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.