Global Minimum Tax: A Challenge for large Corporations

WHAT IT IS ABOUT - IN BRIEF

The re­gu­la­ti­ons ad­op­ted at the OECD le­vel for in­tro­du­cing a glo­bal mi­ni­mum tax, which must be trans­po­sed into na­tio­nal law in the EU due to the Mi­ni­mum Ta­xa­tion Di­rec­tive, were im­ple­men­ted in Ger­many with the Mi­ni­mum Tax Act. Groups with a to­tal an­nual tur­no­ver of at least EUR 750 mil­lion in at least two of the four pre­ce­ding fi­nan­cial years are thus ob­li­ged to check for the first time for the fi­nan­cial year be­gin­ning af­ter 30 De­cem­ber 2023 - hence for fis­cal years coin­ci­ding with the ca­len­dar year from 2024 on­wards - whe­ther the pro­fit of all group mem­bers ba­sed in a ju­ris­dic­tion is sub­ject to ef­fec­tive ta­xa­tion of at least 15 %. If the ef­fec­tive tax bur­den is lo­wer, a cor­re­spon­ding tax in­crease must be paid, usually at the le­vel of the pa­rent com­pany. Both mul­ti­na­tio­nal and pu­rely na­tio­nal groups of com­pa­nies are af­fec­ted.

Groups co­vered by the re­qui­re­ments must carry out ex­ten­sive data ana­ly­ses. The cal­cu­la­tion of the ef­fec­tive tax bur­den re­qui­res de­tai­led data from the con­so­li­da­ted fi­nan­cial state­ments, which must be supp­le­men­ted by nu­me­rous other data points on the in­di­vi­dual group com­pa­nies.

The in­tro­duc­tion of the glo­bal mi­ni­mum tax is also ac­com­pa­nied by ex­ten­sive ad­di­tio­nal de­cla­ra­tion ob­li­ga­ti­ons do­mesti­cally and ab­road. In prin­ci­ple, a mi­ni­mum tax re­port must be sub­mit­ted to the com­pe­tent aut­ho­ri­ties in every tax ju­ris­dic­tion in which group en­ti­ties are ba­sed, pro­vi­ded that the re­spec­tive coun­try has im­ple­men­ted the glo­bal mi­ni­mum tax re­gu­la­ti­ons. Group en­ti­ties ba­sed in Ger­many must sub­mit such a re­port elec­tro­ni­cally to the Fe­deral Cen­tral Tax Of­fice for the first time by 30 June 2026. If the pa­rent com­pany is lo­ca­ted in Ger­many, a mi­ni­mum tax re­turn must also be sub­mit­ted to the re­spon­si­ble tax of­fice for the first time by 30 June 2026. The supp­le­men­tary tax to be paid is to be cal­cu­la­ted by the com­pany its­elf (so-cal­led self-as­ses­sed tax).

RELIEFS THROUGH TEMPORARILY APPLICABLE SAFE-HARBOUR RULES

Tem­porary safe har­bour ru­les, which can be ap­plied using data from Coun­try-by-Coun­try Re­por­ting (CbCR), pro­mise to make the ap­pli­ca­tion of the glo­bal mi­ni­mum tax ea­sier. Cor­re­spon­ding re­gu­la­ti­ons ba­sed on OECD re­qui­re­ments are in­clu­ded in the Ger­man im­ple­men­ta­tion of the mi­ni­mum tax re­qui­re­ments. Th­ree ca­ses are pro­vi­ded where a top-up tax amount of EUR 0 is to be set in the fi­nan­cial years 2024 to 2026 for tax ju­ris­dic­tions in which the re­qui­re­ments are met:

• Ac­cor­ding to CbCR, re­ve­nue is less than EUR 10 mil­lion, and pro­fit be­fore tax is less than EUR 1 mil­lion (de mi­ni­mis test).

• The sim­pli­fied ef­fec­tive tax rate cal­cu­la­ted ba­sed on the CbCR data (along with cer­tain mo­di­fi­ca­ti­ons, par­ti­cu­larly re­gar­ding de­fer­red ta­xes) is at least 15 % (in 2024), 16 % (in 2025), and 17 % (in 2026; sim­pli­fied ETR test).

• Pro­fit be­fore tax ac­cor­ding to CbCR does not ex­ceed the so-cal­led sub­stance-ba­sed ex­emp­tion, de­ter­mi­ned ba­sed on wage costs and tan­gi­ble as­sets (sub­stance test).

These ex­emp­ti­ons can be ba­sed on data al­re­ady col­lec­ted or reu­qi­red for the pur­po­ses of tax CbCR. In fu­ture, this data can also be used as a star­ting point for the "Pu­blic CbCR" to be publis­hed in the com­pany re­gis­ter. The struc­tu­red and con­sis­tent de­ter­mi­na­tion of CbCR data is the­re­fore be­com­ing in­cre­asin­gly im­port­ant for cor­po­rate groups with a group tur­no­ver of at least EUR 750 mil­lion.

If the re­qui­re­ments of one of the safe har­bour ru­les are met, a de­tai­led mi­ni­mum tax cal­cu­la­tion can be avo­ided, thus si­gni­fi­cantly re­du­cing the ad­mi­nis­tra­tive bur­den in the first years of ap­pli­ca­tion.

HOW WE SUPPORT YOU

• Cor­po­rate groups that are sub­ject to the glo­bal mi­ni­mum tax should fo­cus very promptly on de­ter­mi­ning the ef­fec­tive tax bur­den on group pro­fits in in­di­vi­dual coun­tries. We sup­port you in ana­ly­sing which data is re­qui­red and how it can be com­pi­led as ef­fi­ci­ently as pos­si­ble.
• We will be happy to as­sist you with the de­ve­lop­ment and im­ple­men­ta­tion of spe­ci­fic im­ple­men­ta­tion steps wi­thin your data col­lec­tion and data pro­ces­sing sys­tems.
• To take ad­van­tage of the CbCR-sup­por­ted safe har­bour re­gu­la­ti­ons, we of­fer you a tool-ba­sed in­itial ana­ly­sis with our Tran­si­tio­nal CbCR Safe Har­bour Quick Check. Ba­sed on al­re­ady avail­able CbCR data - supp­le­men­ted with cer­tain ad­di­tio­nal in­for­ma­tion - this al­lows you to check in which tax ju­ris­dic­tions your com­pany could be­ne­fit from tem­porary re­li­efs.
• The Tran­si­tio­nal CbCR Safe Har­bour Quick Check also pro­vi­des in­di­ca­ti­ons in which ju­ris­dic­tions or group com­pa­nies spe­cial ef­fects or po­ten­ti­ally im­plau­si­ble data re­cords exist that could pre­vent the ap­pli­ca­tion of safe har­bour ru­les.