EU Introduces Minimum 15% Tax Rate for Multinational Companies

From January 1, 2024, new EU rules came into force, introducing a minimum effective tax rate of 15% for multinational companies operating in EU member states.

The rules will apply to multinational groups of companies and large domestic groups in the EU with a combined financial income of more than €750 million per year. They will apply to any large group, whether domestic or international, with a parent company or subsidiary located in an EU Member State.

The Directive contains a general set of rules on how to calculate and apply the “additional tax” payable in a particular country if the effective tax rate is lower than 15%. If the subsidiary is not subject to the minimum effective rate in the foreign country where it is located, the parent company’s Member State will also apply additional tax to the latter. In addition, the Directive ensures efficient taxation in situations where the parent company is located outside the EU in a low-tax country that does not apply equivalent rules.

Ensuring a global minimum level of corporate taxation is one of the two areas of work of the OECD global agreement. With this reform, the EU has fulfilled its obligation to implement the OECD tax reform – Pillar 1. Pillar 2 adapts international rules on how the taxation of corporate profits of the largest multinational corporations is distributed among countries, including under the condition of operating a business model without a physical presence.

Press release 

Read more:

G20 Signs Agreement on Minimum Global Tax Rate