Pillar II/GloBE - German Ministry of Finance issues first draft

In ac­cor­dance with the EU Di­rec­tive da­ted 15 De­cem­ber 2022 mul­ti­na­tio­nal and na­tio­nal groups with ag­gre­ga­ted an­nual re­ve­nues of at least 750 mil­lion Euro should be sub­ject to a newly in­tro­du­ced Mi­ni­mum Tax Act.

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As far as the in­come of the group mem­bers in a ju­ris­dic­tion is not ta­xed with an ef­fec­tive mi­ni­mum tax rate of 15 % a supp­le­men­tary tax (top-up tax) is to be paid, in ge­ne­ral on le­vel of the ul­ti­mate pa­rent en­tity (UPE). Tran­si­tio­nal safe har­bour ru­les as out­li­ned by the OECD are in­clu­ded in the draft to re­lieve com­pa­nies from com­pu­ta­tion and de­cla­ra­tion re­qui­re­ments to a cer­tain de­gree.

Note: Good news for com­pa­nies with di­rect pen­sion ob­li­ga­ti­ons to (for­mer) em­ployees: In line with OECD ad­mi­nis­tra­tive gui­dance, Ger­many plans to ap­ply the add back of ac­crued pen­sion ex­pen­ses for GloBE in­come pur­po­ses only in re­la­tion to pen­sion ob­li­ga­ti­ons out­sour­ced to a pen­sion fund. In other ca­ses (e.g., di­rect pen­sion ob­li­ga­ti­ons), ac­cor­ding to the ex­planatory me­mo­ran­dum of the draft Mi­ni­mum Tax Act, ac­crued ex­pen­ses shall be re­co­gnized in full in the year in which the ex­pen­ses were ta­ken into ac­count in the pro­fit or loss for ac­coun­ting pur­po­ses.