Global tax disputes hot topics

His Majesty’s Revenue and Customs (“HMRC”) has entered a period of heightened enforcement supported by government funding earmarked for tax compliance. This is expected to result in additional investigations and compliance activity by HMRC, more sophisticated oversight and data interrogation powered by technology and AI. These developments are driving increased scrutiny of fraud and avoidance-related matters. The “nudge” letter has become a mainstream compliance tool: a communication prompting taxpayers to self‑review areas such as compliance for loan relationships, crypto‑asset reporting, and online sales disclosures. Although the nudge letter is not a formal allegation, failure to respond may prompt escalation. Taxpayers in such scenarios should undertake an early assessment of their factual and legal position to determine next steps. This may include responding substantively, making a disclosure, or defending their position, recognising that timing and the procedural approach may drive penalty mitigation and influence any future litigation.

Against this backdrop, procedural and evidential discipline are crucial. Retaining accurate records for relevant periods and engaging promptly with information requests from a litigation standard approach can be key. Where tax errors are identified in later periods, consideration of appropriate disclosures can mitigate penalties.

In an environment defined by a significant increase in data, tax complexity and the need to increase the government’s tax revenue, early decisions on strategy, litigation approach and disclosure can determine the course of the dispute and protect a taxpayer’s position.

Italy’s tax disputes landscape is currently shaped by an expanded ecosystem of tax credits, incentives and the steady sophistication of audit practices assessing entitlement to those benefits. Authorities have intensified the verification of credits, increasingly testing both legal and technical eligibility criteria as well as the evidentiary underpinnings of the tax benefits.

For multinational groups, scrutiny also extends to transfer pricing as well as the other typical intercompany transactions (i.e. dividend distributions and interest payments).

The adoption of cooperative compliance and risk‑prevention systems, such as the Tax Control Framework, is being promoted for the benefit of a broader range of taxpayers to mitigate dispute. This regime has shifted, due to recent regulatory reforms, from an open, company‑driven model to a certified and standardized system.

Procedurally, Italy offers multiple options before litigation. Taxpayers frequently undertake voluntary corrections, negotiate settlements, and reach judicial conciliation to reduce further costs (as interest and penalties). Indeed, the taxpayer often achieves the best outcome by pursuing disciplined administrative procedures that facilitate the use of different settlement mechanisms to contain risk. If such mechanisms are not applied, the Italian dispute system is highly structured, with specialist tax courts and a three‑tier appeals structure but the proceedings can be lengthy, increasing costs and risk.

In short, the system is designed to encourage administrative resolution and prevent dispute; if that fails, a multi‑tiered judicial process is aimed to assert rights, taxpayers should therefore build early and complete defence strategy for both settlement and dispute proceedings from day one.

Sweden exemplifies a lean, rules‑driven model with wide investigative powers and limited room for negotiated outcomes. The Swedish Tax Agency (STA) can reconsider tax decisions up to the sixth year following the financial year. However, after the second year, the STA typically needs to show that the taxpayer provided information of importance that was also incorrect, in order to issue an adverse decision. Investigations commonly involve re-examinations of filed returns or focused sector interventions, where venture capital activity has been a recent focus area, underscoring a data‑rich approach rather than randomised auditing. The STA has broad powers to investigate. A taxpayer must provide the STA – upon request – with all information, books and documents that may be relevant. The STA also has the option of ordering third parties, e.g. banks, suppliers and customers who have been in contact with the taxpayer, to submit documents and other information to the STA. While settlements over tax assessments are not available, taxpayers benefit from meaningful procedural protections, including the right to access information filed by others, to comment on intended decisions, and to representation.

The penalty system is formulaic: surcharges of 40% for income tax and 20% for most other taxes, with potential criminal referral where incorrectly withheld tax is significant. Appeals proceed through the administrative courts in three instances, typically taking around one year per stage; payment deferral may be obtained where the STA’s position appears doubtful, and deferral of surcharges is mandatory upon application when surcharges are imposed. The practical guidance is clear: engage expert counsel early, manage the flow of information carefully, and prepare for litigation rather than negotiated compromise. With alternative dispute resolution mechanisms absent and settlements off the table, factual development, privilege strategy, and meticulous rebuttal of the STA’s audit findings carry outsized weight.

Brazilian tax disputes have recently made international headlines following Netflix’s disclosure that a dispute with the Brazilian tax authorities had materially affected its Q3 2025 results (taxation of cross-border royalty remittances). The case highlights the complexity and potential high stakes of the Brazilian tax environment.

Tax audits are commonly triggered by inconsistencies in filings, abrupt changes in tax practices, or the use of structures perceived as aggressive - such as questionable tax credit deductions or the use of controversial tax incentives. Authorities have broad investigative powers, including access to third-party records, lifting bank secrecy under certain conditions, and conducting raids against taxpayers suspected of fraud or serious non-compliance subject to judicial authorisation.

The Brazilian system offers both administrative and judicial routes for dispute resolution. Taxpayers may challenge assessments through a structured administrative process, followed by judicial review through three levels of courts. Standard penalties range from 20–100% of the tax due (up to 225% in fraud cases), and interest accrues at Brazil’s SELIC rate (the benchmark interest rate set by the Central Bank). Interim relief is available through guarantees such as judicial deposits or surety bonds, or by obtaining an injunction to suspend collection.

Recent areas of focus include the taxation of cross-border payments and royalty remittances, the early revocation of sector-specific tax incentives, and ongoing legal debates over the scope of res judicata in tax matters. In this environment, early engagement with tax authorities, strong evidentiary records, and close monitoring of case law are essential to managing risk and securing favourable outcomes.