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EU member states reached agreement to implement at EU level the minimum taxation component, known as Pillar 2, of the OECD’s reform of international taxation.
Effective implementation of the directive will limit the race to the bottom in corporate tax rates. The profit of the large multinational and domestic groups or companies with a combined annual turnover of at least €750 million will be taxed at a minimum rate of 15%. The new rules will reduce the risk of tax base erosion and profit shifting and ensure that the largest multinational groups pay the agreed global minimum rate of corporate tax.
I am very pleased to announce that we agreed to adopt the directive on the Pillar 2 proposal today. Our message is clear: The largest groups of corporations, multinational or domestic, will need to pay a corporate tax that cannot be lower than 15%, globally.
Zbyněk Stanjura, Minister for Finance of Czechia
The directive has to be transposed into member states’ national law by the end of 2023. This will still result in the EU being a front-runner in applying the G20/OECD global agreement on Pillar 2.
On 8 October 2021, almost 140 countries in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) reached a landmark agreement on international tax reform, as well as on a detailed implementation plan.
The reform of international corporate tax rules consists of two pillars:
On 22 December 2021, the Commission therefore presented a proposal for a directive which aims to implement Pillar 2 in a way which is consistent and compatible with EU law.