Limassol: The corporate tax file that Commissioner Hoekstra pitched as the centrepiece of the simplification agenda has quietly slipped off the Cypriot Presidency’s draft programme. Officials preparing the second half of 2026 confirm that the Business in Europe Framework for Income Taxation file, known as BEFIT, will not be tabled for ministerial discussion before December and that the accompanying transfer pricing directive has been parked alongside it.
The shift caps a year in which the direct tax dossier lost its political tailwind. The Danish Presidency declined to schedule BEFIT for the second half of 2025, passing it to Belgium, which in turn left it off the ECOFIN priority list. With Cyprus signalling the same posture, member states have now skipped three consecutive rotations on a file the Commission submitted in September 2023.
Parliament’s tax sub-committee delivered a positive non-binding opinion in March, supporting the common rules for computing taxable results of groups operating in the internal market. The opinion was warmly received in Berlaymont but the FISC vote carries no procedural weight on a Treaty Article 115 file, where unanimity in Council is the only door that matters. Six member states have publicly expressed reservations and at least two more have written reservations in the Council working party, putting any unanimous landing well out of reach.
Inside the Commission, officials describe the BEFIT pause as part of a broader recalibration. The 2026 work programme will pare back what one cabinet member calls aspirational tax files in favour of legislation that solves a specific problem the single market is throwing up. Translated, that means an emphasis on the implementing tail of the Pillar Two minimum tax directive, the procedural cleanup of the Anti-Tax Avoidance Directive, and the long-awaited revision of the Energy Taxation Directive that has been stuck since 2021.
Pillar Two implementation provides a sobering parallel. Twenty-six member states have now transposed the global minimum tax rules into national law, but the Commission’s compliance check has identified at least nine points where national drafts diverge from the directive text. A consolidated guidance package, prepared in coordination with the OECD Inclusive Framework, is being readied for publication before the summer break. Tax practitioners reading the drafts in Limassol expect the guidance to address the qualified domestic top-up tax interaction with the income inclusion rule, an interplay that has caused headaches in groups with intermediate holding companies.
Outside the legislative pipeline, two infringement letters land this month. The Commission has opened formal procedures against Cyprus and Malta for the non-transposition of specific elements of the Public Country-by-Country Reporting Directive. Both capitals had pleaded technical drafting issues and asked for additional time, but the two-year window expired on 22 June 2025 and the legal service has now signed off on the letters of formal notice.
For taxpayers, the practical effect of the BEFIT parking is that the patchwork of national corporate income tax rules will hold through at least 2028. Groups that had begun mapping BEFIT exposure under planning assumptions of a 2027 implementation are quietly unwinding that work. The Tax Foundation calculates that intra-EU compliance costs for groups operating in five or more member states still average between 1.7 and 2.4 percent of group taxable profit, a figure the BEFIT proposal had promised to cut roughly in half.
