Share with your friends

EU finance ministers express concerns about U.S. tax reform proposals

EU finance ministers express concerns

Finance ministers from five EU countries wrote to Treasury Secretary Steven Mnuchin (and members of the U.S. Congress) expressing their concerns regarding certain aspects of the U.S. tax reform efforts.


Related content

The finance ministers from France, Germany, Italy, Spain, and the UK wrote:


…it is important that the U.S. government’s rights over domestic tax policy be exercised in a way that adheres with international obligations to which it has signed-up. The inclusion of certain less conventional international tax provisions could contravene the U.S.’s double taxation treaties and may risk having a major distortive impact on international trade. We would therefore like to draw your attention to some features of the proposals being discussed that cause significant concerns from a European perspective. 


In particular, the finance ministers expressed concerns about:

  • A proposal in the U.S. House bill that would impose an excise tax of 20% on payments to foreign affiliated companies, unless the related foreign corporation elected to treat the payments as income is effectively connected with the conduct of a U.S. trade or business
  • A proposal in the U.S. Senate bill for a base erosion and anti-abuse tax (BEAT) that would affect “genuine commercial arrangements” involving payments to foreign companies that are taxed at an equivalent or higher rate than the United States, such that this may constitute unfair trade practice and may discourage non-U.S. financial institutions from operating in the United States 
  • A proposal in the Senate bill for a preferential tax regime for "foreign-derived intangible income”

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal