A provision in the US reconciliation bill allowing punitive taxes of up to 20 on foreign investors from countries with digital or unfair taxes

CEOs from firms like Shell Toyota SAP and LVMH supported by lobby groups are warning it will disrupt US jobs and capital markets

Why is it called a revenge tax

It targets countries that impose digital service taxes on US firms framed as retaliatory

How could it deter foreign investment

Higher taxes on dividends and interest may reduce demand for US stocks and bonds weakening global investment inflows

How might European firms respond

By listing in the US to avoid the mandated surcharges

Could it affect US Treasury yields

Yes if foreign demand for US debt declines it could raise yields and borrowing costs

Is the provision guaranteed to take effect

No Senate revisions may delay limit or remove Section 899 under pressure from lawmakers and investors

What revenue would it generate

Estimated at 116 billion over ten years intended to offset budget costs

How does this relate to OECD tax norms

Section899 is partly designed to counter Pillar Two global minimum corporate tax and other extraterritorial taxes affecting US companies

When will action occur

The provision will face intense scrutiny during Senate deliberations likely in JuneJuly 2025

US Tax Bill Section 899 Could Push European Firms to List in the US

🔸Published: 09 Jun 2025 01:54 PM

🔸Updated: 10 Jun 2025 04:49 PM

Section 899 in the U.S. tax bill could penalize foreign investors and encourage European firms to list stateside, spurring a showdown over global investment and capital flows.

Europe’s leading corporations are converging on Washington to oppose Section 899 of the proposed U.S. tax legislation, warning it threatens foreign investment and could prompt companies to seek U.S. listings instead.

What Is Section 899?

Section 899, a provision in former President Trump's budget reconciliation bill, empowers the U.S. Treasury to impose punitive taxes—up to an additional 20 percentage points—on dividends, interest, and sovereign-wealth fund income from investors in countries deemed to have "unfair foreign taxes," such as digital services taxes or undertaxed profits rules .

Though intended to generate roughly $116 billion over a decade, critics argue it undermines global investment and may derail U.S. economic goals .

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European Backlash

Executives from about 70 major international companies, including Shell, Toyota, SAP, and LVMH, are lobbying senior lawmakers, warning that Section 899 could:

Erode foreign direct investment (FDI) into the U.S.
Jeopardize 8.4 million American jobs sustained by foreign firms’ U.S. operations
Trigger market disruptions like reduced demand for U.S. Treasuries .

Lobby groups like the Global Business Alliance and Institute of International Bankers are urging Congress to delay or modify the bill .

“Revenge Tax” and Broader Impact

Dubbed the “revenge tax,” Section 899 is seen as a retaliatory measure against countries with digital services taxes on U.S. tech brands. However, analysts caution it could spark a capital war, discouraging investment in U.S. assets and weakening the dollar through reduced global flowers.

A weakening dollar may benefit exporters but hike interest rates domestically, impacting mortgages, corporate borrowing, and consumer loans .

Why This Could Encourage U.S. Listings

To avoid the tax penalty, European and global firms may choose to list stock in the U.S., thereby reclassifying dividends and interest under U.S. rules and circumventing punitive surcharges. U.S. listing remains appealing due to deeper capital markets and regulatory advantages.

Politics and Next Steps

Republican lawmakers, including Rep. Ron Estes, argue Section 899 protects U.S. business interests against unfair foreign tax regimes . Meanwhile, others in the GOP Senate are urging moderation in light of investor backlash .

Next steps include: