The ECB’s New Approach: Integrating Environmental Degradation into Monetary Policy
23.07.2025
The European Central Bank (ECB) has recently acknowledged the direct impact of environmental degradation on inflation and economic growth. This recognition marks a significant shift in the ECB’s monetary policy, which is now fully influenced by the concept of “degradation of nature.”
Environmental degradation encompasses the entire physical environment of the Earth, including all living organisms and natural resources. The ECB’s decision to incorporate this concept into its monetary strategy is a groundbreaking advancement. For instance, 15% of the euro area’s economic output is vulnerable to water scarcity, and euro area banks have provided over €1.3 trillion in loans to sectors exposed to this risk. By considering environmental degradation, the ECB is demonstrating a commitment to addressing a broader range of factors beyond climate change.
The ECB has identified clear signs that the nature crisis poses significant risks to the economy. Failing to consider these risks may overlook relevant evidence and could affect the goal of maintaining price stability. During the particularly hot summer of 2022, food price inflation increased by between 0.4 and 0.9 percentage points. The ECB is currently studying the impacts of such extreme weather on inflation and GDP to better understand future challenges.
Unlike climate change, which can be measured using various metrics such as greenhouse gas emissions, the degradation of nature is more complex and lacks a single metric like CO2. To understand the nature crisis, it is necessary to have a comprehensive approach and consider factors such as fish stocks, timber, land, scarcity, and water quality.
In its recent review of the Monetary Policy Strategy, the ECB’s Governing Council committed to fully accounting for the implications of climate change and nature degradation within its primary and secondary mandates, in line with its Treaty obligations. The Treaty stipulates that the Eurosystem must support the European Union’s general economic policies, contributing to objectives such as balanced economic growth, a highly competitive social market economy, full employment, social progress, and a high level of environmental protection and improvement.
Conclusions
The ECB’s integration of environmental degradation into its monetary policy represents a forward-thinking approach to addressing the multifaceted challenges posed by the nature crisis. By considering a broader range of environmental factors, the ECB aims to maintain price stability while supporting the EU’s broader economic and environmental objectives. This comprehensive perspective emphasizes the need to acknowledge and address the intrinsic link between environmental health and economic stability.
Family-owned business in Spain: a hidden treasure for investors and strategic buyers
23.07.2025
For companies seeking to establish a foothold in Spain or seeking resilient, profitable, and committed partners, family businesses offer fertile ground for long-term value creation. The Ecovis experts understand the opportunities offered by one of the most dynamic M&A markets.
The Spanish economy is driven by family businesses. According to a recent report published by the Family Business Institute (“Relevance and survival of the family business. The Family Business in Spain 2025”), 92.4% of Spanish companies are family-owned, accounting for more than 70% of private sector employment and 57% of national added value. Despite their smaller average size compared to non-family businesses, they consistently outperform them in terms of economic and financial profitability.
Why is this important for international buyers and investors?
Spanish family businesses are currently facing a generational change. Only one in three has undergone a generational transition. As a result, many business owners are beginning to consider partial or total divestment, creating ideal conditions for strategic buyers, venture capital funds or international groups looking to expand in Spain.
Are you planning to start a business in Spain or are you looking for partners? We're happy to advise you. Juan Santodomingo Díaz, Head of Financial Advisory, ECOVIS Audit Madrid Grosclaude & Partners, Madrid, Spain
Furthermore, these companies are highly resilient: they have a higher survival rate than non-family businesses, stronger margins and a growing interest in internationalisation, especially among larger, older companies with dispersed ownership. However, many remain undercapitalised and lag behind in terms of digitalisation, making them perfect candidates for M&A deals that bring capital, innovation and access to the global market.
