12 Amendments of Luděk NIEDERMAYER related to 2021/0433(CNS)
Amendment 51 #
Proposal for a directive
Recital 2
Recital 2
(2) In a continued effort to put an end to tax practices of MNEs which allow them to shift profits to jurisdictions where they are subject to no or very low taxation, the OECD has further developed a set of international tax rules to ensure that MNEs pay a fair share of tax wherever they operate. This major reform aims to put a floor on competition over corporate income tax rates through the establishment of a global minimum level of taxation, and not eliminate tax competition overall. By removing a substantial part of the advantages of shifting profits to jurisdictions with no or very low taxation, the global minimum tax reform will level the playing field for businesses worldwide and allow jurisdictions to better protect their tax bases.
Amendment 52 #
Proposal for a directive
Recital 3
Recital 3
(3) This political objective has been translated into the Global Anti-Base Erosion Model Rules (GloBE Model Rules) approved on 14 December 2021 by the OECD/G20 Inclusive Framework on BEPS to which Member States have committed. In the Council Conclusions of 7 December 20218 , the Council reiterated its firm support of the global minimum tax reform and committed to a swift implementation of the agreement by means of Union legislation. In this context, it is essential that Member States effectively implement their commitment to achieve a global minimum level of taxation. It is furthermore essential to avoid deviations on substantive matters from the OECD agreement, to confirm the EU support for the compromise negotiated under the OECD umbrella. _________________ 8 Council Conclusions 14767/21 of 7 December 2021
Amendment 61 #
Proposal for a directive
Recital 5
Recital 5
(5) It is necessary to lay down rules in order to establish an efficient and coherent framework for the global minimum level of taxation at Union level, with full respect to the OECD agreement. The framework creates a system of two interlocked rules, together referred to as the GloBE rules, through which an additional amount of tax called a top-up tax should be collected each time that the effective tax rate (ETR) of an MNE in a given jurisdiction is below the 15 %. In such case, the jurisdiction is considered to be low-taxed. Those two rules are called the Income Inclusion Rule (IIR) and the Undertaxed Payment Rule (UTPR). Under this system, the parent entity of an MNE located in a Member State has the obligation to apply the IIR to its share of top-up tax relating to any entity of the group that is low-taxed, whether this is located within or outside the Union. The UTPR should act as a backstop to the IIR through a reallocation of any residual amount of top-up tax in cases where not the entire amount of top-up tax relating to low-taxed entities could be collected by parent entities through the application of the IIR.
Amendment 64 #
Proposal for a directive
Recital 6
Recital 6
(6) It is necessary to implement the GloBE Model Rules agreed by the Member States in a way that it remains as close as possible to the global agreement. The success of the agreement will depend entirely on a transparent and consistent implementation within the Union and globally. This Directive closely follows the content and structure of the GloBE Model Rules. To ensure compatibility with primary Union law, and more precisely with the freedom of establishment, the rules of this Directive should apply to entities resident in a Member State as well as non-resident entities of a parent entity located in that Member State. This Directive should also apply to very large- scale, purely domestic groups. In this way, the legal framework would be designed to avoid any risk of discrimination between cross-border and domestic situations. All entities, including the parent entity that applies the IIR, which are located in a Member State that is low- taxed, would be subject to the top-up tax. Equally, constituent entities of the same parent entity that are located in another Member State, which is low-taxed, would be subject to the top-up tax.
Amendment 67 #
Proposal for a directive
Recital 7
Recital 7
(7) While it is necessary to ensure that tax avoidance practices are discouraged, adverse impacts on smaller MNEs in the internal market should be avoided. For this purpose, this Directive should only apply to entities located in the Union that are members of MNE groups or large-scale domestic groups that meet the annual threshold of at least EUR 750 000 000 of consolidated revenue. This threshold would be consistent with the threshold of existing international tax rules such as the country- by-country reporting rules9 . The European Commission should monitor if and how Member States are applying the GloBE Model Rules to smaller entities, and take appropriate measures, should the implementation be in conflict with the principles of the EU law or where it undermines internal market coherence. Entities within the scope of this Directive are referred to as constituent entities. Certain entities should be excluded from the scope based on their particular purpose and status. Excluded entities would be those that are not profit-driven and perform activities in the general interest and which are, for these reasons, not likely to be subject to tax in the Member State in which they are located. In order to protect those specific interests, it is necessary to exclude from the scope of the Directive governmental entities, international organisations, non- profit organisations and pension funds from the scope of this Directive. Investment funds and real estate investment vehicles should also be excluded from the scope when they are at the top of the ownership chain, since, for those so-called flow-through entities, the income earned is taxed at the level of the owners. _________________ 9 Council Directive (EU) 2016/881 of 25 May 2016 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation, OJ L 146/8 (3 Jun. 2016) [DAC 4].
