The draft legislation aims to amend the Minimum Tax Act by implementing the new OECD guidelines of December 2023, May 2024, and January 2025.
Germany’s Ministry of Finance has 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 Two GloBE guidelines from December 2023, June 2024, and January 2025.
A notable change relates to the treatment of deferred taxes in the overall calculation that are not included in the minimum taxable annual profit or minimum taxable annual loss due to an election or offsetting.
Additionally, measures aim to reduce specific anti-profit shifting provisions to the necessary level, and minimising bureaucracy has been included. Other updates include income allocation in hybrid entity structures and safe harbour provisions.
The draft also aims to eliminate the license (royalty) barrier, establishing a minimum 10% holding requirement for CFC taxation on income with an investment character, and increasing exemption limits for CFC taxation of such income, among other measures.
The introduction of new structuring options is expected to lead to indirect, non-quantifiable tax revenue losses across various areas, including trade tax, corporate income tax, personal income tax, and the solidarity surcharge. These losses are attributed to the shifting of the tax base to foreign jurisdictions.
As for the Minimum Tax Act, there are no additional budgetary expenditures. The proposed changes serve only as clarifications, with the original financial impacts already accounted for in the Act to Implement Council Directive (EU) 2022/2523, which ensures a global minimum level of taxation along with other related measures.
Germany adopted the global minimum tax regulations through a law passed in December 2023.
