Estonia has called for a more flexible approach to implementing the EU’s Pillar 2 global minimum tax, citing the complexity of the rules and the administrative burden they impose.
In a letter to European Commission President Ursula von der Leyen and Commissioner for Taxation and Climate Action Wopke Hoekstra, Finance Minister Jürgen Ligi stressed that the tax should be carefully assessed before it is adopted as mandatory.
This announcement was made on 3 December 2025.
The minimum tax, based on international agreements at the OECD level, is currently under negotiation, with a key proposed change excluding large US-headquartered multinational groups. The rationale is that the US has its own minimum tax system, and its companies should not be subject to both systems simultaneously.
While the OECD is also considering simplifications for calculating effective tax rates and rules for more favourable treatment of tax incentives, Ligi said these measures do not sufficiently reduce the administrative burden. The constantly changing rules increase compliance costs, particularly for smaller countries, while generating lower-than-expected revenue.
Under EU law, implementation of the minimum tax is mandatory for all Member States, putting EU companies at a disadvantage compared with businesses elsewhere, where adoption is voluntary.
Ligi noted that a compulsory minimum tax affects investment decisions, limits international business activity, and undermines EU competitiveness.
Estonia argues that any changes should be thoroughly reviewed at the OECD level, and that the necessity of an EU directive should be reassessed once an agreement is reached. The country also proposes that application of the minimum tax should be voluntary for EU Member States, or at least optional for smaller states, to balance competitiveness, tax revenue, and administrative burden.
Finance Minister Ligi emphasised Estonia’s readiness to help find solutions that safeguard the interests of all Member States while maintaining economic competitiveness.
