On Monday 30 June, the European Commission took the view that the declaration by the G7 countries on the treatment reserved for the United States in the minimum international taxation of multinationals, if validated by the 147 countries party to the international tax reform agreed in 2021 within the inclusive OECD/G20 framework, should not require any amendment to the directive (2022/2523) translating the international rules into European Union law.
“This approach can be implemented via a ‘safe harbour’ and as such would not require a change of the EU directive on global minimum taxation”, said a spokeswoman for the EU institution, Anna-Kaisa Itkonen. In her words, “the agreement promotes fair and simple taxation, reduces economic uncertainty and strengthens international tax cooperation”.
In a joint statement published on Saturday 28 June, the G7 countries express their agreement with the US proposal to apply the US and international tax systems ‘side by side’. Multinationals established in the United States will continue to benefit permanently from the ‘safe harbour’ mechanism, in place until the end of 2025, and to be exempt from the 15% minimum tax (pillar II) for their activities outside the United States while still being subject to the US tax system.
See the G7 declaration: https://aeur.eu/f/hmp
In exchange, the US authorities have agreed to remove the amendment to the ‘One Big Beautiful Bill Act’, which would have allowed Washington to surcharge foreign multinationals from countries applying the international tax agreement to US multinationals by a further 20%.
“The main aim of the agreement is to remove the legal uncertainties weighing on EU investments in the United States”, said Ms Itkonen.
Describing the agreement as “pathetic and scandalous”, the director of the EU Tax Observatory, French economist Gabriel Zucman, said that there was “no reason to bow to Trump’s diktat”, as “the implementation of ‘revenge taxes’ would only have harmed the portfolios of under-taxed international investors and the United States themselves”. “The United States never ratified the [international tax] agreement, not even under Biden. But the agreement was designed to work without them. That was the whole point”, he added, via social networks.
Indignation at the European Parliament. Maintaining the American exception has provoked an outcry from the left of the political spectrum in the European Parliament.
For Aurore Lalucq (S&D, French), chair of the Committee on Economic and Monetary Affairs (ECON), “the European Union is capitulating to the United States”. “The exemption granted (...) is an unjustified backwards step without a mandate, which bodes ill for the ‘negotiations’ still to come”, she added via social networks, calling on the European Commissioner for Taxation, Wopke Hoekstra, to “explain the immediate implications of this exemption for the EU”. Later, speaking to Agence Europe, she criticized “a strategic error at a time when we are negotiating tariffs and it is vital not to show weakness in the face of the Trump administration”
The chair of the Subcommittee on Tax Matters (FISC), Pasquale Tridico (The Left, Italian), did not mince his words either, describing the declaration as a “shameful act of servitude, signed by countries that have sold out their national interest to espouse the American interest”. He hoped that the other countries party to the international tax agreement would rebel against a deal that represents “a step backwards in the fight against tax evasion”.
On Friday, the European Commissioner for Taxation, Wopke Hoekstra, took to social networking sites to welcome the “progress” made within the G7, which will require a great deal of work to achieve “a fair and simple tax system”.
As soon as he returned to power at the end of January, US President Donald Trump announced his intention to withdraw his country from the international reform of the minimum tax on businesses (see EUROPE 13562/8). (Original version in French by Mathieu Bion)