European Parliament legislative resolution of 19 May 2022 on the proposal for a Council directive on ensuring a global minimum level of taxation for multinational groups in the Union (COM(2021)0823 — C9-0040/2022 — 2021/0433(CNS))
Date: 2022-05-19
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: corporation tax, direct tax, investment company, multinational enterprise, parent company, tax avoidance, tax harmonisation, tax law




C_2022479EN.01008901.xml










16.12.2022   


EN


Official Journal of the European Union


C 479/89






P9_TA(2022)0216
Minimum level of taxation for multinational groups *
European Parliament legislative resolution of 19 May 2022 on the proposal for a Council directive on ensuring a global minimum level of taxation for multinational groups in the Union (COM(2021)0823 — C9-0040/2022 — 2021/0433(CNS))
(Special legislative procedure — consultation)
(2022/C 479/12)

The European Parliament,






—


having regard to the Commission proposal to the Council (COM(2021)0823),










—


having regard to Article 115 of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C9-0040/2022),










—


having regard to Rule 82 of its Rules of Procedure,










—


having regard to the report of the Committee on Economic and Monetary Affairs (A9-0140/2022),












1.


Approves the Commission proposal as amended;












2.


Calls on the Commission to alter its proposal accordingly, in accordance with Article 293(2) of the Treaty on the Functioning of the European Union;












3.


Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;












4.


Asks the Council to consult Parliament again if it intends to substantially amend the Commission proposal;












5.


Instructs its President to forward its position to the Council, the Commission and the national parliaments.





Amendment 1


Proposal for a directive


Recital 6








Text proposed by the Commission




Amendment











(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. 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.












(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 transparent and consistent implementation within the Union and globally.
 This Directive 
generally
 follows the content and structure of the GloBE Model Rules 
but diverges in certain aspects, including regarding the application of certain rules in the Union
. 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 2


Proposal for a directive


Recital 7








Text proposed by the Commission




Amendment











(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 rules (9). 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.












(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 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 rules (9)

and should therefore be respected by all Member States. The Commission should monitor how and to what extent Member States are applying the GloBE Model Rules to smaller entities and take appropriate measures if they are applying them in a way that conflicts with the principles of Union law or undermines the integrity of the internal market
. 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.









Amendment 3


Proposal for a directive


Recital 13








Text proposed by the Commission




Amendment











(13)


In order to allow Member States to benefit from the top-up tax revenues collected on their low-taxed constituent entities located in their territory, Member States should 
be able to elect
 to apply a domestic top-up tax system. Constituent entities of an MNE group that are located in a Member State which has elected to implement rules equivalent to the IIR and the UTPR in their own domestic tax system should pay the top-up tax to this Member State. While leaving Member States some flexibility in the technical implementation of the domestic top-up tax 
system, such system should ensure the minimum effective
 taxation 
of the qualifying income or loss of the constituent entities in the same, or in an equivalent manner, to the IIR and UTPR of this Directive
.












(13)


In order to allow Member States to benefit from the top-up tax revenues collected on their low-taxed constituent entities located in their territory, Member States should 
have the option
 to apply a domestic top-up tax system. Constituent entities of an MNE group that are located in a Member State which has elected to implement rules equivalent to the IIR and the UTPR in their own domestic tax system should pay the top-up tax to this Member State. While leaving Member States some flexibility in the technical implementation of the domestic top-up tax
, the Council’s Code of Conduct Group (business
 taxation
) should carefully monitor the application of that tax. The Commission should provide assistance in that regard
.









Amendment 4


Proposal for a directive


Recital 14








Text proposed by the Commission




Amendment











(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 
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 
five
 years.












(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 
three
 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 
three
 years.









Amendment 5


Proposal for a directive


Recital 16








Text proposed by the Commission




Amendment











(16)


In 
order to achieve a balance between the objectives of the global minimum tax reform and the administrative burden for tax administrations and taxpayers,
 this Directive 
should provide
 for a de minimis exclusion for MNE groups or large-scale domestic groups that have an average revenue of less than EUR 10 000 000  and an average qualifying income or loss of less than EUR 1 000 000  in a jurisdiction. Such MNE groups or large-scale domestic groups should not pay a top-up tax even if their ETR is below the minimum tax rate in that jurisdiction.












