The Federal Council approved wide-ranging amendments to its Pillar 2 minimum tax framework, aligning domestic law with EU and OECD guidance, introducing DAC 9 information-exchange rules, simplifying compliance for multinational groups, and making targeted changes to royalty deduction and CFC regimes.
Germany ’s Federal Council (Bundesrat) approved a bill (Gesetz zur Anpassung des Mindeststeuergesetzes und zur Umsetzung weiterer Maßnahmen) on 19 December 2025 amending the country’s Pillar 2 minimum taxation framework.
The bill updates the German Minimum Tax Act to incorporate the OECD Pillar 2 country-by-country (CbC) reporting safe harbour rules set out in the December 2023 guidance and to bring national law into line with Council Directive (EU) 2022/2523. It also introduces administrative simplifications and reflects the OECD Pillar 2 administrative guidance.
A central feature of the reform is the implementation of Council Directive (EU) 2025/872 (DAC 9), which standardises the exchange of information on minimum taxation reports within the EU. Under section 75(2) of the German Minimum Tax Act, multinational enterprise groups will be able to file the GloBE information report (GIR) in a single EU member state, reducing compliance burdens.
The legislation further abolishes the royalty barrier rule in section 4j of the Income Tax Code with retroactive effect from 1 January 2025 and amends the German controlled foreign company (CFC) rules under the Foreign Tax Act. These changes include higher shareholding and income thresholds, alongside related amendments to the General Tax Act and the Investment Tax Act.
Under section 9 of the Foreign Tax Act, the final bill raises the absolute income threshold for applying the CFC rules from EUR 80,000 to EUR 100,000 and increases the relative threshold from 10% to 33.3%. Both thresholds will now be assessed solely at the level of the relevant CFC, rather than through a two-step analysis involving both the CFC and its shareholders.
The legislation will enter into force after presidential signature and publication in the Federal Gazette.
Earlier, Germany’s Ministry of Finance released a draft law (Minimum Tax Adjustment Act) to amend the Minimum Tax Act, on 8 August 2025, to align it with the latest OECD Pillar 2 GloBE guidelines from December 2023, June 2024, and January 2025.