Investing in Spain
Investors and buyers can find ideal conditions in Spain. However, they should seek information and advice on corporate strategies, mergers and acquisitions, and financing in Spain:
Corporate strategy and valuation advice
Strategic succession planning and ownership reorganisation
Local and cross border transactions with industrial and financial buyers
Debt and equity financing for growth and crisis management
Sectors of expertise: industrial, business services, food and beverages, telecom and technology, retail, logistics, construction and engineering
For further information please contact:
Juan Santodomingo Díaz, Head of Financial Advisory, ECOVIS Audit Madrid Grosclaude & Partners, Madrid, Spain
Email: juan.santodomingo@ecovis.es
VAT law China: A new era for tax compliance in China
22.07.2025
The long-awaited VAT law, which represents a comprehensive modernisation of the Chinese tax system, will come into effect on 1 January 2026. It will align more closely with global standards such as the OECD VAT Guidelines. This will have implications for businesses.
As VAT brought in almost CNY 6.9 trillion in 2023, which is around 38% of China’s total tax revenue, these legal updates will significantly impact both local and international businesses operating in China.
Maintaining structure, enhancing clarity
The new VAT law retains the familiar three-tier tax rate structure:
13% for general goods and imports
9% for essential services such as utilities, publishing, and transportation
6% for modern service sectors, including IT, finance, and consulting
However, it builds upon the previous regulations by offering enhanced legal clarity and a codified statutory basis, superseding the prior provisional regulations that have governed the VAT system since 1994.
Defining taxable transactions and jurisdiction
A major change is the clearer definition of taxable transactions. Article 3 includes the sale of goods, services, intangible assets, real estate dealings, and imports within China, which are all considered taxable. This also applies to individuals and sole proprietors.
Additionally, the law adopts the place-of-consumption principle to define cross-border tax jurisdiction. Instead of the service location, the focus is now on where consumption occurs, aligning with OECD standards.
Cross-border transactions: Clearer rules
The law sets clear tests for when VAT applies to cross-border services and intangible assets, such as when the consumer is in China, the product is issued in China, or the seller is domestic. In these cases, Chinese VAT rules apply.
For overseas providers, especially in digital services, a withholding agent in China may be required. This ensures VAT compliance without forcing foreign companies to register with Chinese tax authorities.
Companies should review contracts and invoicing now to ensure compliance with the new rules before 1 January 2026. Pingwen Hu, Senior Partner and Certified Public Accountant, ECOVIS Ruide Certified Public Accountants Co., Ltd, Shanghai, China
Financial products and market-oriented pricing
Financial services are now clearly defined as taxable, using the place of issuance or the seller’s registration to determine jurisdiction. Even free financial products count as deemed sales, maintaining tax obligations.
The law also broadens the definition of sales revenue to include non-cash benefits. Market value will guide taxation for such exchanges, and authorities may reassess prices if they seem abnormally low or high.
Administrative and compliance updates
The new VAT law removes ultra-short filing periods and aligns import tax declarations with customs timelines, simplifying compliance and reducing costs for businesses.
Additionally, the removal of the “fallback clause” increases clarity by limiting authorities’ discretion to redefine taxable items, making tax rules more predictable.
Preparing for 2026 and beyond
The new VAT law is a step toward modernisation, but many details such as refund procedures and input VAT rules will be clarified in future regulations before 2026.
In the meantime, businesses engaged in cross-border trade, finance, or digital services should start reviewing how the changes may affect their operations, invoicing, and compliance.
Conclusion
China’s updated VAT law keeps the core tax rates but offers a clearer framework, greater global alignment, and more legal certainty, explain the Ecovis experts. It adopts principles such as place-of-consumption and refundable credits to support both domestic and cross-border growth.
For further information please contact:
Pingwen Hu, Senior Partner and Certified Public Accountant, ECOVIS Ruide Certified Public Accountants Co., Ltd, Shanghai, China
Email: pingwen.hu@ecovis.cn
Tax reform Brazil: Alignment with International Standards
21.07.2025
With the tax reform, the Brazilian government intends to introduce a new tax collection model. It is intended to support fiscal sustainability and alignment with global standards. The new system is scheduled to come into force in 2027. One of the most important changes is the introduction of the split payment model. The Ecovis expertsexplain what this means.
