Einde inhoudsopgave
Treaty Application for Companies in a Group (FM nr. 178) 2022/2.4.3.6
2.4.3.6 Draft Pillar Two Directive
L.C. van Hulten, datum 06-07-2022
- Datum
06-07-2022
- Auteur
L.C. van Hulten
- JCDI
JCDI:ADS657757:1
- Vakgebied(en)
Europees belastingrecht / Richtlijnen EU
Vennootschapsbelasting / Fiscale eenheid
Internationaal belastingrecht / Belastingverdragen
Vennootschapsbelasting / Belastingplichtige
Voetnoten
Voetnoten
Proposal for a Council Directive on ensuring a global minimum level of taxation for multinational groups in the Union, COM(2021)823.
Art. 2, par. 1, Pillar Two Directive. This annual revenue threshold has to be met in at least two of the last four consecutive fiscal years.
Art. 3, par. 3, Pillar Two Directive. Art. 3 Pillar Two Directive also defines the concepts ‘MNE group’ (‘any group that includes at least one entity or permanent establishment which is not located in the jurisdiction of the ultimate parent entity’) and ‘large-scale domestic group’ (‘any group of which all entities are located in the same Member State’).
This is also the case for the Pillar One project (see, e.g., OECD, Pillar One – Amount A: Draft Model Rules for Domestic Legislation on Scope, Paris: OECD Publishing 2022, p. 8-9). Apart from the reliance on accounting principles, an entity that has one or more permanent establishments is explicitly seen as a group.
Art. 3, par. 22, Pillar Two Directive.
As indicated, group definitions as used under other accounting methods are not discussed in this research, as the IFRS consolidation rules are applied in a large part of the world.
The Pillar Two rules are designed by the OECD. To ensure that the rules are implemented in a coherent and consistent way across the EU, the EU has proposed an implementing directive. The proposal for a Pillar Two Directive1 lays down rules to ensure a minimum level of effective corporate taxation for large multinational groups and large-scale purely domestic groups within the European internal market. This Directive aims to put a floor on excessive tax competition between jurisdictions. Pillar Two applies to multinationals as well as to large-scale domestic groups with a combined annual group turnover of at least EUR 750 million. To determine whether a group of companies falls within the scope of Pillar Two, the consolidated financial statements are used.2
The proposal for a Pillar Two Directive defines the concept group as follows:3
‘(a) a collection of entities which are related through ownership or control as defined by the acceptable accounting framework for the preparation of consolidated financial statements by the ultimate parent entity, including any entity that may have been excluded from the consolidated financial statements of the ultimate parent entity solely based on its small size, materiality grounds or on the grounds that it is held for sale; and(b) an entity that has one or more permanent establishments, provided that it is not part of another group as defined in point (a).’
The group concept thus relies on accounting principles.4 Acceptable financial accounting standards for Pillar Two are IFRS and generally accepted accounting principles of various specifically mentioned countries.5 The actual definition of the group concept will therefore depend on the applicable accounting framework. Par. 2.3.2.2 discusses the pros and cons of the IFRS group concept.6 As indicated, it seems a workable definition for taxpayers and tax administrations. However, as it concerns an already existing concept, its interpretation is not flexible. Additionally, it would mean that tax laws would partially depend on the decisions of a private-sector body (the IASB or a similar body).