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Minimum tax: transitional safe harbour rules

A global minimum tax will apply from taxable periods beginning on or after 1 January 2024. It will be applied to groups with consolidated revenues of more than EUR 750 million. This is the same revenue threshold that obliges corporate groups to compile a country-by-country report under applicable (CbCR) legislation. Corporate groups may thus temporarily use CbCR to prove that they have not become liable to the minimum tax.

The global minimum effective tax will apply to all companies of a corporate group whose consolidated turnover for at least two of the four immediately preceding taxable periods exceeded EUR 750 million. For example, if a group had consolidated revenues exceeding this threshold for 2020 and 2021, the global minimum tax rules will apply to it regardless of the development of turnover in subsequent years.

This revenue threshold is the same as the one that obliges corporate groups to prepare country-by-country reports under CbCR legislation. Given this fact, in financial years 2024 to 2026, corporate groups may use the CbCR to prove that they are not liable to the minimum tax (safe harbour rules).
These temporary safe harbour rules can only be applied for reports compiled using data drawn either from the group consolidated statements or from the individual entity financial statements (a ‘qualifying’ CbCR); reports prepared based on management accounts data cannot be used.
CbCR safe harbour rules can be used if:

  • the group’s revenues in the tested jurisdiction do not reach the threshold of EUR 10 million, and the profit before tax is less than EUR 1 million (de minimis test) or
  • the group’s effective tax rate for the tested jurisdiction is higher than the stipulated tax rate (15% for taxable periods beginning in 2023 and 2024, 16% for taxable periods beginning in 2025, and 17% for taxable periods beginning in 2026), with the tax rate determined as the tax (adjusted for the specifics of calculating the minimum tax) divided by the profit as stated in the CbCR (ETR test), or
  • the group’s profit in the tested jurisdiction does not exceed the substance-based income exclusion amount; this amount reduces the profit when calculating the top-up tax and is determined as 5–10% of personnel expenses and the carrying amount of fixed assets in the taxable period (routine profits test).

A group shall test its compliance with the above rules for each individual tax jurisdiction, using data stated in the qualifying CbC report. If it meets at least one of the conditions, it shall be temporarily excluded from the much more complex calculation of the effective tax rate and subsequently from the calculation and payment of the top-up tax in the tested tax jurisdiction.

Thus, in our opinion, it is important to prepare the reports so that they meet the conditions for the application of the simplified test for minimum tax reporting.

At the same time, we believe that data from the reports for the previous period, if prepared in the format of the qualifying report, can be used to plan and model the impact of the minimum tax on the financial results for 2024 and subsequent years already during 2023 or subsequently in the financial statements for 2024. The tax return or notification whether the obligation to pay minimum tax has arisen has a filing deadline on 31 March 2025.