(16)


In 
accordance with the agreement reached by the OECD/G20 Inclusive Framework on BEPS,
 this Directive 
provides
 for a de minimis exclusion for MNE groups or large-scale domestic groups that have an average revenue of less than EUR 10 000 000  and an average qualifying income or loss of less than EUR 1 000 000  in a jurisdiction. Such MNE groups or large-scale domestic groups should not pay a top-up tax even if their ETR is below the minimum tax rate in that jurisdiction.









Amendment 6


Proposal for a directive


Recital 18








Text proposed by the Commission




Amendment











(18)


For an efficient application of the system, it is crucial that procedures are coordinated at a group level. It will be necessary to operate a system ensuring the unobstructed flow of information within the MNE group and towards tax administrations where constituent entities are located. The primary responsibility of filing the information return should lie on the constituent entity itself. A waiver of such responsibility should however apply where the MNE group has designated another entity to file and share the information return. It could be either a local entity or an entity from another jurisdiction that has a competent authority agreement in place with the Member State of the constituent entity. In the first twelve-months after its entry into force, the Commission should review this Directive in line with the agreement reached by the Inclusive Framework on filing requirements under the GloBE implementation framework. Considering the compliance adjustments that this system requires, groups that fall within the scope of this Directive for the first time should be granted a period of 18 months to comply with the information requirements.












(18)


For an efficient application of the system, it is crucial that procedures are coordinated at a group level. It will be necessary to operate a system ensuring the unobstructed flow of information within the MNE group and towards tax administrations where constituent entities are located. The primary responsibility of filing the information return should lie on the constituent entity itself. A waiver of such responsibility should however apply where the MNE group has designated another entity to file and share the information return. It could be either a local entity or an entity from another jurisdiction that has a competent authority agreement in place with the Member State of the constituent entity. In the first twelve-months after its entry into force, the Commission should review this Directive
, by means of relevant delegated acts,
 in line with the agreement reached by the Inclusive Framework on filing requirements under the GloBE implementation framework. Considering the compliance adjustments that this system requires, groups that fall within the scope of this Directive for the first time should be granted a period of 18 months to comply with the information requirements.









Amendment 7


Proposal for a directive


Recital 19








Text proposed by the Commission




Amendment











(19)


Considering the benefits of transparency in the field of tax, it is encouraging that a significant amount of information will be filed with the tax authorities in all the participating jurisdictions. MNE groups within the scope of this Directive should be obliged to provide comprehensive and detailed information on their profits and effective tax rate in every jurisdiction where they have constituent entities. Such extensive reporting could be expected to increase transparency.












(19)


Considering the benefits of transparency in the field of tax, it is encouraging that a significant amount of information will be filed with the tax authorities in all the participating jurisdictions. MNE groups within the scope of this Directive should be obliged to provide comprehensive and detailed information on their profits and effective tax rate in every jurisdiction where they have constituent entities. Such extensive reporting could be expected to increase transparency. 
More transparency in financial disclosure results in benefits for tax administrations and more certainty for taxpayers. In that context, Council Directive 2011/16/EU



 (1a)



will play a role in facilitating the implementation of this Directive and the future revision of Directive 2011/16/EU will be subject to an impact assessment to be carried out before 31 December 2022.











Amendment 8


Proposal for a directive


Recital 19 a (new)








Text proposed by the Commission




Amendment





 










(19a)






Potentially harmful and distortive measures that aim to compensate for the potential increase in corporate income tax should be monitored and the Commission notice on the application of the state aid rules to measures relating to direct business taxation should be updated as necessary.











Amendment 9


Proposal for a directive


Recital 19 b (new)








Text proposed by the Commission




Amendment





 










(19b)






The Council’s Code of Conduct Group (business taxation) should continuously monitor the development of the accounting standards and their application for minimum tax purposes. If necessary, it should make proposals to adjust the profit determination rules. The Commission should provide assistance in that regard.











Amendment 10


Proposal for a directive


Recital 20








Text proposed by the Commission




Amendment











(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. 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.












