On 10 July 2023, the German Ministry of Finance (MoF) released a revised draft bill, building on the initial discussion draft from 20 March 2023. significant changes include the introduction of a top-up tax compensation system within the minimum tax group, incorporation of provisions from the February 2023 administrative guidance of the inclusive framework, and detailed penalties.
Additionally, the legal framework now encompasses 95 sections, marking an increase from the 89 sections present in the initial discussion draft. Noteworthy amendments are also suggested within the income tax Act and the foreign tax Act. These changes encompasses the elimination of the “royalty barrier rule,” a reduction in the low tax threshold applicable to Controlled Foreign Corporations (CFCs) from 25% to 15%, and the discontinuation of subjecting CFC income to German trade tax.
