Europe's five biggest economies have warned Donald Trump that plans for massive US tax reforms may end up violating international trade rules.

Finance ministers from Germany, France, Britain, Italy and Spain say they have 'significant concerns' about some of the US President's tax initiatives and fear they could harm the global economy.

In a letter to US Treasury Secretary Steven Mnuchin, the ministers said the tax overhaul could risk 'seriously hampering genuine trade and investment flows' between Europe and America.

Their warning mirrors fears among some European businesses that aspects of Mr Trump's tax-reform bills may have been designed to give American companies an advantage over foreign rivals.

Europe's five biggest economies have warned Donald Trump (pictured) that plans for massive US tax reforms may end up violating international trade rules

The ministers, including Britain's chancellor Philip Hammond (pictured), warned that Trump's measures could 'discriminate' in a manner which would contravene World Trade Organisation

The ministers, including Britain's chancellor Philip Hammond, warned the measures could 'discriminate' in a manner which would contravene World Trade Organisation (WTO) provisions, would be inconsistent with double taxation rules, and would be 'poorly targeted' at helping to combat tax avoidance.

'The inclusion of certain less conventional international tax provisions could contravene the US's double taxation treaties and may risk having a major distortive impact on international trade,' the letter stated.

One of Mr Trump's proposals would see US companies forced to pay a 20 per cent tax on payments to foreign companies – effectively forcing them to spend money with American firms.

This, the ministers, said, 'would impact on genuine commercial arrangements'.

Because it would only apply where payments are being made for foreign goods and services, this would discriminate and break WTO rules. The plans have not yet been passed by the US Congress.

The letter warned that 'it is important that the U.S. government's rights over domestic tax policy be exercised in a way that adheres with international obligations to which it has signed-up.'

In a letter to US Treasury Secretary Steven Mnuchin (pictured), the ministers said the tax overhaul could risk 'seriously hampering genuine trade and investment flows' between Europe and America

EU nations have been warily eyeing President Trump's domestic tax proposals as they made their way through congress and have long expressed fears they might hurt world trade and EU companies in particular.

The five ministers specifically targeted the so-called Base Erosion and Anti-abuse Tax (or BEAT) Senate bill.

This measure aims to combat what is called base erosion and profit shifting, the practice by some multinationals to avoid tax by exploiting mismatches in countries' tax rules to artificially report their profits in countries with low or no taxes.

The finance ministers lauded the measure's aim to ensure companies pay their fair share in taxes to the U.S.

But they said that under the current plans, the measures would also hurt genuine commercial deals.

In the financial sector in particular, 'the provision appears to have the potential of being extremely harmful for international banking and insurance business.'

U.S President Donald Trump (left) shakes hands with French President Emmanuel Macron after at the Elysee Palace in Paris

They said it 'may lead to significant tax charges and may harmfully distort international financial markets.'

The EU's 28 finance ministers had already expressed concern about the U.S. plans during a meeting last week, but now its five biggest economies have gone ahead with their own warning.

In Washington, however, Republicans are upbeat about finalising the tax bill from the House and Senate versions for Trump's first major legislative accomplishment in nearly 11 months in office.

Trump has set a Christmas deadline for signing the bill into law, giving lawmakers named to a special conference committee two weeks to iron out major differences in the House and Senate versions of the legislation.

The conference committee has scheduled its first formal meeting for Wednesday.

Both measures would cut taxes by about $1.5 trillion over the next decade while adding billions to the $20 trillion deficit, combining steep tax cuts for corporations with more modest reductions for most individuals.

Together, the changes would amount to the biggest overhaul of the U.S. tax system in 30 years, touching every corner of society.