The Directive aims to ensure that large groups operating in the EU are taxed at a minimum global effective tax rate of 15%. The rules apply to all large groups (whether they operate on a purely domestic or international basis) whose annual turnover exceeds €750 million and which have either a parent company or a subsidiary in an EU Member State.

The Directive fulfils the EU's commitment to implement the agreement on global tax reform reached by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) to combat profit shifting and base erosion (the so-called OECD Pillar Two Model Rules on minimum taxation).

The IASB is working towards mitigating possible adverse effects of the global adoption of these rules at great speed. While the OECD released the rules in December 2021, the IASB had little alternative to monitoring developments until jurisdictions began implementing them. The developments suddenly picked up speed and the IASB reacted by, in one meeting only, discussing the required amendments holistically and developing proposals that would introduce a temporary exception from accounting for deferred taxes arising from the implementation of the OECD Pillar Two rules and targeted disclosures requirements for affected companies. An exposure draft is expected in January 2023 and the DPOC has agreed to a shortened comment period of 60 days.

Please click to access the EU Directive legally anchoring the OECD Pillar Two rules in the European Union.