Brazil’s tax system is undergoing major changes set to take effect in 2026. The reforms mark a decisive step toward the modernisation of the country’s fiscal structure. Inspired by international best practices, the new system aims to foster a safer, more transparent, and more reliable business environment.
The split payment model
This mechanism involves the automatic separation of taxes – Imposto sobre Bens e Serviços (goods and services tax, IBS) and Contribuição sobre Bens e Serviços (contribution on goods and services, CBS) – at the moment of financial settlement. The amounts due are directed straight to government accounts, significantly reducing the risk of tax default and offering greater predictability in transactions, especially in B2B operations. However, it may also pose challenges to companies’ cash flow management.
By ensuring that taxes are collected in an automatic and transparent manner, split payment aims to streamline the collection system and reduce the bureaucratic burden businesses face. In practice, companies will operate in a more simplified tax environment, no longer needing to invest excessive time and financial resources in the calculation and payment of taxes, as is currently the case.
We support companies and international investors in developing legally compliant, effective strategies to adapt to the new rules. Mauricio Nucci, Partner Tax Department, Vaz de Almeida Advogados – Member of ECOVIS International, São Paulo, Brazil
The system will be enforced starting in 2027 and will apply exclusively to electronic payments, highlighting Brazil’s commitment to digitalisation and tax efficiency. Furthermore, the new legislation includes intelligent mechanisms to prevent double taxation and allow automatic compensations, minimising distortions and enhancing operational security.
New rules for tax credits
Another highlight is the new method for generating and appropriating tax credits. From now on, the credit assessment process will be integrated into the systems of the Tax Management Committee and the Federal Revenue Service, enabling instant credit validation and automation.
This restructuring aims to position Brazil more competitively among emerging markets by creating a tax environment that is more transparent, reliable, and less bureaucratic. It opens up new opportunities for foreign companies seeking to establish or expand their operations in the country, with better control over tax risks and improved medium- and long-term financial planning.
For further information please contact:
Mauricio Nucci, Partner Tax Department, Vaz de Almeida Advogados – Member of ECOVIS International, São Paulo, Brazil mauricio.nucci@vazdealmeida.com
Larissa Moreira, Lawyer Tax Law Department, Vaz de Almeida Advogados – Member of ECOVIS International, São Paulo, Brazil larissa.moreira@vazdealmeida.com
Sustainability Signals: How Companies are Integrating Long-Term Value Strategies in 2025
21.07.2025
Morgan Stanley’s latest report, entitled “Sustainable Signals: Corporates 2025,” unveils substantial trends and insights into the manner in which companies on a global scale are incorporating sustainability into their long-term strategies. The report is based on a survey conducted in March and April 2025, involving over 300 companies worldwide, both public and private, with revenues exceeding $100 million.
A salient finding is that 88% of companies regard sustainability as a potential driver of long-term value, representing an increase of three percentage points from 2024. This underscores a mounting cognisance of the strategic significance of sustainability in cultivating resilient and future-oriented enterprises.
A survey of companies reveals that the majority of them are able to measure returns on investment (ROI) for sustainability-related projects. The capacity to quantify the merits of sustainability initiatives is imperative for substantiating ongoing investment and exemplifying the substantial value these projects confer to the organisation.
The report also indicates that over half of the companies have experienced physical climate-related impacts in the past year. In response to this initiative, 80% of the companies have indicated their willingness to enhance their resilience measures. This proactive approach emphasises the significance of sustainability in mitigating the risks associated with climate change.
The perception of sustainability’s value is subject to variation across different regions and industries. A substantial increase in perceived value creation was reported by North American and European companies, with a nine-point and ten-point rise respectively from 2024. Conversely, companies in the Asia-Pacific region have adopted a more risk-based approach to sustainability.
Industries such as utilities, consumer staples, real estate, materials, and financials are more inclined to view sustainability as a value creation opportunity. Conversely, sectors such as information technology, industrials, energy, and communications services are more likely to regard sustainability as a tool for both value creation and risk management.