(20)


The effectiveness and fairness of the global minimum tax reform heavily relies on its 
swift and consistent
 implementation 
worldwide and by Member States by the end of 2023
. 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 
a first
 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. 
The implementation of this Directive will require an increased exchange of information between Member States and third country jurisdictions. To that end, Directive 2011/16/EU should be reviewed in accordance with the future OECD work on a competent authority agreement to be developed by the end of 2022.











Amendment 11


Proposal for a directive


Recital 21 a (new)








Text proposed by the Commission




Amendment





 










(21a)






The GloBE Model Rules are likely to be modified, in particular the rules relating to safe harbours that aim to simplify filing requirements for constituent entities. This Directive should ensure that adequate safeguards are in place for the control of those entities. Therefore, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission to ensure this Directive remains aligned with the international commitments of Member States.











Amendment 12


Proposal for a directive


Recital 23 a (new)








Text proposed by the Commission




Amendment





 










(23a)






A review clause is introduced in this Directive in order to guarantee that the application of this Directive is subject to proper evaluation five years after its entry into force. That review should assess and reconsider progress in the global implementation of the OECD agreement/GloBE Model Rules, as well as certain exemptions and derogations, in particular as regards distribution tax systems and substance-based income exclusion, the relevance of the threshold for MNE Group and large-scale domestic firms in scope and the impact on tax revenues on developing countries. As part of the review, modifications to the GloBE Model Rules could also be integrated into Union law if necessary.











Amendment 13


Proposal for a directive


Recital 24 a (new)








Text proposed by the Commission




Amendment





 










(24a)






In the framework of the OECD/G20 Inclusive Framework on BEPS, in addition to two rules intended for introduction in national domestic tax laws, the so-called Pillar 2 consists of a treaty based rule, namely the Subject to Tax Rule (STTR), that allows source jurisdictions to impose limited source taxation on certain related party payments that are subject to tax below a minimum rate. The Commission should recommend that Member States modify their bilateral tax agreements with low-income countries in order to include that rule.











Amendment 14


Proposal for a directive


Article 4 — paragraph 1 — subparagraph 1








Text proposed by the Commission




Amendment





A constituent entity other than a flow-through entity shall be deemed to be located in the jurisdiction where it is considered as resident for tax purposes based on its place of management, place of creation or similar criteria.


A constituent entity other than a flow-through entity shall be deemed to be located in the jurisdiction where it is considered as resident for tax purposes based on its place of 
effective
 management
, namely the place where key management and commercial decisions that are necessary for the conduct of business are taken
, place of creation or similar criteria 
that reflect real economic activities in accordance with this Directive and the GloBE Model Rules
.





Amendment 15


Proposal for a directive


Article 4 a (new)








Text proposed by the Commission




Amendment





 





Article 4a




Anti-avoidance rules





1.
   
For the purposes of calculating the top-up tax, Member States shall disregard any arrangement or series of arrangements which, having been put in place for the essential purpose of obtaining a tax advantage that defeats the object or purpose of this Directive, is not genuine, having regard to all relevant facts and circumstances. An arrangement may comprise more than one step or part.






2.
   
For the purposes of paragraph 1, an arrangement or a series of arrangements shall be regarded as non-genuine where it is not put in place for valid commercial reasons that reflect real economic activities.






3.
   
An arrangement or a series of arrangements that is disregarded in accordance with paragraph 1 shall be treated, for the purpose of calculating the tax base, by reference to its economic substance.






4.
   
The Commission is empowered to adopt delegated acts in accordance with Article 52 in order to lay down more detailed rules against tax avoidance, in particular to take into account future modifications of the GloBE Model Rules.









Amendment 16


Proposal for a directive


Article 10 — paragraph 3








Text proposed by the Commission




Amendment






3.   Where the amount of qualified domestic top-up tax taken into consideration in the computation of the jurisdictional top-up tax in accordance with Article 26 for a fiscal year has not been fully paid within the 
three
 following fiscal 
years
, the amount of domestic top-up tax that was not paid shall be added to the jurisdictional top-up tax computed in accordance with Article 26(3).




3.   Where the amount of qualified domestic top-up tax taken into consideration in the computation of the jurisdictional top-up tax in accordance with Article 26 for a fiscal year has not been fully paid within the following fiscal 
year
, the amount of domestic top-up tax that was not paid shall be added to the jurisdictional top-up tax computed in accordance with Article 26(3).






