The German Federal Ministry of Finance released a notification form for the parent entity of German minimum tax groups subject to the Pillar Two global minimum tax rules on 17 October 2024.
The notification for the parent entity of the minimum tax group must be submitted to the German Federal Central Tax Office within two months after the taxable period ends. For a financial year starting on 1 January 2024, this notification is due by 28 February 2025.
The leader of any “German minimum tax group” is required to submit this form to the German Federal Central Tax Office within two months following the conclusion of its taxable period for Pillar Two compliance. The German minimum tax group consists of German constituent entities of a multinational enterprise (MNE) group, as well as German joint ventures and their subsidiaries located within Germany.
According to draft legislation, if an MNE group has only one constituent entity in Germany, that entity is also considered a German minimum tax group. This minimum tax group is established automatically by law and is mandatory. Under German regulations, the head of the German minimum tax group is responsible for filing the German minimum tax return and paying the top-up tax, which includes the Income Inclusion Rule (IIR), the Under-Taxed Payments Rule (UTPR), and the Qualified Domestic Minimum Top-up Tax (QDMTT) for the group. While the head of the group handles these payments, the members of the minimum tax group are jointly and severally liable for any minimum tax owed. In exchange for covering these tax payments, the head of the group has a compensation claim against its members.
Additionally, the head is obligated to forward any refunds of top-up taxes received on behalf of the group members.
The head of the German minimum tax group is determined based on specific criteria. If the ultimate parent entity is located in Germany, it serves as the head. If the ultimate parent is based outside Germany, but all German constituent entities of the multinational enterprise (MNE) group are directly or indirectly owned by a single German parent entity, then that entity becomes the head of the minimum tax group. If neither of these conditions applies, the ultimate parent entity can select one German constituent entity to act as the head. However, if the MNE group fails to designate the head in a timely manner, the most economically significant constituent entity located in Germany will automatically assume the role of head of the minimum tax group.
The notification form must be submitted electronically on an online portal, and it is anticipated that filing will be available starting on 2 January 2025.