The Global Anti-Base Erosion (“GloBE”) rules, also called “Pillar Two”, provide for a co-ordinated system of taxation intended to ensure large multinational enterprise (“MNE”) groups pay a minimum level of tax on the income arising in each of the jurisdictions where they operate.
The model rules to give effect to the GloBE rules (the “OECD Model Rules”) initially expected to be released by the end of November 2021 were finally published by the OECD on 20 December 2021.
Because of this delay, it was uncertain whether the EU would be able to publish a directive proposal for the implementation of the GloBE rules at European Union level on 22 December, as previously announced. Nevertheless, they did it and provided us with a nice seasonal gesture: a proposal for a Council Directive on ensuring a global minimum level of taxation for multinational groups in the Union (“GloBE Directive Proposal”). The GloBE Directive Proposal follows closely, with some differences to ensure its compatibility with EU law, the OECD Model Rules and sets out how to calculate and apply the OECD global minimum taxation so that it is properly and consistently applied across the EU.
The OECD Model Rules and the GloBE Directive Proposal (the “GloBE Regulations”) are drafted in a complex way and a first reading does not allow to understand all their nuances and implications. Nevertheless, we have tried to provide a “big picture” of what they involve in general and for investment funds in particular.