Q&A: Tax considerations in cross-border M&A amid ongoing market volatility

October 2025  |  SPECIAL REPORT: CORPORATE TAX

Financier Worldwide Magazine

October 2025 Issue

FW discusses tax considerations in cross-border M&A amid ongoing market volatility with Irene Reoyo, Sergi Lemus, Dany Teillant and Angelica Tsakiridis at Deloitte.

FW: Could you provide an overview of the current cross-border M&A landscape, with a focus on how ongoing market volatility is shaping the tax strategies of both acquirers and targets?

Reoyo: The current cross-border M&A landscape is heavily influenced by current market volatility, geopolitical development and changes in regulatory frameworks. These factors drive the value of a deeper view on targets, to conduct broader due diligence starting with commercial and operational, which are crucial to effectively address the others – financial, tax and legal – and to also be more vigilant about compliance. In this context, uncertainty surrounding tax reforms in various jurisdictions adds another layer of complexity, prompting acquirers to adopt flexible tax strategies that can adapt quickly to changes in the regulatory landscape and that are fully aligned with their business goals. Meanwhile, targets are reassessing their tax structures to achieve compliance and attractiveness.

“In the current environment, tax risks may be compounded by ongoing tariff scenarios.”
— Angelica Tsakiridis

FW: What key areas should be included in the scope of tax due diligence? How critical is it to identify and quantify historical tax risks associated with the target business?

Reoyo: Today’s tax due diligence should include appropriate focus on the substance and business rationale of the target’s structure, alongside existing tax attributes and their usability in jurisdictions under intense scrutiny – areas that have acquired heightened significance. It is important to assess the strength of the target’s supporting evidence. Additionally, transfer pricing remains a critical area of scrutiny, requiring identification of ‘out of market’ patterns. New regulations, such as anti-hybrid rules and Pillar Two, require evaluating the target’s readiness and ability to comply with regimes across multiple jurisdictions. Challenges arise if the target does not include the seller’s entire subgroup in a given jurisdiction, as a result of the jurisdictional blended methodology under Pillar Two, calling for indemnities and careful share purchase agreement wording to protect against pre-closing tax liabilities.

Tsakiridis: In the current environment, tax risks may be compounded by ongoing tariff scenarios – deriving from the customs space where, traditionally, customs plays alongside tax and where the tax structure is typically paramount to a corporation’s global interest. We are seeing clients take historical interest in addressing and measuring the impact of customs risk, including duties, on their overall operations and tax strategy. We advocate for ‘least disruptive’ solutions but, overall, whether it is customs planning or supply chain planning, broadly speaking, it is best to mitigate not only indirect tax implications that may arise from customs planning or non-compliance, but also to support challenges across the tax world while leveraging the opportunity with comprehensive supply chain solutioning layering to address comprehensive tax diligence across the diversity of dependencies that may be enhanced or burdened by the current customs environment. 

“To unlock value, firms are reassessing their mix of in-house and external resources.”
— Sergi Lemus

FW: How vital is strategic tax planning in achieving tax efficiency during M&A transactions? What deal structures can help acquirers demonstrate genuine business purpose and operational substance?

Teillant: In today’s volatile economic climate, integrating tax considerations – such as withholding tax, capital gains tax, tax losses and incentives, and management equity plans – into strategic planning in an M&A transaction, is crucial for navigating financial challenges like inflation, interest rates, prices and foreign exchange fluctuations. But implementation is as important as planning. Tax authorities increasingly focus on whether a company or transaction has economic substance, and there is no ‘one size fits all’ deal structure that can help acquirers secure legal certainty over a tax outcome. As a result, tax departments play a key role in achieving compliance with evolving tax regulations, aligning the operating model and business activities with tax planning, determining tax benefits eligibility, and minimising tax audits and reassessments.

Tsakiridis: From a more broad-based trade controls perspective, we are seeing an increased need to approach the planning and due diligence considerations from an export control and sanctions perspective, as well as the inherent risks posed by import activities. Specifically, the focus is on those controls that may prevent or diminish returns on investment due to the potential that these control regimes have broad-reaching effects on critical requirements for sourcing, technology development, transaction partner limitations and potential costs associated with government oversight, intervention or interaction in the marketplace. Due diligence is therefore crucial, specifically in today’s environment of enhanced risks, particularly in the US but also across global jurisdictions, compounded by retaliatory tariff measures and the changing topography of relationships with global trading partners. The US has put in play a variety of complex investment regulations and preventative rulesets that demand careful accounting of supply chain and transaction partners, including US information and communications technology and services rules for AI investment, among others.

“Tax implications for cross-border M&A will continue to evolve toward an increased demand for tax reporting and data collection.”
— Dany Teillant

FW: What are the main factors currently influencing how M&A transactions are structured and valued? How would you describe the impact of the current US tariff regime on deal valuations?

