What is the global minimum tax and to whom does it apply?

The global minimum tax is part of the so-called Pillar Two, an international tax reform promoted by the OECD to prevent large multinational groups from paying very low levels of tax in certain countries.

This regime only affects multinational groups with a consolidated turnover of 750 million euros or more and operating in more than one country. The objective is to ensure that these large groups are taxed at least 15% effectively in each country where they generate profits.

The main measures

With this new agreement, the OECD seeks to maintain the objective of the tax, but to reduce unnecessary administrative burdens and facilitate its practical application for both companies and tax administrations.

The so-called “Side-by-Side” package introduces several relevant improvements:

• Simplified tax calculation. A simpler method is incorporated to check whether a company already meets the minimum rate of 15% in a country. When this requirement is met, it is not necessary to perform the full calculations, which reduces time and compliance costs.
• Extension of transitional measures. The temporary mechanisms that allow companies to progressively adapt to the new system during the next fiscal years are extended.
• Treatment of incentives linked to real activity. Certain tax incentives linked to productive investment, employment or tangible assets may be taken into account, within defined limits, avoiding that these incentives are automatically penalized.
• Coexistence with national regimes. In countries that already have tax systems that pursue similar objectives, an orderly coexistence with the global minimum tax is allowed, reducing overlaps and duplications.