EU member states reached agreement in principle 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.
The directive must be transposed into member states’ national law by the end of 2023, making the EU a front-runner in applying the G20/OECD global agreement on Pillar 2.