It’s a favorite topic of Olaf Scholz (SPD) from the time when he wasn’t Chancellor but Minister of Finance: global minimum taxation. At that time he had helped to devise and drive forward the international tax reform. Now it is up to his successor, Christian Lindner (FDP), to get the project across the finish line in Germany.
His department has now presented the draft bill with which the EU directive on minimum taxation is to be implemented by the end of the year. The core issue is that large corporate groups should pay at least 15 percent in taxes all over the world – meaning that they can no longer push their profits over borders until they have to pay little or no tax. Affected are corporations that have achieved or exceeded the sales limit of 750 million euros in at least two of the four previous financial years.
The minimum tax, to which 138 countries have subscribed, is part of a major international tax reform that has been negotiated at international and European level for years – and in some cases is still being negotiated. The project rests on two “pillars”. The “first pillar” revolves primarily around the “where” of taxation: In the future, companies should have to pay tax on their profits where they arise. In the course of digitization, large digital groups, for example, also generate their profits in countries in which they have no branches or production facilities and certainly not their headquarters. In this way, they can avoid the sometimes high taxes in these countries. This part of the reform is still under negotiation. The “second pillar” is the global, effective minimum taxation that Germany and France proposed in 2018 and which Lindner is now transposing into national law.
According to the draft law, the Ministry of Finance anticipates significant additional revenue from the minimum tax from 2026, albeit with decreasing momentum: 910 million euros are expected in 2026, a year later 535 million euros and 2028 another 285 million euros. However, there could be more. Because according to the draft, the minimum taxation in itself would provide an increase in income of one billion euros in 2026, 800 million in 2027 and 600 million in 2028.
However, Lindner is planning so-called “accompanying measures”: One is the abolition of the “license barrier”. This measure, introduced in 2017, has so far stopped a tax ploy in which companies reduce their tax burden by selling their license and trademark rights to subsidiaries in tax havens – and then renting them back at inflated prices. Now, Lindner’s draft law states that undesirable “profit-shifting arrangements” would now be prevented by a “many internationally coordinated measures”, such as the planned global minimum taxation. Means: From the point of view of the finance department, the license barrier can go. Together with two other measures related to the taxation of foreign subsidiaries (reduction of the “low tax limit” and abolition of the trade tax liability in certain cases), this results in reduced income, which somewhat reduces the additional income from the minimum taxation.