Sustainability as a key component of long-term strategies
The “Sustainable Signals” report, published by Morgan Stanley’s Institute for Sustainable Investing, offers a comprehensive overview of the increasing recognition among companies of sustainability as a fundamental element of their long-term strategic planning. The capacity to evaluate return on investment (ROI), the emphasis on resilience, and the regional and industry-specific insights all point to a future in which sustainability is intrinsic to corporate success.
Updated circular on the income tax treatment of crypto assets in Germany
18.07.2025
The Federal Ministry of Finance in Germany has now provided assistance to taxpayers declaring crypto assets such as Bitcoin in their tax return to help them document and declare their income. This guidance is also available to taxpayers and tax offices outside Germany. The Ecovis expertsare familiar with the details.
In response to the ongoing developments in the crypto sector, the German Federal Ministry of Finance (BMF) has clarified the tax treatment of crypto assets. These requirements replace the previous circular dated 10 May 2022, which is published under the title “Individual questions on the income tax treatment of certain crypto assets”.
What now applies to taxpayers?
Taxpayers holding or trading in crypto assets should familiarise themselves with the new cooperation and record-keeping requirements and ensure that their documentation is tax compliant, given the cross-border nature of these assets. Key changes include:
1. Terminology: The term “crypto assets” is now used instead of “virtual currencies and other tokens” to reflect the evolution of regulatory terminology. A detailed description of the various crypto assets can be found here.
2. Transactional gains: These are taxable within one year, while long-term holding periods may offer tax advantages. Please find detailed information here.
3. Stricter documentation and tax reporting requirements:
Investors who make large profits (more than €500,000) must keep all relevant documents archived for six years.
Investors must keep detailed records of all transactions – such as purchases, sales, stakes, loans or airdrops. Incomplete records can lead to blanket assessments by the Inland Revenue and unexpectedly high tax bills.
Details of purchases and sales: Date, amount, type (purchase, exchange, mining, staking, airdrop), platform used, cost (including transaction fees and account setup) and market price source if not in EUR.
Use in transactions: Records of purchases/exchanges of goods & services, including credit card statements where applicable.
Valuation and accounting: Method chosen (FIFO, average cost, or specific identification), records of purse transactions and documentation of reallocation.
Other revenue sources: Mining, staking, lending, forging, airdrops, and similar activities.
Additional data is available upon request: Source of funds, wallet balances at key dates, wallet addresses, transaction hashes (for decentralised trades), and platform account details.
More information on stricter documentation and tax reporting requirements can be found here.
4. Staking, lending – income from capital assets: In the future, activities such as staking and lending will be classified as income from capital assets and will be subject to personal income tax.
Cryptocurrency in the tax return
If taxpayers declare crypto assets in their tax return, they must pay attention to numerous details. The templates provided by the German Federal Ministry of Finance can also be used by taxpayers and tax offices outside Germany: Please find the full English version of the circular here.
Payment Extensions for Taxes in Vietnam: Which Deadlines Will Apply in the Future?
18.07.2025
Companies and business individuals and households are being given more time: The Vietnamese government has extended the deadlines for paying value added tax, corporate and personal income tax, and land rent for 2025. The Ecovis consultants know which deadlines now apply.
On 2 April 2025, the Vietnamese government issued Decree No. 82/2025/ND-CP. Taxpayers who self-pay their taxes now have more time to meet their payment obligations.
Extensions to tax and land rent payment deadlines in 2025
1. Value added tax (VAT)
Monthly VAT for February/March and quarter I 2025: 6 month extension
Monthly VAT for April/May/June and quarter II 2025: 5 month extension
Businesses must still submit VAT declarations on time in accordance with the law on tax administration, but they do not need to pay the tax incurred until the extended deadline.
2. Corporate income tax (CIT)
Provisional corporate income tax payment of quarter I and quarter II 2025: 5 month extension.
3. Extension for value added tax (VAT) and personal income tax (PIT) of business households and business individuals
All VAT and personal income tax arising in 2025 will be extended until 31 December 2025.
