It's been a long road to approval. But, finally, the minimum tax of 15% to multinationals is already a reality in the European Union after overcoming the last reluctance of Poland and Hungary. The new norm now has to be transposed by all governments into their legislation before the end of 2023 and it will enter into force in 2024.
The agreement comes more than a year after a historic agreement was reached at the OECD in almost 140 countries, including the Twenty-seven. It was a step of undoubted depth. A large part of the world economies agreed and supported setting corporate tax at least 15% for companies with a turnover of more than 750 million euros per year. The objective was clear: to avoid tax dumping that often allows these companies to pay taxes in tax havens or in countries with lower tax burdens.
After its approval in the OECD, the joy, however, was short-lived. In the first meeting that was held in the recently launched French presidency of the Council of the EU, last January, Poland and Hungary led the rejection, along with Sweden, Malta and Estonia. Then they argued that the two laws approved in the OECD (tax on digital giants and the minimum rate on multinationals) should be approved at the same time.
The European finance ministers were summoned for later to try to iron out the doubts. Two months later, the doubts continued and the patience of the French incumbent, Bruno Le Maire, was beginning to wear thin: "Tax justice takes a long time, but in the end it is important that tax justice wins," the Frenchman replied at the time with disgust. .
Already in spring, with the French elections close, patience was running out with the Polish veto. "We thought the technical doubts had ended, but if doubts suddenly appear at the last minute, then it is not a technical question," lamented Le Maire in April.
In June, they managed to raise doubts in Warsaw, although many of the ministers feared that what the Polish government had actually done up to then was to sequester the tax until it got the green light for its recovery plan. Everyone at that meeting believed that, after six months of discussions, this was going to be the day. The surprise was given by Hungary. Budapest, suddenly blocked. "When one problem disappears, another appears," Le Maire despaired.
Hungary then justified that it was concerned about the consequences that the law could have on European economies in the midst of the war in Ukraine. Budapest has maintained the same argument until earlier this week, when it lifted its veto.
Before, the current Czech presidency, in order to put pressure on Budapest, had decided to unite four pieces of legislation. If the minimum corporate tax was not given the green light, nor was the green light given to the 18,000 million aid to Ukraine, Budapest would not get its recovery plan approved either. To this was added the proposal of the European Commission to freeze a part of the regional funds to the Government of Viktor Orbán. The pressure began to bear fruit when last week the countries decided to adopt a plan B and approve an instrument that would unblock aid to Ukraine without the need for Hungary.
And it worked: 48 hours later, Hungary lifted its veto. In exchange, the freezing of all regional funds was reduced to 55%, instead of the 65% initially proposed. "Mega-agreement!" The Czech presidency congratulated itself on Twitter at eleven o'clock at night. But Warsaw still had an ace up its sleeve, and warned that it "had some doubts" that it wanted to resolve at the summit on Thursday. Polish Prime Minister Mateusz Morawiecki entered the meeting claiming that linking aid to Ukraine to the freezing of funds to Hungary seemed “blackmail”. "It is almost immoral," reproached Polish government sources. However, he ended up agreeing. The long road was over.
