Agreement Reached on EU's Pillar 2 Directive

While last week the adoption of the Directive at the EU Finance Ministers' meeting failed due to Hungary's veto, an agreement on the new Pillar Two Directive has now been reached. This means that the ambassadors of the 27 member states have agreed on the implementation of the directive by the end of 2023.

About "Pillar Two"

Pillar Two ("Pillar 2") aims to ensure that large multinationals pay a minimum international effective tax rate of 15% in all countries in which they operate. This affects groups with consolidated sales of at least €750 million ($790 million). In Germany alone, these are around 800 groups.

When does the implementation take effect and what does this mean for affected companies?

The directive implementing the global 15% minimum tax for large companies has accordingly been adopted and EU member states must transpose the directive into national law by the end of 2023. The EU will thus spearhead the implementation of the OECD Model Rules on global 15% minimum taxation internationally. As early as spring 2023, the Federal Ministry of Finance intends to publish an initial discussion draft for implementation in Germany.

Companies that meet the above-mentioned requirements should familiarize themselves with the new rules promptly and set the appropriate course at an early stage.

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