EU: EC publishes FAQs on interpretation and transposition of EU global minimum tax

Cannot be interpreted as binding on the EC and the member states

Cannot be interpreted as binding on the EC and the member states

The European Commission (EC) today published “frequently asked questions” (FAQs) on the interpretation and/or transposition of the EU minimum tax directive (2022/2523).

The FAQs represent the outcome of informal reflections of the Commission Services and therefore cannot be interpreted as binding on the EC and the member states.

The FAQs reinforce the reference to the OECD’s work under Recital 24 of the Preamble to the Directive and confirm that the Commentary to the OECD Model Rules could be used as a source of illustration or interpretation to ensure consistency in application of the rules across member states, to the extent that those sources are consistent with the Directive and EU law. References to the OECD Model Rules, the Commentary, and the Administrative Guidance is made throughout the FAQs in the context of the interpretation of certain Directive terms. However, the FAQs note that certain terms are better defined or interpreted in accordance with national laws and guidance (e.g., the terms “widely held entity” and “holds predominantly immovable property” in the context of real estate investment vehicles). In addition, the FAQs confirm that the EU Directive may be applied in accordance with certain elements of the Administrative Guidance that adapt the OECD Model Rules / EU Directive rules (e.g., treatment of pension expenses that are accrued for direct pension payments (i.e., not contributed to a fund), election to include portfolio shareholding income). Since the third tranche of Administrative Guidance was released just earlier this week, on 18 December 2023, the FAQs do not refer to those recent supplementary provisions and clarifications.

The FAQs also include clarifications in relation to provisions in the EU minimum tax directive that are specific to EU implementation and not derived from the OECD Model Rules. This includes the option as per Article 50 of the EU Directive, which allows EU countries to defer the application of the income inclusion rule (IIR) and the undertaxed profits rule (UTPR) up to 31 December 2029, where a maximum number of 12 UPEs are based in that EU member. As per the EC notice published on 12 December 2023, Estonia, Latvia Lithuania, Malta, and Slovakia have notified the EC of their intention to elect for a delayed application of the IIR and UTPR. The FAQs clarify that countries still have the right to already introduce a domestic minimum top-up tax (DMTT) if an election under Article 50 has been made. In addition, the FAQs confirm that, in the EC’s view, all member states that form part of the Inclusive Framework (IF) are considered to have agreed to a “qualifying international agreement on safe harbours” as referred to in Article 32 of the Directive. It is further specified that such agreement includes the country-by-country (CbC) reporting safe harbour (December 2022), QDMTT safe harbour and the UTPR safe harbour (July 2023). It can therefore be inferred that, in the EC’s view, member states are required—as per the provisions of Article 32 of the Directive, to ensure that these safe harbours are available to filing constituent entities in their jurisdictions.

In addition, the FAQs provide for certain clarifications that relate to special provisions in the EU minimum tax directive (not included in the OECD Model Rules) or special EU-specific direct tax considerations. For example, with regard to acceptable EU accounting standards, the FAQs confirm that accounting standards of EU Member States are considered acceptable financial accounting standards when they comply with the International Financial Reporting Standards (IFRS or IFRS as adopted by the Union pursuant to Regulation (EC) No 1606/2002), as well as when they transpose the provisions of EU Directive 2013/34/EU. Furthermore, the FAQs clarify that approval of a tax scheme under an EC State aid assessment does not result in a more favorable treatment under the EU minimum tax directive. Furthermore, the assessment of whether such schemes are considered a qualified refundable tax credit for the purposes of the GloBE rules is independent from their qualification under EU State aid rules and should be carried out in light of the provisions of the Directive. 

KPMG observation

While the FAQs may not be interpreted as binding on the EC and the member states, the reinforced message from the EC that the EU minimum tax directive is to be applied and interpreted by member states in accordance with the OECD Commentary and Administrative Guidance (even when issued after the adoption of the Directive) is welcomed. It is nevertheless important for in-scope taxpayers to monitor how each member state makes use of the options available to them (in terms of e.g., QDMTTs design, administration, specific definitions), as there are likely to be local specifics that must be considered when preparing for compliance (e.g., the use of local accounting standards, different filing deadlines, different qualifications of certain entities depending on domestic definitions).

Read a January 2024 report prepared by the KPMG EU Tax Centre:

For more information, contact a tax professional with the KPMG EU Tax Centre: 

Raluca Enache |

Marco Dietrich |

Nina Matviienko |



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