4. Land rent
50% of the land rent payable in 2025 (first period) is extended for 6 months, calculated from 31 May 2025.
If you're unsure about your deadline, please feel free to contact us. Trung Pham, Partner, ECOVIS AFA VIETNAM, Da Nang City, Vietnam
How the tax payment extension works
Taxpayers who directly declare and pay taxes to the tax authority and are eligible for an extension should submit a request for the extension of payment for all taxes and land rents arising in the extended tax periods at the same time as the submission of monthly (or quarterly) tax declarations, or no later than 30 May 2025.
Taxpayers must self-assess and are responsible for requesting an extension to ensure that the right subjects are eligible for an extension according to the Decree.
Tax authorities are not required to notify taxpayers of their acceptance of the extension of tax and land rent payment.
Late payment interest will not be charged for tax and land rent amounts extended within the extended payment deadline.
Investors in capital construction works using state budget capital, payments from state budget sources for capital construction works, or projects using ODA capital subject to VAT in payment procedures with the State Treasury must submit the confirmation notice from the tax authority for the application for tax or land rent payment extension.
Peru: When lack of documentation triggers a dividend recharacterization
17.07.2025
In a recent resolution, the Peruvian Tax Court analysed a case in which funds from a company were deposited directly into the personal bank account of its legal representative without supporting documentation. The Peruvian tax authority (SUNAT) treated such deposits as undeclared dividends. The Ecovis expertsexplain the court’s ruling, which contradicts this view.
Background to the case
In Resolution No. 5340-11-2024 (dated 6 June 2024), the Peruvian Tax Court reviewed the treatment of deposits made by multiple companies into the personal bank account of their shared legal representative. SUNAT had recharacterized these transfers as second category income, specifically as dividends paid in cash, based on Article 24(i) of the Peruvian Income Tax Law.
However, the taxpayer challenged the assessment, arguing that the transfers were not distributions of earnings but rather operational payments or reimbursements, and that the absence of documentation should not automatically qualify them as dividends.
SUNAT’s position and arguments
To support the classification as a cash dividend, SUNAT put forward several arguments:
The funds were transferred to an individual with no clear legal obligation or service agreement justifying the payments
There was no evidence of mandates, reimbursement orders, or commercial contracts backing the disbursements
Therefore, the amounts qualified as undeclared dividend distributions, subject to tax as second category income and the corresponding penalties
We support you in creating accurate reports and documentation, reducing audit risks for you. Octavio Salazar Mesías, Partner – Tax & Legal Department, ECOVIS Peru, Lima, Peru
The ruling by the Tax Court
The Tax Court disagreed with SUNAT’s position on several grounds:
SUNAT failed to demonstrate that the funds were distributed within the framework of a formal profit allocation process governed by Article 24-A of the Income Tax Law
The authority also did not identify under which specific paragraph of Article 24-A the recharacterization was being applied
The court concluded that, although the lack of documentation is problematic, it is not sufficient on its own to presume a distribution of profits
This ruling reaffirmed that the burden of proof lies with the tax authority, and that a simple transfer of funds to a legal representative’s account does not automatically constitute a dividend if there is no concrete evidence of profit distribution.
What companies should do now
The Ecovis experts provide recommendations to help companies avoid similar disputes in future audits:
Formally document any transfers to company officers or legal representatives, including:
written mandates
reimbursement orders
detailed expense reports with supporting invoices
Properly record all profit distributions through:
shareholder meeting minutes
profit distribution resolutions
withholding and remittance of applicable income taxes
Maintain detailed accounting and legal records, including service agreements and financial authorisations, to support the legitimacy of each transaction.
The significance of the verdict
The ruling confirms that SUNAT cannot presume a dividend distribution based solely on unexplained bank deposits. Nonetheless, the absence of documentation places the taxpayer in a vulnerable position during tax audits.