Tsakiridis: The current environment where tariffs and retaliatory tariffs are being proposed and negotiated is creating uncertainty, depressing asset valuations.

FW: How can buyers and sellers effectively manage the growing complexity of US and international tax regulations? What indirect tax issues should also be taken into account during cross-border transactions?

Teillant: Buyers and sellers can effectively manage the growing complexity of tax regulations by proactively addressing risks through sell-side assistance reviews and employ solutions like tax insurance or remediation to mitigate them beforehand. Anticipation is key to forecasting potential challenges and preparing strategies that maximise value creation while avoiding common pitfalls. It is especially true with indirect taxation. Governments worldwide have used indirect taxation to raise revenues or to effect certain policies. Due to the pervasive and complex nature of VAT, goods and services tax, sales tax, property tax, customs and excise duties, or environmental taxes, indirect tax liability risk is often marked as high and material in cross-border M&A tax due diligences.

Tsakiridis: While the US tariff regime presents both buyers and sellers with many new challenges, this new environment also provides an opportunity to reassess current strategies and develop a tariff mitigation playbook as a core pillar for wider supply chain resiliency and planning activities. Resiliency with purpose strengthens the ability to manage future risks, while also addressing immediate risks and opportunities associated with the current tariff environment.

“Uncertainty surrounding tax reforms in various jurisdictions adds another layer of complexity.”
— Irene Reoyo

FW: What recent trends in business process integration do you believe are having the greatest impact on the effectiveness of M&A transactions? How can companies capitalise on these opportunities?

Lemus: Companies are navigating significant challenges due to regulatory changes, technological advancements, talent scarcity and the adoption of more sophisticated approaches by tax authorities. Furthermore, an M&A environment accentuates complexity. To unlock value, firms are reassessing their mix of in-house and external resources, leveraging the benefits of next-generation managed services. Engaging third parties provides access to specialised talent, accelerates transformation and mitigates risks, particularly in takeover, transition service agreement and post-merger integration contexts where bandwidth is limited and speed is critical. A trusted partner can help balance essential trade-offs between cost, quality and urgency, achieving operational continuity while enabling scalability and establishing a robust growth platform. This, in turn, allows companies to better manage finance and tax in new markets and maximise synergies – ultimately enhancing M&A success and sustainability.

FW: Looking ahead, how do you expect tax implications for cross-border M&A to evolve? Does the current capital environment indicate a likely increase in deal activity over the coming months and years?

Teillant: Tax implications for cross-border M&A will continue to evolve toward an increased demand for tax reporting and data collection, digitalisation of tax, and an ever-increasing need to adapt to international tax reform. Our ‘2025 M&A Trends’ survey polled 1500 US-based corporate and private equity professionals between September and October 2024 to gauge their expectations for M&A activity in the next 12 months. M&A activity is expected to remain very volatile. Buyers and sellers are gearing up for future deals, but are also looking beyond traditional M&A, pivoting toward nontraditional lenders to finance deals and narrowing the focus to a smaller number of sectors.

Irene Reoyo is a partner in the international tax team at Deloitte Legal Spain, with over 15 years of experience in the field. She leads the transportation sector in Deloitte Spain, serving both Spanish and international airlines, as well as some of the largest logistics groups. Her specialisation encompasses international tax and providing tax advisory services to multinational enterprises in both inbound and outbound investments. She is a specialist in Pillar Two, with extensive experience advising Spain’s largest groups, and has been actively working on the implications of Pillar Two in the context of M&A. She can be contacted on +34 914 432 205 or by email: ireoyo@deloitte.es.

Sergi Lemus is a partner with Deloitte Spain, based in Barcelona. With over 20 years of experience in professional services, he currently leads Deloitte Spain’s business process solutions finance and tax operate services, overseeing a team of more than 10,000 business process solutions practitioners. His expertise encompasses driving transformation and efficiency in finance, tax and human resources within M&A environments. He can be contacted on +34 931 697 980 or by email: slemus@deloitte.es.

Dany Teillant is a partner in the M&A tax department of Deloitte Luxembourg and has over 20 years of experience in international tax. He advises asset managers on a wide variety of international tax issues, including mergers and acquisitions, tax due diligence, alternative investment fund management implementation, global tax optimisation, cross-border withholding taxes, tax compliance, investor tax reporting, and assistance with tax considerations affecting regulated and non-regulated investment funds. He can be contacted on +352 45145 2246 or by email: dteillant@deloitte.lu.

Angelica Tsakiridis is managing director in Deloitte Tax’s US global trade advisory practice. She has over 18 years of legal and consulting experience serving multinational clients globally with import, export and sanctions regulatory, and supply chain resiliency strategies. She focuses on transactional, audit, investigation and remediation support across several critical industries, including life sciences and pharmaceutical, industrial manufacturing, and aerospace and defence. She can be contacted on +1 (847) 962 3511 or by email: atsakiridis@deloitte.com.

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