On 22 December 2021, the European Commission presented its further proposals against tax evasion and the erosion of corporate taxpayers’ tax bases (BEPS 2.0 Initiative). These are:

1st Pillar – a draft directive to lay down rules to prevent the misuse of “shell” entities for tax purposes,

2nd Pillar – a draft directive to ensure a global minimum level of taxation of multinational groups in the EU on the level of a minimum of 15%. We informed you about these proposals earlier this year here.

However, in the course of 2022, EU Member States were unable to agree on the final form of the 2nd pillar of the minimum level of taxation of multinational groups in the EU.

The member States have now managed to overcome this disagreement. On 12 December 2022, they recommended to the EU Commission to adopt the 2nd pillar of this tax initiative, under which the income of multinational and domestic groups in the EU with a consolidated turnover of at least EUR 750 billion should be subject to a minimum of 15% corporate tax. EU Member States should implement this 2nd pillar into their domestic legislation by the end of 2023, so that this tax initiative would be effective in each Member State from 1 January 2024.

We will keep you informed about further legislative developments in the EU and the Czech Republic; however, we strongly recommend that you check now, if this new directive does not lead to an additional tax burden for you (or your group).

If you have any questions about either of the above initiatives, which we will continue to monitor for you, please do not hesitate to contact us.

Author: Jiří Jakoubek, Petr Němec, Jaroslav Foltýn