For further information please contact
Octavio Salazar Mesías, Partner – Tax & Legal Department, ECOVIS Peru, Lima, Peru
Email: octavio.salazar@ecovis.pe
China will no longer publicly report companies removed from the list of abnormal business relationships. The revised measures already took effect on 1 May 2025. The Ecovis expertsexplain what this means and who can apply for removal from the “blacklist” under the social credit system.
The State Administration for Market Regulation recently issued a notice regarding the implementation of the Measures for the Administration of the List of Enterprises with Abnormal Operations. According to the notice, once a business entity is removed from the abnormal operations list, the related information will no longer be publicly displayed – thus achieving a “no trace” policy after removal.
To date, China’s National Enterprise Credit Information Publicity System has stopped disclosing about 48.42 million entries concerning abnormal operations, affecting around 25.51 million market entities, including 5.02 million enterprises, 20.13 million individual businesses, and 362,400 farmers’ cooperatives.
China wants to strengthen confidence in the market
Upon approval of a removal application, public disclosure of the related listing will cease. This addresses business concerns, enhances credit restoration, fosters fairer conditions, and strengthens market confidence, supporting China’s economic recovery.
The abnormal operations list, part of China’s business “blacklist” system under the social credit regime, tracks relatively minor violations, mainly concerning incomplete or outdated business disclosures. It differs from more serious lists like the Seriously Illegal and Dishonest Entities List or the National Basic List of Punishment Measures for Dishonest Conduct.
Discuss with an expert what impact the tightened compliance and liability regulations have on your company. Richard Hoffmann, Lawyer, ECOVIS Rechtsanwaltskanzlei Richard Hoffmann, Ladenburg, Germany
How companies can be removed from the list
Businesses may apply for removal depending on the cause of listing:
Failure to submit annual reports: May be removed after submitting the overdue report
Failure to disclose enterprise information on time: May be removed after fulfilling disclosure duties
Failure to register a name change: May apply for removal after the name change is properly registered
Unable to contact via registered address: Can apply after updating the registered address or confirming reachable contact details
In each case, the local market authority will decide on removal within five working days of receiving the application or verifying the correction.
These changes make the system more balanced. While transparency remains a goal, companies that address minor infractions won’t face lasting reputational damage. This encourages timely compliance, while reducing the long-term burden on businesses, helping foster a healthier business environment.
However, it is important to consider, that compliance and liability regulations for companies have tightened and underwent (partially) significant changes under the new company law.
For further information please contact
Richard Hoffmann, Lawyer, ECOVIS Rechtsanwaltskanzlei Richard Hoffmann, Ladenburg, Germany
Email: richard.hoffmann@ecovis.com
Labour law Czech Republic: Flexibilisation of Czech labour law from 1 June 2025
15.07.2025
The “flexi-amendment” of the Czech Labour Code, also known as the “flexinovela”, came into force on 1 June 2025. The aim is to make the Czech Republic more competitive through a modern and flexible labour market. The Ecovis experts know which changes companies need to be aware of now.
The flexi-amendment introduced some changes that companies must now implement. However, termination of employment without cause was rejected as too fundamental.
Notice periods
The notice period will be reduced to one month if the employee violates work discipline or does not meet the legal requirements for performing the job. The duration of the notice period will also be revised. For further details visit the Ecovis Czech web page.
Get expert advice to ensure that the requirements and changes in Czech labour law are correctly implemented. JUDr. Mojmír Ježek, Ph.D., Partner, ECOVIS ježek, advokátní kancelář s.r.o.
Probationary period
The maximum probationary period will be extended from 3 to 4 months, and from 6 to 8 months for managers. The probationary period will also be extended in certain cases. For more information see the Ecovis Czech website.
Wage transparency
Employers may not prevent employees from sharing information about their wages.
Youth work
Minors aged 14 and over can perform light work during the main summer vacation, even if they have not yet completed compulsory schooling.
The most important changes to Czech labour law
At the beginning of April, the long-awaited amendment to Law No. 262/2006 on the Labour Code, the “Flexinovela”, was adopted, bringing about fundamental changes in the area of labour relations.
For more information and details on these aspects, see the ECOVIS Czech web page.