was in a certain type of EU VAT group. Overseas branches of UK entities will once again be treated as part of the UK VAT group, removing the need to account for reverse-charge VAT on services supplied by those branches. There is now the potential for VAT reclaims covering the past four years to be made in respect of tax paid in line with the previous guidance. However, any additional VAT recovery on outbound transactions previously taken may need to be reversed.
From 1 April 2026 the main rate of writing down allowances will fall from 18% to 14%. Additionally, a new 40% First Year Allowance (FYA) will apply to expenditure on new assets (not cars) for activities such as leasing. This should encourage new investment, improve lessors’ yields and provide competitive pricing for lessees. Finally, a 100% FYA for qualifying expenditure on zero emission cars and Electric Vehicle (EV) charge points will be extended to 31 March 2027.
From April 2029, there will be a £2,000 annual cap on pension contributions made via salary sacrifice so that employers’ and employees’ national insurance contributions (NICs) become due on payments above this limit. This change will mean that based on current NIC rates for each £100 contribution above the £2,000 limit, the employee will pay £8 and the employer £15. This increase is likely to be a substantial cost which will have to be funded. Financial services firms may also face substantial cost increases and should model the impact now.
In the upcoming financial year, 2026-2027, financial services businesses subject to anti-money laundering regulation with annual revenues above £10.2 million will face increase in the economic crime levy. The levy for the “very large” band will double and a new band is created.
From 2026-2027
Fines for late company tax returns will double from 1 April 2026. The penalty for returns more than three months overdue doubles from £100 to £200. Other penalties, on a sliding scale, also double.
The Government will invest in new technology that will deliver digital prompts within VAT and corporation tax filing software. These prompts are expected to be introduced by April 2027 (VAT) and April 2028 (corporation tax).
In-scope multinationals will be required to submit an International Controlled Transaction Schedule (ICTS) under proposed legislation expected to apply to accounting periods beginning 1 January 2027. The ICTS will be an annual report on cross-border related party transactions. In addition, the Government announced that medium-sized enterprises will continue to benefit from the existing exemption from transfer pricing.
For chargeable periods beginning from 1 January 2026, the government intends to introduce measures to simplify the tax on related party transactions, non-resident companies trading in the UK and profits diverted from the UK. This will include repealing Diverted Profits Tax as a standalone tax, whilst retaining its features through corporation tax.
Technical amendments will be introduced to Pillar 2 legislation to ensure the multinational top-up tax and domestic top-up tax remain consistent with commentary to the Global Anti-Base Erosion (GloBE) rules.
Key measures include:
The UK will require Crypto Asset Service Providers to report both UK and non-UK-resident users under the OECD’s Crypto Asset Reporting Framework. This amendment aligns with the global trend of increasing crypto regulation and reporting. HMRC is considering a “no gain, no loss” approach for some transfers.
Ian Thomson, Associate Director, Banking & Capital Markets Tax, United Kingdom
Abolition of imputed rental value and implications for banks and homeowners
On 28 September 2025, the Swiss population voted to abolish the imputed rental value. Owners of owner-occupied residential property will no longer have to pay tax on rental income.
Until now, the imputed rental value represented a notional income that owners had to pay tax on for their self-occupied property as if they were renting their apartment or house to themselves, but mortgage interest and certain maintenance costs could be deducted for tax purposes. The abolition of this system not only eliminates the notional income tax but also a significant portion of the associated tax deductions. For individuals, this means that debt interest is generally no longer deductible unless the property is rented to third parties.
The shift has reduced the attractive advantages of high mortgage financing and may accelerate debt reduction for many homeowners
As a result, many banks may face:
The change in the system for imputed rental value thus marks a fundamental turning point for private property owners and financial institutions alike. The changed tax framework significantly shifts the incentives away from credit-based financing models toward a more equity-oriented asset structure. For banks, this creates both a necessity and an opportunity to strategically develop their offerings and respond to the changing needs of their customers and therefore to realign their advisory and product strategies.
