As we reported in our article from March 9, 2022 during the Economic and Financial Affairs (ECOFIN) Council of March 15, 2022 the Council tried to come to an agreement on a general approach with respect to a compromise text for a Council Directive on ensuring a global minimum level of taxation for multinational groups in the Union. Last week it became already clear that parties did not come to an agreement on a compromise text.
On March 25, 2022 on the website of the European Council the draft minutes of the ECOFIN Council of March 15, 2022 were published. With respect to the discussions regarding a General approach on a Directive on ensuring a global minimum level of taxation for multinational groups in the Union these draft minutes state the following: “The Council discussed the compromise text (doc. 6975/22). Agreement on a general approach could not be reached. Poland, Estonia and Malta maintained their reservations and Sweden maintained a parliamentary scrutiny reservation. It was agreed to include this dossier in the agenda of the forthcoming meeting of the Council (Economic and Financial Affairs) that will take place on 5 April 2022.” Unfortunately, the draft minutes do not provide any further information regarding the nature of the reservations these parties had.
The comprise text that was discussed can be found here.
In addition to minor grammatical changes, the proposed compromised text also contained a few interesting amendments.
Election for a delayed application of the IIR and UTPR
The compromise text introduces a new Article 47a “Election for a delayed application of the IIR and UTPR”, which reads as follows:
1. By way of derogation from Articles 5 to 13, Member States in which no more than ten ultimate parent entities of groups in scope of this directive are located may elect not to apply the IIR and the UTPR for each fiscal year beginning as from 31 December 2023 to 31 December [2025]. Member States that make such election shall notify the Commission by the transposition date laid down in paragraph 1 of Article 55.
2. Where the ultimate parent entity of an MNE group is located in a Member State that has made an election pursuant to paragraph 1, the Member States, other than the one in which the ultimate parent entity is located, shall ensure that the constituent entities of this group are subject, in the Member State in which they are located, to the UTPR top-up tax amount allocated to that Member State for the fiscal years beginning as from 31 December 2023 in accordance with Article 13.
3. The UTPR percentage determined for a Member State that has made an election pursuant to paragraph 1 shall be deemed to be zero for the fiscal year.
Specific application of the IIR to large-scale domestic groups
The compromise text did not contain the articles of Chapter X - Specific application of the IIR to large-scale domestic groups. The articles 49 and 50 of the proposed Directive arranged that IIR regulations did not only apply to multinationals, but also to large-scale domestic groups (pure domestic groups with an annual revenue exceeding EUR 750 million).
Entry into force
Furthermore Article 55 “Transposition” the compromise texts proposes to amend the text of the Directive in such way that EU Member States have until December 31, 2023, instead of until December 31, 2022, to bring into force the laws, regulations and administrative provisions necessary to comply with the Directive.
So it will be interesting to see whether the Council will be able to reach a compromise during there next meeting that will take place on April 5, 2022.
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