Discussion Draft of a Minimum Tax Adjustment Act

For tax periods from 2024 onwards, corporate groups with a total annual turnover of at least 750 million euros in at least two of the previous four fiscal years must check whether the profits of all group members resident in a jurisdiction are subject to effective taxation of 15 %. In the event of lower effective tax rates, a corresponding tax increase amount must be determined and paid in order to raise the tax burden to the minimum level of 15 %.

This so-called global minimum taxation, which was decided at the OECD level, was introduced in Germany with the Minimum Tax Act of 21 December 2023 (BGBl. I 2023, No. 397).

On 15 December 2023, the OECD published additional administrative guidelines, primarily concerning the so-called CbCR-based Safe Harbour. These are regulations that grant temporary relief using country-specific reports (CbCR). The primary aim of the Minimum Tax Adjustment Act is to implement the changes specified by the OECD in the CbCR-based Safe Harbour into national law. The Federal Ministry of Finance presented a discussion draft on 20 August 2024, which includes, among other things, the following changes to the Minimum Tax Act:

• Some modifications are planned for the so-called Safe Harbour regulations.
  • The option to use the regulations should explicitly exist even if there is no obligation to prepare a CbCR. In this case, data that would have been reported shall be used (§ 84 para. 1 sentence 2 MinStG-E).
  • It should also be added that a joint venture or a joint venture group in a tax jurisdiction should be treated as a separate tax jurisdiction that is independently tested (own blending circle) if business units of the corporate group are located in the same tax jurisdiction (§ 85 para. 1 sentence 1 MinStG-E).
  • The definition of a qualified CbCR should be rephrased. It should be required that the data is collected based on qualified accounting information and is derived from uniformly determined accounting data for a tax jurisdiction (§ 87 sentence 1 no. 1 sentence 1 MinStG-E). So far, the law conceptually refers to a "qualified group financial statement." Recognized as qualified accounting information should, among others, be the accounting data of business units adjusted to uniform group accounting and valuation rules for consolidation purposes (reporting packages) if they comply with the CbCR requirements.
  • It should be explicitly defined which CbCR data should be used for a permanent establishment if no qualified accounting information has been prepared (§ 87 sentences 2 ff. MinStG-E).
  • The newly inserted § 87a MinStG-E should regulate the consideration of the acquisition method for CbCR Safe Harbours. In principle, this should only be possible if the acquisition method is already applied within the framework of the CbCR.
  • Additionally, § 87b MinStG-E should include regulations for dealing with hybrid arbitrage agreements in the context of the CbCR Safe Harbours.
• Besides changes in the CbCR-based Safe Harbour, a significant change in the discussion draft concerns the consideration of deferred taxes in the context of the full calculation (i. e., outside the scope of the CbCR-based Safe Harbours), which are not reported due to an option or due to offsetting in the HB II result. Accordingly, deferred taxes should also be considered in determining the effective tax rate (GloBE ETR) when there is an excess of deferred taxes due to the use of the option according to § 274 para. 1 sentence 2 HGB not being reported in the balance sheet (§ 50 para. 1 sentence 2 no. 3 MinStG-E) or when active and passive deferred taxes are offset against each other. The development of the corresponding positions must be traceable based on appropriate data.
• The existing transitional arrangements for hybrid top-up taxation should be modified (§ 88 paras. 3 and 4 MinStG-E).
• For the transmission of the minimum tax report to be prepared for the first time, an extended transmission deadline of 18 months after the end of the fiscal year is already provided for (§ 75 para. 3 sentence 2 MinStG). To ensure that this deadline extension is also granted in the case of a shorter or calendar-year-deviating fiscal year, it should be added that this deadline does not end before 30 June 2026 (§ 75 para. 3 sentence 3 MinStG-E).