Experts try to puzzle out whether Europe will fall prey to the One Big Beautiful Bill Act (OBBBA). For the United States, the bill represents a vast field of opportunity.
According to some analysts, the American One Big Beautiful Bill Act will reshape corporate cash flows through generous tax provisions. However, its impact on Europe comes with several nuances, currency strategists at Morgan Stanley note.
The bill includes two key measures: immediate and retroactive expensing of R&D costs in the US, and 100% bonus depreciation for qualified capital expenditures. For American companies with significant R&D operations or capital investments, this means a substantial increase in free cash flow.
For European companies, the impact is less direct, but still present, considering that around 23% of MSCI Europe revenues come from the US.
According to a Morgan Stanley study, only 2.2% of European corporations mentioned the OBBBA or tax incentives in their earnings reports in Q2 2025, compared to at least 11% of American firms that acknowledged the bill’s impact.
In such a scenario, Morgan Stanley analysts believe European management teams have yet to fully grasp the potential implications of the new law.
The degree to which European firms are affected depends on several factors: the scale of their US R&D and capital expenditures, the location of employees and operations, and complex cross-border tax agreements. According to Morgan Stanley, healthcare and tech companies in Europe are most likely to benefit from the bill.
Pharmaceutical firms such as Argenx, Genmab, Indivior, Roche, and Novo Nordisk, along with software companies like Nemetschek and Sage, are well-positioned to benefit from upfront R&D expensing. Meanwhile, capital-intensive companies such as Deutsche Telekom, Ashtead Group, CRH, and Air Liquide could benefit from bonus depreciation provisions.
Some management teams have already acknowledged the advantages of the OBBBA. Deutsche Telekom, for example, expects T-Mobile US to save $1–$1.5 billion in taxes in the medium term, increasing free cash flow by up to 5%.
However, as with any policy, there are caveats to consider. Cross-border tax rules, such as the US anti-abuse tax, may limit the benefits for businesses. Additionally, European minimum tax regimes could erode the savings, Morgan Stanley concludes.
