Financial services tax digest – October 2025

As we enter the final quarter of 2025, political instability and limited growth continue to affect the global economy. However, promising market opportunities are emerging. Banks, insurers and asset managers must be prepared to navigate efficiently in an evolving domestic and cross-border tax environment.

In this October edition of the Financial Services Tax Digest, experts at Forvis Mazars provide a comprehensive overview of new and contemplated tax developments affecting the financial services sector across several jurisdictions.

As finance bills for 2026 take shape and tax authorities continue to refine their tax reassessment approach, we remain committed to helping you stay ahead of the curve. Whether you are assessing the tax impact of a cross-border M&A transaction, complying with new reporting obligations, or exploring tax-efficient growth strategies, we look forward to supporting you in navigating the ever-evolving global tax landscape. 

Jerome Labrousse, Partner, Forvis Mazars in France

France

French financial institutions are focusing on index-based insurance

Index-based insurance is a recent innovation in the insurance market, offering automatic compensation based on a pre-set index. Even though a lot of time has been spent on the legal aspects of this new insurance product, few practitioners have commented on the tax implications of index-based insurance. 

Tax is an important component considering the cross-border aspects of this new insurance product and the localisation of the beneficiaries of the indemnity payment.

Index-based insurance provides automatic compensation to the insured party any time that a specific and relatively easy-to-measure index exceeds a triggering event. For example, if heavy rainfall, measured according to a pre-set threshold, is expected to cause damage to the insured agricultural business, this would result in a pay-out. The benefit for the insured party is that the compensation provided for by the index-based insurance contract is paid quasi-automatically if the triggering event occurs, without any deep assessment of the exact loss incurred.  

Index-based insurance structuring may involve using the blockchain and therefore crypto assets (e.g., mostly stablecoins) to indemnify the insured party.

In addition, index-based insurance covers new market needs and is now considered by international groups that are using their own captive insurance company. Financial institutions have also introduced virtual captive insurance solutions that leverage both regulatory and index-based compensation enabling efficient indemnity payments through an automated mechanism triggered by predefined index thresholds.

The tax implications of index-based insurance must be monitored to allow this relatively new insurance product to provide the expected benefits, both for the financial institution offering it and for the beneficiaries.

In particular:

• The usual aspects of the tax treatment of premium and compensation should not be overlooked. For the insurer, one may want to verify that insurance treatment is properly complied with in international index-based insurance contracts so that the premium is not requalified as a financial instrument premium. For the insured company, compensation is usually treated differently for tax purposes when it is intended to cover the loss of a fixed asset for a value higher than its net book value.
• International tax issues should also be addressed, including those regarding transfer pricing, withholding tax and Pillar 2 (minimum 15% corporate income taxation as provided for by the OECD).
• The tax implications linked to the development of digitalised payment solutions (using “smart contracts”) where blockchain-based solutions using stablecoins allow for a prompt compensation on a cross-border basis must be clearly monitored including the “sourcing” by the French financial institution and the conversion by the insured company of crypto-assets into “Fiat” (Euros or US dollars).

Index-based insurance products are paving the way to providing more insurance products to demanding customers worldwide. French financial institutions aiming to develop their activities in this space need to consider the tax aspects above with their advisors to ensure that the economic implications for themselves and for their customer are fully understood.

Jerome Labrousse, Partner, Forvis Mazars in France

Italy

EU Court rulings challenge Italy’s IRAP dividend taxation

In its joined cases involving Banca Mediolanum and the Italian tax authority dated 1 August 2025[1], the Court of Justice of the European Union (CJEU) ruled that Italy’s IRAP regime violates Article 4 of the Parent-Subsidiary Directive[2] when it subjects more than 5% of inbound dividends from EU subsidiaries to taxation, even if the levy is not formally classified as corporate income tax.

IRAP is a regional production tax levied on the net value of production and applies also to banks and financial intermediaries, including insurance companies operating in the life business (Ramo Vita). Under current rules, 50% of dividends, whether of domestic or inbound origin, are included in the IRAP tax base.

The CJEU clarified that the Directive’s scope extends to any form of taxation that economically duplicates the taxation of dividends, regardless of nomenclature. This interpretation aligns with prior rulings[3], which excluded similar levies in France and Belgium from applying to dividends covered by the Directive.

More broadly, the judgment reinforces a pan-European principle: any tax, regardless of its label, that results in economic double taxation of intra-EU dividends is incompatible with the Directive. This opens the door to challenges against similar levies in other Member States, adding a new layer to the evolving EU case law on dividend taxation and prompting a re-examination of national regimes beyond Italy.

