The German Ministry of Finance has released a discussion draft for a proposed amendment to the law implementing Council Directive (EU) 2022/2523 on establishing a global minimum level of taxation – lowering the low tax threshold for foreign controlled companies and the licence barrier from 25% to 15% – on Tuesday, 20 August 2024.
The OECD/G20 Inclusive Framework on BEPS has issued two new administrative guidelines in December 2023 and June 2024, necessitating updates to the minimum tax law. Germany has pledged to adopt these guidelines within 24 months of their release.
The discussion draft outlines more specific details on applying the CbCR safe harbour. It focuses on the use of reporting packages essential for companies to meet CbCR safe harbour requirements and includes measures to prevent circumvention schemes.
Additionally, the draft incorporates the regulation on the activation option under Section 274 of the German Commercial Code (HGB) into the minimum taxation framework, which has significant practical implications. It also features numerous editorial changes, including adjustments to EU directive wording and correction of reference errors, along with other key administrative simplifications.
Germany adopted the global minimum tax regulations through a law passed in December, 2023, aligning with EU’s directives.
