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Global minimum tax: Basic assumptions | News Flash

October 12, 2023

Conception of global minimum tax (further: ”Globe”) was developed during OECD forum as part of the Pillar 2, which constitutes a part of OECD/G20 Inclusive Framework on BEPS. The above concept assumes effective taxation of multinational companies (entities whose yearly consolidated revenue exceeds EUR 750M) at the level of 15%.

Proposal of the global minimum tax results from the fact that in recent years decrease of effective tax rate in multinational companies was observed. It was the result of tax optimizations on the one side and treating tax incentives as competitive edges by certain countries on the other hand. The aimed goal of implementation of global minimum tax would be a situation in which non-tax factors (such as level of public services, access to qualified workforce, infrastructure etc.) will be crucial upon making a decision on a place for an investment.

How to achieve the aimed goals?

The main rule is an income inclusion rule (IIR). According to this rule the parent entity will be obliged to pay minimum top-up tax on insufficiently taxed income from entities from low-tax jurisdictions. It may be easily imagined the trial of circumventing of the minimal tax by locating the seat of the parent entity in a jurisdiction that does not apply IIR. For such situations there has been worked out an undertaxed profits rule (UTPR). According to UTPR, if the parent entity does not implement IIR, then other entities from the group (with seat in a country that implemented IIR) apply minimum top-up tax. It seems that based on the above, low-taxed jurisdiction should have a natural perquisite to increase the level of effective taxation in their jurisdiction, since if not, then the income will be still taxed, but the other jurisdiction will benefit from this tax. The above rule reflects the qualified domestic minimum top-up tax (QDMTT), according to which low-taxed jurisdiction will impose additional taxation of income to the level of 15%.

How to calculate effective tax rate? Problematic definitions

Effective tax rate (ETR) is being calculated as a quotient of the covered tax to qualifying income. Both definitions (covered tax and qualifying income) will raise many doubts in practise.

Looking into Polish CIT provisions it seems undoubtable that regular CIT or Estonian CIT will fulfil the definition of the covered tax. It remains open whether tax on shifted income, minimal tax, tax on commercial properties also meet this definition.

Qualifying income is the result of corrected accounting result of the company. Corrections concern i.a. dividend payments, qualified refundable tax credits and certain capital transactions.

Additionally, tax base will be decreased by the substance based income – that is a specified percentage of labour and depreciation costs (ultimately it will be 5%).

We would like to point out that above we have described only basic assumptions of Globe. Pillar 2 contains many exceptions (i.e. subjective) and precise provisions regarding calculation of effective tax rate and the amount of top-up tax.

Implementation of Globe across EU

Yes, on December 15, 2022 European Union adopted Directive no 2022/2523 concerning Globe. As a consequence, member states of European Union will be obliged to implement Directive until the end of 2023 to local provisions.

Czech Republic

The Czech Republic will be among the countries in which large multinational and national groups will have to pay at least a minimum income tax of 15%. The relevant bill – the Act on Equalisation Taxes for the Purposes of Ensuring a Minimum Level of Taxation of Large Multinational and Large National Groups – was approved by the Chamber of Deputies in the first reading on 29 August 2023.

The Act, which should come into force on 31 December 2023, must still be discussed by the Senate and signed by the President.

The Act will introduce two new direct taxes into the Czech tax system – the Assigned Equalisation Tax and the Czech Equalisation Tax. The aim of the introduced equalisation taxes is to ensure a minimum 15% effective level of taxation of large multinational groups and large domestic groups.


The situation in Hungary is not simple, as companies pay different taxes based on their activities in Hungary. Typical examples are local business tax, innovation tax, but also in some sectors the income tax on energy suppliers (Robin Hood tax) and extra profit taxes. 

Hungary is continuously negotiating to include these taxes in the global minimum tax.

According to some experts, the earliest date for the introduction of global minimum tax rules in Hungary will be in the tax package due at the end of October or beginning of November. The tax is due to apply from 2024.


For the time being it remains unknown when exactly and in what kind of shape provisions regarding Globe will be implemented to the Polish provisions. Will the Polish legislator decide to implement IIR, UTPR, QDMTT? What will be the scope of implementation of safe harbours? How will exactly reporting obligations look like? Will the implementation of Globe result in the necessity to amend current provisions? Unfortunately, at the current advancement of works on the implementation of the Directive there are no precise answers.

Once the draft of implementation of the Directive to the local provisions will be published, we will inform you in the next article concerning this topic.

Read more about global minimum tax in Poland in a dedicated article.


The Romanian tax authorities have publicly declared that Romania is committed to implement the Directive within the deadline, 31st of December 2023 and until end of August, a draft should be released. Unfortunately, up to date, there is no publicly available draft document on the transposition of the Directive into national law.


As an obligation of one of the member state of European Union, the Slovak Republic is also planning to adopt this into the local legislative. The new law named as the Act on Top-up Tax is currently in the legislative procedure and shall be effective as of 31 December 2023. The draft law should ensure that the income of Slovak subsidiaries will be taxed in the Slovak Republic, and not in the state of the parent company, through the top-up tax. The Ministry of Finance of the Slovak Republic estimates that the new obligation to submit the new tax return will cover around 5 000 of subjects in Slovakia. For the multinational groups with the accounting period identical with calendar year might establish the first obligation to submit the special tax return and pay top-up tax for tax period of the year 2024, with the deadline up to end of April 2026. However, the final wording of the Act might change, as the legislative procedure is still running.

In case of any further questions, we encourage you to contact our tax advisors at:

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