Analysis of the EU Global Minimum Tax Directive and its implications for Spain

Abstract

The implementation of the EU global minimum tax Directive, which, formalizing OECD’s Pillar 2, fixes a minimum tax rate of 15% for those multinational groups with revenues over 750 million euros, comes together with different consequences for Spain, which is important to evaluate to optimize the strategies carried out by the multinational groups under the scope of this measure. During the first steps of implementation, the affected groups would have to deal with different challenges, highlighting the complexity of the rules, an important administrative burden, an exhaustive gathering of information and data from their different subsidiaries to carry out the different computations required, an adaptation of their information systems to ease the obtention of this information, constant monitoring for the future updates that could emerge, and the design of the relevant protocols to ensure compliance with the requirements. However, once the companies overcome these challenges and the Directive’s rules have been effectively implemented in Spain, not only we are going to be in a step closer to fulfill the OECD’s objective of reducing the profit shifting carried out by different multinational companies to pay less taxes (by eliminating the tax incentives that imply a reduction of the effective tax rate below the minimum), but it will also translate in higher revenues to Spain, and higher investment costs. Further information regarding the implications of the Directive for these variables will be provided in depth in this study, with the help of other research projects that have attempted to obtain its numerical implications.