We are at an uncomfortable juncture in Europe. There are entire sectors reorganising their activity as fast as they can, under pressure by volatile costs, geo-political tensions and inflation rates which are decreasing, but not at the pace which many expected.
The current economic climate in Europe
From the beginning of 2024, and more acutely since 2025, Euro-zone governments have been dealing with the effects of a commercial war led by the US which has, unexpectedly, greatly impacted European industry.
Germany has seen demand for machinery significantly decrease, whereas Spain has felt the impact on its wineries and agricultural sector, and France has been forced to renegotiate aeronautical sector contracts. Add to this energy costs, which, although lower than the 2022 peak, remain high, and we have cause for a major headache in many intensive industries.
Companies are not only adjusting margins or searching new markets: they are redesigning their legal, tax and organisational structures. And that´s where restructurings come into play.
What type of restructurings are we witnessing?
Many companies are opting for internal restructurings which do not necessarily relate to financial distress. There are moves aiming to simplify corporate structures, others seeking to optimise their tax position, and many linked to split-ups of business lines which no longer align with future strategies. We are also seeing more carve-outs -preparing business units for sale or to attract external investment-. And, of course, there are also “defensive” restructurings focused on the closure of non-profitable subsidiaries, personnel adjustments and selective divestments.
What´s interesting is that these restructurings are taking part sooner than ever before. There is a great degree of anticipation: companies do not wait to be in serious trouble. They want wiggle room.
Key legal issues
Directive (EU) 2019/1023 on preventive restructuring frameworks forces EU states to offer pre-insolvency mechanisms which allow the restructuring of debt and businesses without having to file for insolvency. Some countries have already transposed the directive to different degrees of success, and others, such as Spain, have gone one step further by incorporating special procedures for micro-companies, for example.
But this new framework requires careful reading. There are matters such as the appointment of restructuring experts, court approval of restructuring plans, their effect on dissenting creditors… and of course the eternal question: when to file for insolvency. It is not the place to improvise.
Tax matters
Any restructuring has consequences from a tax perspective, even if the aim is not to obtain immediate benefits. Asset transfers, corporate mergers or dissolutions can trigger VAT payments, corporate tax or capital gains tax, to mention just a few. In addition, may European countries are closely reviewing these transactions to ensure that they do not become tax evasion mechanisms.
There are also changes coming from Brussels. The European Commission´s proposal for a Common Consolidated Corporate Tax Base (CCCTB) is slowly moving forward, but it is already affecting the way in which multinationals plan their structures. Some corporate transactions which used to be tax neutral can now have implications if they are not compliant with the new criteria about sustainability and real activity.
Public policies
Governments have responded to this new environment in different ways, but there is a clear pattern: intervention is back. We´re not talking only about occasional aid, but frameworks which condition the type of restructurings which a company can or cannot do.
In France, for instance, the State is demanding social commitments in exchange of guarantees or rescues, and this has had an impact on some reorganisations. In Germany, the government has promoted energy transition plans which are forcing many industrial companies to rethink their production plants. In Spain, there are funds, such as SEPI, which support strategic companies, but requirements are now harsher for any action which might impact employment.
In addition, the Recovery Plan for Europe has brought an avalanche of funds linked to digital or sustainable transformations. Many companies are restructuring part of their activity simply to be eligible for aid from the scheme. In other words, they are not reorganising because they are in trouble, but also to enable growth under the new rules.
And, of course, we must also consider employment frameworks. In some countries, including Italy and Belgium, any restructuring leading to redundancies must be negotiated with the unions. In others, such as The Netherlands, there are more flexible rules, but also within strict controls.
Restructuring in Europe in 2025 makes is as much a business decision as it is a legal, tax and political one. It cannot be done without paying close attention to what happens beyond the figures. At Confianz, we have a long track record advising on such processes with a pragmatic, multidisciplinary approach. Because a badly planned restructuring can cost not just money: it can close doors in markets, in financing, or even with regulatory authorities.