Amendment 17


Proposal for a directive


Article 13 — paragraph 8 a (new)








Text proposed by the Commission




Amendment





 





8a.
   
The Commission may, by means of implementing acts, further specify the meaning of the terms used in paragraphs 5 and 6 of this Article. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 52a.








Amendment 18


Proposal for a directive


Article 13 — paragraph 8 b (new)








Text proposed by the Commission




Amendment





 





8b.
   
The Commission is empowered to adopt delegated acts in accordance with Article 52 in order to modify the formula laid down in paragraph 5 of this Article, in order to take into account corresponding modifications of the GloBE Model Rules.








Amendment 19


Proposal for a directive


Article 15 — paragraph 11 a (new)








Text proposed by the Commission




Amendment





 





11a.
   
The Commission may adopt delegated acts in accordance with Article 52 in order to modify any of the definitions laid down in paragraph 1 of this Article, or to amend any of the items for which adjustments are provided for under paragraphs 2, 3, 6, 7, 10 and 11 of this Article, in particular to take into account future modifications of the GloBE Model Rules.








Amendment 20


Proposal for a directive


Article 19 — paragraph 3 a (new)








Text proposed by the Commission




Amendment





 





3a.
   
The Commission may, by means of implementing acts, further specify the meaning of the terms used in paragraph 1 of this Article. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 52a.








Amendment 21


Proposal for a directive


Article 21 — paragraph 7 — subparagraph 1








Text proposed by the Commission




Amendment





A deferred tax liability that is not paid or reversed within the 
five
 subsequent fiscal years shall be recaptured to the extent it was taken into account in the total deferred tax adjustment amount of a constituent entity.


A deferred tax liability that is not paid or reversed within the 
three
 subsequent fiscal years shall be recaptured to the extent it was taken into account in the total deferred tax adjustment amount of a constituent entity.





Amendment 22


Proposal for a directive


Article 21 — paragraph 7 — subparagraph 2








Text proposed by the Commission




Amendment





The amount of the recaptured deferred tax liability determined for the fiscal year shall be treated as a reduction to the covered tax of the 
fifth
 preceding fiscal year and the effective tax rate and top-up tax of such fiscal year shall be recomputed in accordance with Article 28(1).


The amount of the recaptured deferred tax liability determined for the fiscal year shall be treated as a reduction to the covered tax of the 
third
 preceding fiscal year and the effective tax rate and top-up tax of such fiscal year shall be recomputed in accordance with Article 28(1).





Amendment 23


Proposal for a directive


Article 21 — paragraph 8 a (new)








Text proposed by the Commission




Amendment





 





8a.
   
The Commission is empowered to adopt delegated acts in accordance with Article 52 to amend any of the items to which an exception accrual applies under paragraph 8 of this Article, in particular to take into account future modifications of the GloBE Model Rules.








Amendment 24


Proposal for a directive


Article 27 — paragraph 9 a (new)








Text proposed by the Commission




Amendment





 





9a.
   
The Commission may, by means of implementing acts, further specify the meaning of the terms used in the definitions laid down in paragraph 1 of this Article. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 52a.








Amendment 25


Proposal for a directive


Article 29 — paragraph 5 a (new)








Text proposed by the Commission




Amendment





 





5a.
   
The Commission may adopt delegated acts in accordance with Article 52 in order to amend the amounts laid down in paragraph 1 of this Article, in particular to take into account future modifications of the GloBE Model Rules.








Amendment 26


Proposal for a directive


Article 31 — paragraph 4 — introductory part








Text proposed by the Commission




Amendment






4.   Where a single MNE group demerges into two or more groups (each a ‘demerged group’), the consolidated revenue threshold shall be deemed to be met by each demerged group if it reports:




4.   Where a single MNE group demerges into two or more groups (each a ‘demerged group’), the consolidated revenue threshold shall be deemed to be met by each demerged group 
for at least six years following the demerger
 if it reports:






Amendment 27


Proposal for a directive


Article 41 — paragraph 1








Text proposed by the Commission




Amendment






1.   At the election of the filing constituent entity, a constituent entity-owner of an investment entity may apply a taxable distribution method with respect to its ownership interest in the investment entity, provided that the constituent entity-owner is not an investment entity and can be reasonably expected to be subject to tax on distributions from the investment entity at a tax rate that equals or exceeds the minimum tax rate.




