Europe’s Voice at UN Tax Talks Grows Despite US Hostility

European countries are actively participating in a United Nations effort to ensure developing economies have a stronger footing to tax remote and digital businesses—an endeavor fervently opposed by the Trump administration.

They have expanded their engagement in the UN talks over a year and a half of discussions, despite initially siding with the US in trying to keep the negotiations from getting off the ground. Germany, France, Estonia, and Belgium were among the most active participants at meetings in New York and Nairobi, and have been key players in closed-door work among negotiators.

“I guess that most of us have some sort of this inner wish to bring some sense to these discussions,” Helen Pahapill, tax policy adviser at Estonia’s Ministry of Finance and a negotiator at the UN, said on a panel last month.

EU countries have other reasons for being engaged in the UN process, according to tax officials and observers, including a loss of trust in US tax cooperation, frustration with the lack of progress on digital tax discussions in the EU and internationally, and fear of missing out on an eventual UN agreement if they aren’t in the room.

The Trump administration has vowed to impose punitive tariffs on countries that impose digital taxes, which it says would mostly target US companies. Negotiations at the Organization for Economic Cooperation and Development over taxing remote and digital businesses have stalled over US objections.

Scott Levine, partner at Baker McKenzie LLP and a former Treasury Department tax official in the Biden administration, said the UN talks will result in a deal that includes positions the US doesn’t like, making it key to get involved.

“Things happen at the UN whether the US likes them or not,” Levine said at the Pacific Rim Tax Conference in San Francisco earlier this month.

Aart Roelofsen, senior policy adviser for international tax and treaties in the Netherlands’ Ministry of Finance, said UN engagement isn’t so much fueled by frustration with the OECD, but rather a desire to keep the international tax community on the same page.

“If there is any frustration it is about the fear that a majority will decide on a draft convention that will be unacceptable for the minority,” Roelofsen said in an email.

Physical Presence a Key Issue

The central aim of the UN effort—driven largely by developing countries—is a new international tax treaty that would replace the use of physical presence as a legal basis to tax multinationals. This goal is a fundamental bone of contention with developed countries, which say the physical presence concept is enough to address issues caused by the rise in remote and digital services.

The UN began negotiations in August 2025 to address developing countries’ concerns with the standards used to craft bilateral tax treaties, which they say limit their ability to tax economic activity, especially remote and digital businesses. In addition, existing rules drawn up by wealthier nations at the OECD have long ignored their interests, they say.

The OECD’s negotiations, which led to a global minimum tax deal named Pillar Two—and a digital economy profit reallocation regime, still being negotiated, named Pillar One—galvanized developing countries. They say they lack the clout the OECD’s 38 member states have in the process, where US influence has dominated.

EU countries joined the US in voting against preliminary UN discussions in 2023, but abstained in 2024 on votes to begin negotiations.

“We find it ourselves a bit ironic because we really didn’t want to be there in the first place,” Pahapill said.

EU countries are formally representing themselves at the UN after refusing to grant the European Commission a mandate to negotiate a protocol on dispute resolution mechanisms, one of the talks’ workstreams.

But national representatives coordinate with EU officials and one another—detailing positions and sharing information about the proceedings—before and after negotiating sessions and deadlines, according to people familiar with the matter.

OECD or UN?

Recent US-led changes to the global minimum tax have strained EU countries’ ability to claim the OECD should be the forum to discuss international tax. Many of the changes are unpopular not only with developing countries but with some EU countries too, despite their consent to those changes.

Further, the US view that the OECD’s Pillar One discussions should start from scratch, a position taken in March, has led some EU countries to explore where a UN workstream on digital taxation, a key focus of the negotiations, could go, according to the people.

Many EU countries—including Belgium, Poland, Germany, and Czechia—have shown interest in digital services taxes despite preferring a global solution, but how long they’ll wait is unclear. France, Italy, and Spain are among countries that already impose DSTs—and France has pushed for adoption of the tax at an EU level.

Gerassimos Thomas, the EU’s top civil servant for tax, said in March the OECD must reach an agreement on Pillar One this year or accept a patchwork of measures.

Part of the EU’s increased UN engagement is the result of the transatlantic alliance unraveling, according to a person familiar with the matter. With the US an unreliable partner, the faith EU countries put in the OECD has been shaken, the person said.

Pahapill, the Estonian negotiator, said the negotiations will increase the leverage developing countries will have in future tax treaties regardless of whether Europe signs up. European countries need to engage, she said, if they want to win support and get a final deal that reflects their views.

The UN has gained momentum because of the OECD’s failure to be inclusive, Peter Barnes, international tax adviser and counsel at Caplin & Drysdale, said at the May Pacific Rim conference. It’s absolutely essential for the US to be involved, he said.

“I think the US is making a huge, huge mistake if it steps back from the UN,” Barnes said.