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The European Council decides on a minimum tax of 15% for companies in 2024

Thursday evening, the leaders of the 27 member countries of the European Union approved the transposition into European law of the minimum tax of 15% on the profits of multinationals. The entry into force of the measure in Europe is scheduled for December 31, 2023.

The project to tax the profits of multinationals up to 15% was approved Thursday evening by the 27 member countries of the European Council. This project is the result of an agreement drawn up by the OECD and concluded by 137 States in the fall of 2020. It must enter into force in the EU on December 31, 2023. Large multinationals will therefore have to pay, in the European Union, from 2024 an effective tax of 15% on their profits (realized in 2023). The European Commissioner for the Economy, Paolo Gentiloni, admitted it himself: “It was a long journey, with obstacles at every stage. Today, unity has prevailed and all EU Member States and citizens will benefit”, he welcomed, in a press release. Indeed, the unanimity of the 27 was necessary to validate this project.

Warsaw and Budapest had in turn blocked this file since the beginning of the year. The two capitals wanted to obtain the validation by the European Union of their recovery plans with billions of euros in subsidies. After being assured of a green light on these files, Poland and Hungary finally lifted their reservations within the framework of a compromise on several files, which also include the release of financial aid of 18 billion euros for Ukraine in 2023.

“A historic day”

The reactions were not long in coming. The President of the Republic, Emmanuel Macron, at the forefront of this file for several years, hailed “a major step forward for all those who hold as we hold to tax justice”,  as reported by AFP.

For his part, the Minister of the Economy Bruno Le Maire used his Twitter account to salute, too, a “historic day” , “against the race for the lowest tax” . The German Chancellor, Olaf Scholz also reacted to this agreement:  “We are implementing one of my dearest projects in Europe: the minimum taxation of companies worldwide. »

Tax is only part of the deal 

The global minimum tax is only one part (known as pillar 2) of the OECD agreement. The first pillar, which provides for the taxation of companies where they make their profits to put an end to certain practices of tax evasion, targets in particular the digital giants. It therefore requires an international agreement which is not yet finalized. 

But this step already represents a big step for the reform of international taxation. According to the experts and the authorities of the European Union, this decision will perhaps make it possible to encourage the United States to follow. The pillar of the OECD reform has still not been validated by the American Congress.

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