André Kuhn, Partner, Forvis Mazars, Switzerland
Steven Gruendel, Manager, Forvis Mazars, Switzerland
Naomi Lynn Huber, Consultant, Forvis Mazars, Switzerland
Featured below are two ECJ case law having direct consequences for German tax purposes.
On 23 October 2025, the ECJ issued its judgement on the Finnish case referred to as “A Oy” (C-232/24), addressing the various types of factoring with collection of the claim. The question to be clarified was whether the service consisted entirely of the taxable collection of claims or whether it included a VAT-exempt loan.
A Finnish company, referred to as “A Oy” provides factoring services in relation to invoiced, undisputed receivables which become due in the future. In both forms, A Oy charges several types of remuneration and commissions from its customers, including a so-called financing commission payable in advance amounting to a percentage of the receivable. This commission is higher the lower the credit rating of the customer and the debtor of the receivable and the longer the payment term for the invoices is. In addition, A Oy charges a so-called set-up fee and various other costs and fees.
The case concerned two structures:
A Oy is of the opinion that all fees, including the financing commission and other costs, are subject to VAT in their entirety.
The referring Finnish court first wanted to know whether, in the case of factoring through the sale of receivables, the financing commission and the set-up fee constituted consideration for a taxable service provided by A Oy.
The ECJ confirmed that, consistent with the MKG-Kraftfahrzeuge-Factoring case, factoring through the purchase of receivables is a service for consideration, consisting in relieving the customer of the collection, as well as the risk of irrecoverability. The consideration is the difference between the nominal value of the receivable and the amount paid by the factor for the receivable.
The court noted that GFKL Financial Services (C-93/10) may apply differently in the case of non-performing receivables. However, since the receivables were not yet due in the present case, a payment default could not be assumed.
The ECJ held that:
The Finnish court also asked whether the service should be treated as
The referring court asked for clarification as to whether there was a uniform service of debt collection or whether, in addition, the granting of a loan was to be assumed.
The question was relevant because Article 135 (1) (d) of the VAT Directive exempts the granting of a loan from VAT, but not the collection of debts. The court considered the granting of a loan to be conceivable, among other things, because the amount of the financing commission depends on the length of the payment period and the risk assumed by A Oy.
The ECJ ruled that the VAT exemption under Article 135 (1) (d) of the VAT Directive must be interpreted narrowly as an exception to the principle of tax liability. However, the concept of debt collection requires a broad interpretation as an exception to the exception. It therefore covers all forms of factoring, regardless of their modalities. This means that both factoring through the sale of receivables and factoring through pledging are covered by Article 135 (1) (d) of the VAT Directive as debt collection.
From the perspective of both the customer and the factor, this constitutes a single economic transaction, the main purpose of which is to enable the customer to transfer the collection and recovery of its receivables to a third party. A division of the transaction would be unrealistic. The service provided by A Oy in the present case is therefore a single and indivisible service of debt collection, which is subject to VAT. It does not include any independent financing service. It is true that A Oy provides its customers with funds through factoring by way of pledge and receives the receivables as security. However, since A Oy also takes over the collection and recovery of the receivables, which is the main purpose of factoring, this does not give rise to a different assessment.
Since Finnish law, unlike German law, does not exclude the collection of receivables from the tax exemption for transactions involving receivables, the referring Finnish court wanted to know whether taxable persons could directly invoke Article 135 (1) (d) of the VAT Directive in this respect.
The ECJ answered in the affirmative because the exception to tax exemption is precise and unconditional and Member States have no discretion in this regard.
Both the Federal Fiscal Court (BFH) and the German tax authorities have adopted the ECJ ruling in the MKG-Kraftfahrzeuge-Factoring case. With regard to the granting of a loan by the factor in connection with the factoring service, the Federal Ministry of Finance (BMF) and the BFH assume that this is generally of secondary importance and, as a dependent ancillary service, shares the fate of the main service. This view corresponds with the ECJ's ruling.
