On October 3, 2024 the European Commission published the key decisions of the October 2024 infringements package. One of the decisions is the decision of the European Commission to refer Spain, Cyprus, Poland and Portugal to the Court of Justice of the European Union (the CJEU) for failing to notify measures transposing into national law the Council Directive (EU) 2022/2523 (the Pillar 2 Directive).
In May 2024 the European Commission sent reasoned opinions to Spain, Cyprus, Poland, and Portugal. On October 3, 2024 the European Commission decided to refer Spain (INFR(2024)0049), Cyprus (INFR(2024)0020), Poland, (INFR(2024)0113) and Portugal (INFR(2024)0119) to the CJEU for failing to notify measures for the transposition into national law of Council Directive (EU) 2022/2523 of 15 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the European Union (Pillar 2 Directive).
The transposition of the Directive is key for the effective implementation in the European Union of Pillar 2, the minimum taxation component of the G20/OECD's reform of international taxation. Pillar 2 will limit the race to the bottom in corporate tax rates. The profit of the large multinational and domestic groups or companies with a combined annual turnover of at least €750 million will be taxed at a minimum effective tax rate of 15%.
The Commission states that it considers the implementation of the Pillar 2 rules a priority because it will help reduce the risk of tax base erosion and profit shifting and ensure that the largest multinational groups pay the agreed global minimum rate of corporate tax. All EU Member States were required to bring into force the laws necessary to comply with the Pillar 2 Directive by December 31, 2023 and to communicate the text of those measures to the Commission immediately. These measures are applicable in respect of the fiscal years beginning from December 31, 2023.
To date, almost all EU Member States have met these obligations. However, the national implementing measures still have not been notified by Spain, Cyprus, Poland, and Portugal. The Commission acknowledges that significant efforts are being made by the authorities to finalize their Pillar 2 national implementing legislation but, to date, these Member States have not notified the transposition measures and therefore it is taking a formal step to refer Spain, Cyprus, Poland and Portugal to the CJEU for lack of transposition of the relevant EU provisions.
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