EU Agreement On Minimum Taxation (Pillar 2)

ON 12 DECEMBER 2022, THE COUNCIL OF THE EU ANNOUNCED_ THAT
EU MEMBER STATES HAVE REACHED AGREEMENT TO IMPLEMENT A DIRECTIVE THAT ENSURES A GLOBAL MINIMUM LEVEL OF TAXATION FOR MULTINATIONAL GROUPS IN THE EU ("PILLAR 2 DIRECTIVE") AND THAT A WRITTEN PROCEDURE FOR ITS FORMAL ADOPTION WILL BE LAUNCHED.

The new rules aim to tax the profits of large multinational and domestic groups with a combined annual turnover of at least EUR 750 million based on consolidated financial statements at a minimum rate of 15%.

Background

On 8 October 2021, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting reached an agreement_ known as Pillar 2 on reform of the international rules on taxation of the profits of multinational enterprises.