The BMF assumes that the granting of a loan can also be an independent main service if it has independent economic significance. This is particularly likely to be the case if the claim is due in several instalments or in total before the end of one year after the transfer, or if the requirements of section 3.11 (1) UStAE (administrative guidelines to the German VAT Code) are met, which provides guidance on the distinction between several independent and uniform overall services (section 2.4 (4) sentences 5 and 6 UStAE). However, such circumstances cannot be inferred from the judgment in the A Oy case.
The question of the applicability of Article 135 (1) (d) of the VAT Directive is irrelevant for Germany, as Section 4 (8) (c) of the UStG (German VAT Code) expressly excludes the collection of claims from the VAT exemption.
On 26 November 2025 (T-657/24), the EC issued a preliminary ruling on whether the activities of Portuguese company Versãofast constituted VAT-exempt credit intermediation under Article 135 (1) (b) of the VAT Directive.
Versãofast operates as a credit intermediary and generally treated its services as VAT‑exempt negotiations of credit. One exception concerned services provided to Caixa Geral de Depósitos S.A. (CGD), for which it charged VAT and deducted input VAT, resulting in a surplus. The services provided to CGD included:
Remuneration was based on a contingency fee model. Potential customers remained free to decide whether, and with which bank, they wished to conclude a credit agreement.
Versãofast argued that it had no authority to conclude contracts on CGD’s behalf and was not involved in credit approval. Versãofast claimed its activities were limited to informing potential customers about the prospectuses published by CGD and the terms and conditions offered for mortgage loan agreements, whereby it was not permitted to recommend a specific real estate credit.
It also did not evaluate customer information, and commissions received compensated only for customer acquisition, not for credit negotiation. Since 1 October 2024, the EC has been responsible for preliminary rulings in the field of VAT instead of the ECJ.
The court relied on established ECJ case law defining negotiation as an intermediary activity distinct from the contractual services of the parties themselves. Such activity may include presenting opportunities, contacting parties, or negotiating mutual obligations. The purpose is to enable two parties to conclude a contract without the intermediary having an interest in its content.
The court confirmed that:
The court also noted that language versions of Article 135(1)(b) vary: while Portuguese, French and English refer to “negotiation”, German, Finnish, Swedish, Danish and Dutch use terms equivalent to “intermediation”. Both concepts fall within the exemption.
Accordingly, Versãofast’s services to CGD were VAT‑exempt, and the related input VAT deduction was not permitted.
German VAT law (§4 No. 8(a) UStG) uses the term “Vermittlung von Krediten”, meaning credit intermediation. Although the Federal Fiscal Court (BFH) has not ruled specifically on loan intermediation, a 2008 decision on share brokerage (V R 44/07) held that intermediation may involve providing evidence, establishing contact or negotiating. This reasoning would likely extend to the Versãofast case.
German tax authorities have incorporated this interpretation into the UStAE (section 4.8.1 sentence 4), defining intermediation services under §4 Nos. 8 and 11 UStG accordingly.
Nadia Schulte, Director, Forvis Mazars, Germany
Jens Nußbaumer, Partner, Forvis Mazars, Germany
Carolin Gieseke, Director, Forvis Mazars, Germany
From 1 January 2026, Poland will introduce a significantly higher corporate income tax (CIT) rate for banks and selected financial institutions. According to the explanatory memorandum to the draft law, the combined effect of the higher CIT and the partial reduction of the current bank levy is expected to generate around PLN 20.6bn of additional revenue for the state budget over a ten year period.
The amending act changes the CIT Act and the tax on certain financial institutions and introduces a higher income tax rate for:
For most of the affected entities the current standard 19% CIT rate will be replaced by a stepped schedule:
Lower, preferential rates apply to small taxpayers and certain cooperative banks, including retention of a reduced rate for the smallest institutions and moderately lower stepped rates for the rest of the cooperative sector.
