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Tuesday, 13 December 2022

Breaking: the EU’s Pillar Two Directive received required unanimous support

Bart De Cock

Bart De Cock

Partner
Ghent
Robin Minjauw

Robin Minjauw

Partner
Brussels
Andy Neuteleers

Andy Neuteleers

Partner
Tiberghien economics
Ahmed El Jilali

Ahmed El Jilali

Counsel
Brussels
Rik Smet

Rik Smet

Senior Associate
Brussels
Heleen Van Baelen

Heleen Van Baelen

Senior Associate
Tiberghien economics
Koen Morbée

Koen Morbée

Partner
Brussels

As mentioned in a previous newsflash, the EU Council published a slightly revised draft of the Pillar Two Directive on 25 November 2022. This was done in an attempt to convince the final member state to cave and drop its reservations to this Directive. Last night, Hungary apparently did so (International taxation: Council reaches agreement on a minimum level of taxation for largest corporations - Consilium (europa.eu)), albeit that a number of other agreements were made part of the deal to convince Hungary. Including the country’s reservations to an aid package for Ukraine and EU funds that were temporarily frozen, but would now be partially released to Hungary.

The formal adoption procedure of the Pillar Two Directive still needs to be finalized, but at least on a political level, the EU is in the final stretch to formal adoption thereof. Transposition of this Directive into domestic law has to be done by 31 December 2023. Given the complexity of the rules and the required integration thereof in domestic (income) tax systems, the domestic legislatures are up for a considerable task for which they hopefully already have started to prepare.

We also note that the OECD Administrative Guidelines are still awaited for. These await approval by the Inclusive Framework and are expected to be published within a relatively short period of time. At least, that can be hoped for, as not only the rules itself and their transposition into domestic legislation are rather complicated. The actual application of those rules by tax authorities and in scope multinational enterprises alike, raises additional questions of a legal, as well as a practical nature. In that regard, the – be it temporary or definitive – safe harbors are indeed one of the much awaited for clarifications that is hoped to be provided in the Administrative Guidelines.

Tiberghien's Pillar Two Team

Bart De Cock – Partner (Belgium) – bart.decock@tiberghien.com

Robin Minjauw – Partner (Belgium) – robin.minjauw@tiberghien.com

Koen Morbée – Partner (Belgium) – koen.morbee@tiberghien.com

Andy Neuteleers – Partner Tiberghien economics (Belgium) – andy.neuteleers@tiberghien.com

Ahmed El Jilali – Counsel (Belgium) – ahmed.eljilali@tiberghien.com

Rik Smet – Senior Associate (Belgium) – (rik.smet@tiberghien.com)

Heleen Van Baelen – Senior Manager Tiberghien economics (Belgium) – heleen.vanbaelen@tiberghien.com

Bart De Cock

Bart De Cock

Partner
Ghent
Robin Minjauw

Robin Minjauw

Partner
Brussels
Andy Neuteleers

Andy Neuteleers

Partner
Tiberghien economics
Ahmed El Jilali

Ahmed El Jilali

Counsel
Brussels
Rik Smet

Rik Smet

Senior Associate
Brussels
Heleen Van Baelen

Heleen Van Baelen

Senior Associate
Tiberghien economics
Koen Morbée

Koen Morbée

Partner
Brussels
Tiberghien Brussels

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