Fair Taxation: Commission welcomes agreement on minimum taxation of multinationals
13 December 2022
The Council Directive, to be formally adopted by Council written procedure, includes a common set of rules on how to calculate the 15% effective minimum tax rate– so that this is properly and consistently applied across the EU. The minimum tax rate of 15% has been agreed at global level by 137 countries.
The Commission welcomes the unanimous agreement announced last night by the Czech Presidency of the EU Council on the Commission's proposal for a Directive
ensuring a minimum effective tax rate for large multinational groups.
With this historic agreement, the EU's pledge to be among the first to
implement the OECD tax reform,
comes closer to fruition. Once implemented, this agreement will bring
fairness, transparency and stability to the international corporate tax
framework.
The rules will apply to multinational enterprise groups and
large-scale domestic groups in the EU, with combined financial revenues
of more than €750 million a year. They will apply to any large group,
both domestic and international, with a parent company or a subsidiary
situated in an EU Member State. If the minimum effective rate is not
imposed by the country where the subsidiary company is based, there are
provisions for the Member State of the parent company to apply a
“top-up” tax. This Directive also ensures effective taxation in
situations where the parent company is situated outside the EU in a
low-tax country which does not apply equivalent rules.
Member States must implement the new rules by 31 December 2023.
Background
Ensuring a global minimum level of taxation for Minimum corporate
taxation is one of the two work streams of the global OECD agreement
(Pillar 2) - the other is the partial re-allocation of taxing rights
(known as Pillar 1). The latter will adapt the international rules on
how the taxation of corporate profits of the largest and most profitable
multinationals is shared amongst countries, to reflect the changing
nature of business models and the ability of companies to do business
without a physical presence.
Quote(s)
This
agreement on minimum corporate taxation is a win for fairness, a win
for diplomacy and a win for multilateralism. The European Commission
never gave up on this deal, and I am proud to see it become reality. The
common European interest has prevailed and I want to pay tribute to the
French and Czech Presidencies for all their efforts that have led us to
this point. We must now concentrate our efforts on finalising the
discussions on the other pillar of the global agreement, which focuses
on taxing the largest multinational groups, and bringing it into EU law.