Global minimal tax

Reforms prepared by the OECD and the EU will dramatically change the world of international taxation, as on 1 January 2024 the EU Directive implementing the rules of Pillar 2 of the BEPS 2.0 initiative (15% minimum level of taxation) came into force.

The rules of the EU Directive are complex, full of complicated exceptions and choices, and therefore every large Czech group and Czech subsidiary of a large foreign group should be considering the impact that the complex global minimum tax rules will have on them. 

• The rules apply to all EU-based companies and permanent establishments that are part of groups with consolidated revenues of at least EUR 750 million.
• The global minimum tax introduces two interlinked rules ensuring a minimum level of taxation:
  • the Income Inclusion Rule (IIR)
  • the Undertaxed Profit Rule (UTPR).
• The directive includes the possibility of introducing a qualified domestic top-up tax, giving the Czech Republic the possibility to collect top-up tax from all low-taxed companies and permanent establishments located in the Czech Republic.
• The rules contained in this directive must be implemented by member states in their national legislation by the end of 2023, with effect for tax periods beginning after 31 December 2023. The Income Inclusion Rule will apply from 2024 and the Undertaxed Profit Rule from 2025.