Introduction to European Tax Law on Direct Taxation

I. Introduction

A. Background and Overview

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The advancing digitalization and globalization has changed the global economy and business models around the world in the 21^st century. To address the tax challenges of this time, the OECD/G20 Inclusive Framework, among other projects, presented a two-pillar solution to the public in 2019. While Pillar I tries to establish a new system for profit allocation between states to accommodate new digital business models, Pillar II tackles the issue of global base erosion by introducing a new internationally agreed upon minimum tax rate. At the time of publication, it seems unlikely that Pillar I will come into effect as it would need S. 224the political support of the United States. However, the Inclusive Framework finished the main work on Pillar II in 2022, releasing the so-called OECD Model Rules in December 2021 and the corresponding commentary early in the following year. Since then, the OECD has published administrative guidance and further information on safe harbour rules to promote the effective and efficient implementation of Pillar II.

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Pillar II is designed to ensure that large MNE groups and large-scale domestic groups pay a minimum level of ...