Raffaele Villa, Partner, Forvis Mazars in Italy

Belgium

The Federal Government has approved a draft Program Law[4] introducing initial tax measures focused on investment and innovation, set to impact the financial sector as early as 2025.

Annual tax on securities accounts: new anti-abuse rules introduced

New anti-abuse rules will apply to the tax on securities accounts[5] introducing a rebuttable presumption of tax avoidance when: (i) financial instruments are converted from a securities account into instruments no longer registered in such an account, without altering their financial characteristics and (ii) part of the securities are transferred to another securities account while the account holder remains the same, or is a co-holder of the receiving account. This will result in new reporting obligations for Belgian intermediaries or designated representatives which will be required to notify the tax authorities of each conversion or transfer carried out during a reference period. Failure to comply may result in penalties.

Dividend-received deduction: strengthening the minimum participation condition

Dividend income can be fully exempt from corporate income tax if specific dividend-received deduction conditions are met. This regime will shift from a deduction to a full exemption. Shares held merely as investments will no longer qualify; they must be financial fixed assets under BEGAAP. This restriction targets large companies only.

Capital gains tax (private individuals)

A 10% capital gains tax will apply – unless exempted – to future capital gains on financial assets, including crypto. Belgian financial institutions will face new withholding tax obligations as from 1 January 2026, requiring significant IT investments. Such a tax also raises uncertainties at this stage.

Joeri de Ceuleneire, Partner, Forvis Mazars in Belgium

Poland

Poland plans to increase corporate income tax for banks

The legislative project states that the rate should be increased to 30% in 2026, with decreases to 26% in 2027 and 23% permanently as of 2028 (whereas the standard corporate income tax rate in Poland is 19%).

The project also includes some “anti-abusive” clauses, with the intention of prohibiting most obvious counteractions, such as shifting a tax year.

Even though the legislative project is still at an initial phase (legislative project published by the Ministry, before being submitted to the Polish Parliament), the tax consequences of this increased corporate income tax rate could be analysed and monitored as of today by banks with the assistance of their advisors.

Kinga Baran, Partner, Forvis Mazars in Poland

Ireland

Finance Bill 2026 – expected changes for Irish funds

The Irish Budget 2026 is scheduled to be announced on 7 October 2025. However, it is the Finance Bill – typically published two weeks later – that will be of particular interest to the financial services industry.

This year’s Finance Bill is expected to address several recommendations from the Irish Government’s Fund Sector Review 2030, aimed at ensuring Ireland’s fund sector remains resilient, future-proofed, supportive of financial stability and a continued exemplar of international best practice.

In July 2025, the Government published its Tax Strategy Group (TSG) Reports, which indicated that the following recommendations from the Fund Sector Review are under consideration:

1. Private assets: Measures to support growth in the private asset sector, including a proposed Dividend Withholding Tax exemption for Irish Limited Partnerships (ILPs).
2. Retail investment: Measures to address the low level of Irish retail investor participation in domestic funds. These include removing the eight-year deemed disposal rule, reducing the tax rate from 41% to 33% (in line with Capital Gains Tax and Deposit Interest Retention Tax) and introducing loss relief.
3. Irish Real Estate Funds (IREFs): Consideration of an entity-level tax for IREFs.
4. Section 110 Securitisation Regime: While no substantive changes are proposed at this time, it is hoped that the long-standing issue regarding the treatment of withholding taxes suffered by qualifying companies will be resolved.

These potential changes – alongside developments from the Interest Consultation discussed in our April edition – make this Finance Bill one of the most eagerly anticipated by the financial services industry in recent years.

