Taxation of multinationals: after Hungarian veto, Europe still wants to act

The French Economy Minister believed it till the end. He was counting, before 30 June, the end of the French presidency of the European Union to persuade Hungary to lift its veto on the directive to lower the minimum tax for multinationals, drafted last year under the auspices of the OECD. date of. It is now clear that will not happen – Hungary is using this file to get the green light for its recovery plan, which is still blocked by Brussels over questions of the rule of law.

But Bruno Le Maire, who had spent months convincing Poland, didn’t say his last word. He considers an “alternative solution” possible. The Bercy tenant said in an interview with “Les Echos” that France would study other options with the European commissioner for the economy, Paolo Gentiloni.

Under study is the creation of “advanced cooperation” among member states wishing to implement “Pillar 2” (minimum tax rate) of the OECD agreement. As Politico reported, Martin Krienbaum, the international tax official at the German finance ministry, defended the plan at an OECD meeting in Washington earlier this week.

enhanced cooperation

This is the process that was chosen to impose a European tax on financial transactions. In the end, this tax never saw the light of day because the quorum of the signatories was not reached, especially due to opposition from the United Kingdom (before Brexit) but this problem should not have arisen for the taxation of multinationals. , because 26 countries have already given green signal.

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Introduced by the Treaty of Amsterdam in 1997, increased cooperation allows a group of member states to advance in a particular area without the others. The Lisbon Treaty expands the possibilities, provided there are at least nine participants. The device was first applied in connection with international divorce in 2010.

But European finance ministers are also exploring other possibilities, for example the transcription into national legislation of the Minimum Taxation Project, state by state. “Twenty-three minus Hungary will move towards unilateral decisions, with each state setting this minimum rate because there is no real need for a European directive on this pillar of reform”, thus believing the source who worked on this file is.

Gafa tax

This approach would be similar to that adopted on a digital tax (“GAFA tax”): Spain, Italy, Austria and France have adopted a national version with their own rules.

In France, this tax, which brought in 474 million euros last year and was created in 2019, levies 3% of turnover and targets companies whose annual worldwide turnover from digital services exceeds 750 million euros. more and of which at least EUR 25 million corresponds to a business involving France. The “Gaffa tax” should disappear when “Pillar 1” of the OECD reform on the redistribution of profits for the world’s 100 largest companies is implemented. A deadline that seems increasingly uncertain.

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About the Author: Forrest Morton

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