Pillar 2: The global minimum tax is still the talk of the town

The global minimum tax (Pillar 2) is intended to ensure that multinational companies with an annual turnover of at least 750 million euros pay at least 15% tax, regardless of where they are domiciled. While almost 30 countries have already implemented the regulation, current political developments – particularly in the USA – are leading to discussions about the model’s future.

Regardless of these discussions, the minimum tax in Germany and Europe currently remains legally binding, even if the USA as a major player on a global level has ceased to partake for the time being.

Pillar 2 remains binding - national laws must be applied

The EU directive on global minimum tax has been transposed into national law in Germany at the end of 2023 and is mandatory. For German and European companies, the US announcement means little at first, as they must apply the respective national laws on the basis of EU law. The developments in the US do not change this.

The USA and Pillar 2: Political signals, but no immediate consequences

Although the Trump administration's memorandum of January 20, 2025, announcing the USA's withdrawal from the “Global Tax Deal” has triggered discussions, it currently has no influence on the existing legal situation in Germany and Europe. Above all, it has a political signal effect, because:

• The USA never fully ratified Pillar 2, even under the Biden administration.
• GILTI (“Global Intangible Low-Taxed Income”) is the existing US system for minimum taxation, but differs from the OECD requirements.
• The Undertaxed Profits Rule (UTPR) means that Pillar 2 is also indirectly applied to US companies if their subsidiaries operate in minimum tax countries.

Focus on simplification: Safe harbors as a possible key

In Germany, however, there are also increasing calls for a reassessment and simplification of minimum taxation. On February 3, 2025, the Federal Chamber of Tax Consultants (BStBK) commented on the second discussion draft of the Minimum Tax Adjustment Act (MinStAnpG) and advocates simplifications. The proposed optimizations promise to simplify implementation and can provide practical relief.
The focus is on:

• Permanent safe harbor solutions: The previously temporary relief should be made permanent. 
• Practical implementation: Minimum taxation must be implemented with a sense of proportion in order to avoid unnecessary bureaucracy.
• EU-wide initiative for simplifications: Germany should advocate strongly for simplifications within the EU and the OECD.

There are also calls from politicians for a reassessment of minimum taxation. Hesse's Minister of Finance Prof. Dr. Alexander Lorz (CDU), for example, has advocated a suspension of the global minimum tax in order to examine possible competitive disadvantages for European companies.

Switzerland and Pillar 2: An exit option under US protection?

The Swiss-American Chamber of Commerce under President Rahul Sahgal has suggested that Switzerland should consider opting out of the global minimum tax. A possible "silver bullet" would be close coordination with the USA in order to protect itself from international additional taxation.

Conclusion: Focus on national implementation and practicable simplifications

Regardless of geopolitical developments, Pillar 2 currently remains valid in Germany and the EU. Companies should focus on national implementation and drive forward practical simplifications.

The discussion about making temporary safe harbors permanent is welcome. It is crucial that it is implemented with a sense of proportion that avoids bureaucracy and equalizes potential competitive disadvantages.

We will keep you up to date on further discussions and developments. If you have any questions about the global minimum tax, please do not hesitate to contact us.