1.   At the election of the filing constituent entity, a constituent entity-owner of an 
investment entity or an insurance
 investment entity may apply a taxable distribution method with respect to its ownership interest in the investment entity, provided that the constituent entity-owner is not an investment entity and can be reasonably expected to be subject to tax on distributions from the investment entity at a tax rate that equals or exceeds the minimum tax rate.






Amendment 28


Proposal for a directive


Article 42 — paragraph 2 — subparagraph 2 a (new)








Text proposed by the Commission




Amendment





 




Where no constituent entity has been appointed by other constituent entities of the MNE group, the designated local entity in charge of filing the top-up tax information shall be the largest entity of the MNE group located in the same Member State in terms of annual revenues for the last two consecutive years.







Amendment 29


Proposal for a directive


Article 42 — paragraph 7 a (new)








Text proposed by the Commission




Amendment





 





7a.
   
The Council, acting unanimously on a proposal from the Commission and after obtaining the opinion of the European Parliament, shall adopt the measures necessary to implement the filing obligations under this Directive and ensure the necessary exchange of information.








Amendment 30


Proposal for a directive


Article 47 — paragraph 1








Text proposed by the Commission




Amendment






1.   The top-up tax due by an ultimate parent entity located in a Member State in accordance with Article 5(2) shall be reduced to zero in the first 
five
 years of the initial phase of the international activity of the MNE group notwithstanding the requirements laid down in Chapter V.




1.   The top-up tax due by an ultimate parent entity located in a Member State in accordance with Article 5(2) shall be reduced to zero in the first 
three
 years of the initial phase of the international activity of the MNE group notwithstanding the requirements laid down in Chapter V.






Amendment 31


Proposal for a directive


Article 47 — paragraph 2








Text proposed by the Commission




Amendment






2.   Where the ultimate parent entity of an MNE group is located in a third country jurisdiction, the top-up tax due by a constituent entity located in a Member State in accordance with Article 13(2) shall be reduced to zero in the first 
five
 years of the initial phase of the international activity of that MNE group notwithstanding the requirements laid down in Chapter V.




2.   Where the ultimate parent entity of an MNE group is located in a third country jurisdiction, the top-up tax due by a constituent entity located in a Member State in accordance with Article 13(2) shall be reduced to zero in the first 
three
 years of the initial phase of the international activity of that MNE group notwithstanding the requirements laid down in Chapter V.






Amendment 32


Proposal for a directive


Article 47 — paragraph 4 — subparagraph 1








Text proposed by the Commission




Amendment





The period of 
five
 fiscal years referred to in paragraphs 1 and 2 shall start from the beginning of the fiscal year in which the MNE group falls within the scope of this Directive for the first time.


The period of 
three
 fiscal years referred to in paragraphs 1 and 2 shall start from the beginning of the fiscal year in which the MNE group falls within the scope of this Directive for the first time.





Amendment 33


Proposal for a directive


Article 47 — paragraph 4 — subparagraph 2








Text proposed by the Commission




Amendment





For MNE groups that are within the scope of this Directive when it enters into force, the 
five-year
 period referred to in paragraph 1 shall start on 1 January 2023.


For MNE groups that are within the scope of this Directive when it enters into force, the 
three-year
 period referred to in paragraph 1 shall start on 1 January 2023.





Amendment 34


Proposal for a directive


Article 47 — paragraph 4 — subparagraph 3








Text proposed by the Commission




Amendment





For MNE groups that are within the scope of this Directive when it enters into force, the 
five-year
 period referred to in paragraph 2 shall start on 1 January 2024.


For MNE groups that are within the scope of this Directive when it enters into force, the 
three-year
 period referred to in paragraph 2 shall start on 1 January 2024.





Amendment 35


Proposal for a directive


Article 50 — paragraph 1








Text proposed by the Commission




Amendment






1.   The top-up tax due by an ultimate parent entity located in a Member State in accordance with Article 49 shall be reduced to zero in the first 
five
 fiscal years, starting from the first day of the fiscal year in which the large-scale domestic group falls within the scope of this Directive for the first time.