The law contains targeted rules for taxpayers whose tax year does not coincide with the calendar year and for banks using simplified CIT advances. These provisions are designed to prevent shortening the period during which income is taxed at the higher 30% or 26% rates – and in some cases may even extend the high-rate period. Also “simplified advances,” based on prior tax payments, will be proportionally uplifted to reflect the higher statutory rate. Hence, the easiest means of countering the tax increase may seem impossible.
Given the steep rate increase, especially in 2026, banks are expected to create strong incentives for taxpayers to revisit their tax and business structures. Because the higher rate applies specifically to entities qualifying as banks, credit institutions, and the tax the capital groups including them, one option is to separate activities that do not legally require a banking licence into non-bank entities taxed at 19%.
Activities that could theoretically be separated include:
However, such restructurings raise several issues. These include the risk of the general anti-avoidance rule (GAAR) and specific anti-avoidance provisions, the impact of interest limitation rules (Article 15c CIT) on non-bank entities, regulatory approvals and KNF supervision standards for new entities and practical timing constraints such as obtaining regulatory approvals and reorganising operations before 1 January 2026.
Any structural changes will therefore require robust business rationales, careful transfer-pricing design and close coordination with tax and financial advisors.
Banks may also consider making use of bank-specific tax rules. Two areas are particularly relevant.
Firstly, general risk reserves are generally tax-deductible when created and taxable when released, while their release or utilisation constitutes taxable income. This may encourage banks to strengthen such reserves in 2026 and consider their gradual release in later years when the rate falls to 26% or 23%. The growing regulatory agenda, including DORA, accessibility requirements and ESG-related obligations, provides additional arguments for recognising higher operational and compliance risks.
Secondly, the rules on losses and write-downs on loan portfolios may incentivise banks to accelerate disposal of non-performing loans (NPL) or to maximise tax-deductible impairments in high-rate years, within the limits allowed by the law.
Beyond bank-specific rules, the simple increase in the tax rate changes the cost-benefit analysis of many general CIT positions, including the deductibility of settlements and compensations and the classification and timing of bad-debt deductions. Any such steps should be backed by solid technical analysis and documentation, along with an assessment of potential litigation exposure.
In light of the final shape of the legislation, banks operating in Poland should consider:
The CIT increase is one of the most significant tax changes for Poland’s financial sector in recent years, with implications for profitability, capital formation and credit growth. Banking groups should therefore approach the coming years with a holistic plan that combines tax, regulatory and business considerations.
Łukasz Kempa, Director, Tax, Forvis Mazars, Poland
Kinga Baran, Partner, Head of Tax Advisory, Poland
OECD updates Article 9 Commentary: implications for associated enterprises and intra-group funding
Published on November 18 2025, the OECD updated the commentary on Article 9 of the OECD Model Tax Convention on Income and Capital, also known simply as the “OECD Model Tax Convention.”
The Article 9 update revises paragraphs one to six and confirms that:
Furthermore, the update of the commentary on Article 9 provides that if Contracting States disagree on the appropriate adjustment to reflect the arm’s length profit allocation, the relevant States should consult with each other to determine an appropriate adjustment with a view to eliminating double taxation, in line with the tax treaty provisions.
The update also clarifies that, as Article 9 applies only to allocating profits to associated enterprises in accordance with the arm’s length principle, a denial of a financial expense in one Contracting State does not automatically require a corresponding adjustment by the other Contracting State.
The update of the Commentary on the Model Tax Convention shall come into effect in 2026. Banking groups shall bear in mind the relevant update provided by the OECD, particularly when it comes to funding their branches and/or subsidiaries outside France in order to limit potential double taxation impacts on intra-group financial flows.
Jérôme Labrousse, Financial Services Tax Partner, France (Paris)
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