“It’s been a long journey with obstacles at every turn.” The image conveyed by Paolo Gentiloni, Commissioner for Economic Affairs of the European Union (EU), says a lot about the progress of the European project on the taxation of multinational corporations. But the heads of state and government of the 27 member countries of the EU finally announced on Thursday 15 December that they had agreed to transpose the 15% minimum tax on corporate profits into European law.
The unanimity of members was necessary to validate the Commission’s draft directive, which will implement the historic Tax Justice Accord adopted last year by nearly 140 countries under the aegis of the Organization for Economic Co-operation and Development (OECD).
Poland and Hungary, on the other hand, had blocked these files since the beginning of the year in order to have their construction plans, which are endowed with billions in subsidies, validated by the EU. After those stimulus plans were approved, Warsaw and Budapest eventually lifted their reservations as part of a compromise on several dossiers that also includes the release of €18 billion in macro-financial assistance to Ukraine in 2023.
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“A big step forward” for “tax justice”, according to Emmanuel Macron
“Today, unity has prevailed and all Member States and all citizens of the EU will benefit from it,” said Paolo Gentiloni in a press release.
The measure is scheduled to come into force in Europe on December 31, 2023. The global minimum tax is only part (so-called Pillar 2) of the OECD agreement. The first pillar, which envisages taxing companies where they make their profits in order to discourage certain tax evasion practices, is particularly aimed at the digital giants. An international agreement is needed, which has not yet been concluded.
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French President Emmanuel Macron, who has been at the forefront of this issue for several years, hailed “a major step forward for everyone who cares about tax fairness as much as we do.”
“We are implementing one of my favorite projects in Europe: minimum taxation for companies worldwide,” said Federal Chancellor Olaf Scholz.
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