1.   The top-up tax due by an ultimate parent entity located in a Member State in accordance with Article 49 shall be reduced to zero in the first 
three
 fiscal years, starting from the first day of the fiscal year in which the large-scale domestic group falls within the scope of this Directive for the first time.






Amendment 36


Proposal for a directive


Article 50 — paragraph 2








Text proposed by the Commission




Amendment








2.
   
For large-scale domestic groups that are in scope of this Directive when it enters into force, the five-year period abovementioned shall start on 1 January 2023.







deleted







Amendment 37


Proposal for a directive


Article 52 — paragraph 2








Text proposed by the Commission




Amendment






2.   The power to adopt delegated acts referred to in 
Article 51(3)
 shall be conferred on the Commission for an indeterminate period of time from the date of entry into force of this Directive.




2.   The power to adopt delegated acts referred to in 
Articles 4a(4), 13(8b), 15(11a), 21(8a), 29(5a) and 51(3)
 shall be conferred on the Commission for an indeterminate period of time from the date of entry into force of this Directive.






Amendment 38


Proposal for a directive


Article 52 — paragraph 3








Text proposed by the Commission




Amendment






3.   The delegation of power referred to in 
Article 51(3)
 may be revoked at any time by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.




3.   The delegation of power referred to in 
Articles 4a(4), 13(8b), 15(11a), 21(8a), 29(5a) and 51(3)
 may be revoked at any time by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.






Amendment 39


Proposal for a directive


Article 52 — paragraph 5








Text proposed by the Commission




Amendment






5.   A delegated act adopted pursuant to 
Article 51(3)
 shall enter into force only if no objection has been expressed by the Council within a period of two months of notification of that act to the Council or if, before the expiry of that period, the Council has informed the Commission that it will not object. That period shall be extended by two months at the initiative of the Council.




5.   A delegated act adopted pursuant to 
Articles 4a(4), 13(8b), 15(11a), 21(8a), 29(5a) and 51(3)
 shall enter into force only if no objection has been expressed by the Council within a period of two months of notification of that act to the Council or if, before the expiry of that period, the Council has informed the Commission that it will not object. That period shall be extended by two months at the initiative of the Council.






Amendment 40


Proposal for a directive


Article 52 a (new)








Text proposed by the Commission




Amendment





 





Article 52a




Committee procedure





1.
   
The Commission shall be assisted by a committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011.






2.
   
Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.









Amendment 41


Proposal for a directive


Article 53 — paragraph 1








Text proposed by the Commission




Amendment





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.


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 42


Proposal for a directive


Article 53 a (new)








Text proposed by the Commission




Amendment





 




Article 53a






 




Review






 




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 the use of exemptions and derogations and their impact on internal market coherence.






 




The report shall assess the impact of the substance-based income inclusion provision, the implementation of the optional qualified domestic top-up tax and the treatment of distribution tax systems on the effectiveness of ensuring a minimum effective level of taxation.






 




The report shall consider the impact of the Directive on the revenues of least developed countries and on Member States’ tax revenue, investment decisions of the companies, as well as competitiveness of the Union within the global economy. It shall evaluate the impact of a threshold reduction for MNE Groups and large-scale domestic firms. Where appropriate, the report shall be accompanied by a legislative proposal.







Amendment 43


Proposal for a directive


Article 53 b (new)








Text proposed by the Commission




Amendment





 





Article 53b




Delimitation clause





1.
   
This Directive shall not affect the application by Member States of domestic or agreement-based provisions, aimed at safeguarding a higher level of protection for domestic corporate tax bases, that relate to the controlled foreign company rule within the meaning of Article 7 of Council Directive (EU) 2016/1164



 (1a)



, in particular where the stricter controlled foreign company rule follows the recommendations of the 2015 Final Report on Action 3 of the OECD/G20 Base Erosion and Profit Shifting Project.






2.
   
This Directive shall not affect the application of domestic provisions on alternative forms of minimum taxation of domestic groups or companies.








 







(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, 3.6.2016, p. 8) [DAC 4].

(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, 3.6.2016, p. 8) [DAC 4].

(1a)  
Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC (OJ L 64, 11.3.2011, p. 1).



(1a)  
Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (OJ L 193, 19.7.2016, p. 1).