Joe Walsh, Director, Forvis Mazars in Ireland

United Kingdom

1. Access to data held by banks and other financial services providers
2. Draft legislation was issued on 21 July 2025 to facilitate greater access by the Government to data held by banks, building societies and others, as well as card sales data.[6] These measures will:
   1. Introduce standing reporting obligations (replacing manual notices)Increase the timeliness and frequency of reportingStandardise data submission via XML schemaMandate suppliers to request, collect and report tax identifiers such as National Insurance numbersImpose due diligence checks on data quality
   1. Reform the penalties regime to ensure compliance
3. HMRC aims, for example, to use data to identify unregistered taxpayers and automatically register them for the relevant tax regimes. This is a significant extension of HMRC’s powers and will increase the compliance burden on financial services businesses. These measures will be included in the Finance Bill 2025-26 and will take effect not before 1 April 2027.
4. “MTD” for corporation tax cancelled
5. At the same time, HMRC cancelled the introduction of MTD (making tax digital) for corporation tax.[7] MTD has been introduced for VAT and is being introduced for income tax self-assessment, but HMRC has recognised that it needs to develop a reporting approach suited to the varying needs of diverse corporation taxpayers.
6. Autumn Budget 2025 predictions: increase in bank taxation?
7. Chancellor of the Exchequer, Rachel Reeves, has hinted at tax rises in the Budget which she will present to Parliament on 26 November, acknowledging that the Government faces hard choices.
8. Among many predictions made by pundits is talk of an increase in bank surcharge, which currently stands at 3% on annual profits over £100 million. There is also suggestion of a “QE Reserves Income Levy” which would tax banks on their income from funds held at the Bank of England. These predictions are unconfirmed by the Government.

Ian Thomson, Director, Forvis Mazars in the UK

Germany

The German Government has launched two legislative initiatives with implications for the financial services industry:

1) Planned (re-)extension of record retention periods for banks, insurance companies and investment firms

The government is planning to amend legislation to (re-)extend the retention period for accounting records for banks, insurance firms and investment firms from the current eight years back to ten years[8]. This measure aims to enhance the authorities’ ability to prosecute abusive tax arrangements. While the Government anticipates limited administrative burden of longer retention periods – due to the very common practice of digital storage – the financial services industry should closely monitor the legislative process, carefully assess which entities are affected by the draft regulation and implement the new retention requirements – which may then vary within a group – as soon as the legislative process is finalised.

2) Major changes for investment funds planned – Location Promotion Act

The German Federal Cabinet has approved the draft law of a Location Promotion Act (“Standortfördergesetz”)[9] which introduces extensive changes to regulatory and tax frameworks, especially to promote private and fund investments in venture capital, infrastructure and renewable energy.

From a tax perspective, the planned key amendments are:

• The investment opportunities available to funds under German tax law (InvStG) are extended for these asset classes for investment funds (“Chapter 2 Funds”) as well as for special investment funds (“Chapter 3 Funds”).
• The taxation of investments in commercial partnerships by funds subject to the Investment Tax Act is being revised, including the introduction of new tax filing obligations.

The amendments to the Investment Tax Act and the Investment Code aim to establish a legally robust framework that removes existing investment barriers.

Next steps and timetable

Both initiatives still need to pass through the legislative process, including possible amendments of the draft bills. The planned timeline is:

1) (Re-)extension of record retention periods: It is currently unclear when the legislation process will be completed.

2) The completion of the Location Promotion Act is scheduled for the end of January 2026.

Jens Nußbaumer, Partner, Forvis Mazars in Germany

[1] 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; [2] Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (recast); [3] Court of Justice of the European Union, Judgment of 17 May 2017, Case C‑365/16, Association française des entreprises privées (AFEP) and Others v Ministre des Finances et des Comptes publics, ECLI:EU:C:2017:378; and Judgment of 17 May 2017, Case C‑68/15, X v Ministerraad, ECLI:EU:C:2017:379; [4] https://www.ejustice.just.fgov.be/cgi/article.pl?language=fr&sum_date=2025-08-11&pdd=2025-07-29&pdf=2025-07-29&ddd=2025-07-18&ddf=2025-07-18&choix1=en&choix2=en&fr=f&nl=n&du=d&trier=afkondiging&lg_txt=f&pd_search=2025-07-29&s_editie=&numac_search=2025005578&caller=list&2025005578=10&view_numac=2025005578N; [5] Annual tax at the rate of 0.15% levied on the average value of the securities accounts in excess of EUR 1.000.000; [6] HMRC Policy Paper ‘Better use of new and improved third-party data’ https://www.gov.uk/government/publications/better-use-of-new-and-improved-third-party-data; [7] HMRC’s Transformation Roadmap; https://www.gov.uk/government/publications/hmrc-transformation-roadmap/hmrcs-transformation-roadmap; [8] Bundesfinanzministerium Press Release, August 6, 2025; Entwurf eines Gesetzes zur Modernisierung und Digitalisierung der Schwarzarbeitsbekämpfung, Articles 17 and 18; [9] Bundesfinanzministerium Press Release, September 10, 2025; Entwurf eines Gesetzes zur Förderung privater Investitionen und des Finanzstandorts