##  [The European Commission presents its proposed directives to ensure a 15% minimum global tax rate and to counter the misuse of shell companies](/en_GB/new/european-commission-presents-its-proposed-directives-ensure-15-minimum-global-tax-rate-and) 

# The European Commission presents its proposed directives to ensure a 15% minimum global tax rate and to counter the misuse of shell companies





European Union - 12 / 27 / 2021





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**These proposals, presented on December 22, 2021, have their respective origins in the work of the OECD and G20, for the implementation of a global minimum tax rate (known as Pillar 2) and in the communication on business taxation for the 21st century (revision of the ATAD Directive to include measures to counter shell companies).**





The main elements relating to the **minimum tax rate** are:

**a)** The minimum tax rate will be for groups of companies, multinationals or otherwise, with combined revenues of more than €750 million and with either their parent company or any of their subsidiaries in the EU.

**b)** The way it works is that if the taxes paid in any of the jurisdictions where these groups operate (inside or outside the EU) are below the minimum threshold, they will have to pay a top-up tax (the “income inclusion rule”), to bring their effective tax rate to 15%.

**c)** This income inclusion rule is required to be applied at both the parent company (or the intermediate parent company in the EU, if the ultimate parent company is outside the EU and does not apply a similar rule) and, alternatively, in the country of the subsidiary concerned.

**d)** It contains a backstop rule (“undertaxed payments rule”) which allows tax bases falling outside application of the income inclusion rule to be captured and reallocated among the group companies in the EU.

**e)** Exceptions are provided for minimal revenue or income (*de minimis* rule) or income associated with minimum percentages obtained on fixed assets and payroll.



If the proposed directive is ultimately approved, the income inclusion rule will start to apply in the member states on January 1, 2023; and the backstop rule on undertaxed payments will come into force one year later.

In relation to the **use of shell companies (or ATAD 3),** the proposed directive is targeted mainly at requiring them to report on their activities and resources, and if applicable, not allowing access to certain types of tax benefits for residents in the EU meeting every one of three tests:

**a)** More than 75% of their revenue in the previous two taxable periods relates to passive or non-trading income.

**b)** More than 60% of their assets or of their revenue (or payments) are located in, come from, or are passed on to other states.

**c)** In the previous taxable periods they have outsourced daily management and key decision-making activities.



A number of exceptions or exclusions are provided, notably in relation to:

**a)** Financial institutions.

**b)** Collective investment schemes / undertakings.

**c)** Companies with a minimum number of employees (5) exclusively carrying out the activities generating the relevant income.

**d)** Holding companies located in the same member state as their operating subsidiaries or as their shareholders.

**e)** Entitles which, through the information that they are required to report, evidence sufficient substance, mainly in relation to:

- The existence of tangible resources.
- The members, residence and operations of their managing bodies.
- The existence of commercial reasons.
- The absence of tax advantages for their beneficial owners.





The effects for qualifying companies under the directive are:

**a)** They will not be treated as tax resident in the country of their formation.

**b)** They will not have access to any measures for avoiding double taxation under bilateral conventions or European directives.

**c)** Their shareholders may be taxed as if they themselves had received the income obtained by the company.



The date set in the proposal for its entry into force is January 1, 2024.









[Tax](/en_GB/tags/tax), [Spain](/en_GB/tags/spain), [European Union](/en_GB/tags/european-union)







 

 



 

 

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