Amendment 74 #
Proposal for a directive
Recital 12
Recital 12
(12) The ETR of an MNE group in each jurisdiction where it carries out activities or of a large-scale domestic group should be compared to the agreed minimum tax rate of 15 % in order to determine whether the MNE group or large-scale domestic group is liable to pay a top-up tax and consequently should apply the IIR or the UTPR. The minimum tax rate of 15 % agreed by the OECD/G20 Inclusive Framework on BEPS reflects a balanced compromise amongst corporate tax rates worldwide. In cases where the ETR of an MNE group falls below the minimum tax rate in a given jurisdiction, the top-up tax should be allocated to the entities in the MNE group that are liable to pay the tax in accordance with the application of the IIR and the UTPR, in order to comply with the globally agreed minimum effective rate of 15 %. In cases where the ETR of a large- scale domestic group falls below the minimum tax rate, the UPE at the top of the large-scale domestic group should apply the IIR in respect of its low-taxed constituent entities, in order to ensure that such group is liable to pay tax at an effective minimum rate of 15 %.
Amendment 80 #
Proposal for a directive
Recital 14
Recital 14
(14) To ensure a proportionate approach, this exercise should take into consideration certain specific situations in which BEPS risks are reduced. Therefore, the Directive should include a substance carve-out based on the costs associated with employees and the value of tangible assets in a given jurisdiction. This would allow to address, to a certain extent, situations where an MNE group or a large-scale domestic group carries out economic activities which require material presence in a low-taxed jurisdiction as in such case BEPS practices would be unlikely to flourish. The specific case of MNE groups that are at the first stages of their international activity should also be considered in order not to discourage the development of cross- border activities for MNE groups that benefit from low taxation in their domestic jurisdiction where they are predominantly operating. Thus, the low-taxed domestic activities of such groups should be excluded from the application of the rules for a transitional period of no longer than five years, and provided that the MNE group does not have constituent entities in more than six other jurisdictions. In order to ensure equal treatment for large-scale domestic groups, the income from the activities of such groups should also be excluded for a transitional period of no longer than five years.
Amendment 95 #
Proposal for a directive
Recital 20
Recital 20
(20) The effectiveness and fairness of the global minimum tax reform heavily relies on its worldwide implementation. It will thus be vital that all major trading partners of the Union apply either a qualified IIR or an equivalent set of rules on minimum taxation. In this context, and in support of legal certainty and efficiency of the global minimum tax rules, it is important to further delineate the conditions under which the rules implemented in a third country jurisdiction which will not transpose the rules of the global agreement can be granted equivalence to a qualified IIR. To this end, this Directive should provide for an assessment, by the Commission, of the equivalence criteria based on certain parameters together with a listing of third country jurisdictions that meet the equivalence criteria in a timely manner. This list would be modified, through a delegated act, following any subsequent assessment of the legal framework implemented by a third country jurisdiction in its domestic law.
Amendment 101 #
Proposal for a directive
Recital 23 a (new)
Recital 23 a (new)
(23 a) A review clause is introduced in this Directive to assess the application of the Directive in the EU after five years. This assessment should reflect progress in the global implementation of the OECD agreement/GloBE Model Rules, as well as analysing the harmonized application of the Directive in the EU Member States. It should focus on the use of exemptions and derogations and its impact on internal market coherence. A review could be used as an opportunity to integrate further modification of the GloBE Model rules into EU law if necessary.
Amendment 120 #
Proposal for a directive
Article 3 – paragraph 1 – point 12
Article 3 – paragraph 1 – point 12
(12) ‘minimum tax rate’ means fifteen percent (15 % hereinafter);
Amendment 240 #
Proposal for a directive
Article 53 – paragraph 1
Article 53 – paragraph 1
The European Parliament shall be informed of the adoption of delegated acts by the Commission, of any objection formulated to them, and of the revocation of a delegation of powers by the Council in a timely manner.
Amendment 241 #
Proposal for a directive
Article 53 – paragraph 1 a (new)
Article 53 – paragraph 1 a (new)
By... [five years after the entry into force of this Directive], the Commission shall review the application of this Directive and report to the Council on its operation. The report shall address whether there is a need to amend this Directive in light of changes and developments in the international tax context, in particular regarding the implementation of the GloBE Model Rules outside the Union and the development of other, unilateral approaches towards minimum effective taxation of MNE groups. It should also focus on use of exemptions and derogations and its impact on internal market coherence. The report shall assess the impact of the Directive on EU countries’ tax revenue, investment decisions of the companies, as well as competitiveness of the EU within the global economy. Where appropriate, the report shall be accompanied by a legislative proposal. Such an impact assessment can support the OECD’s Inclusive Framework analysis of Pillar 2 and, if appropriate, feed into a modification of the rules at the OECD level and, if agreed, in the OECD, changes to the EU Directive.