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DRAFT REPORT (2025/2210(INI))

On the EU’s approach to corporate tax policy in a changing international environment

ECON-PR-781467

Committee on Economic and Monetary Affairs · Rapporteur: Kinga Kollár

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A draft report by the Committee on Economic and Monetary Affairs sets out Parliament's position on EU corporate tax policy in a changing international environment. It regrets incomplete global implementation of Pillar Two and warns that the OECD side-by-side approach exempts US-headquartered multinationals from most Pillar Two obligations, disadvantaging EU companies. It calls on the Commission to correct these imbalances, use State aid and anti-subsidy measures, and simplify EU tax law, including reviewing the ATAD controlled foreign company rules and the BEFIT proposal. It asks Member States to fully transpose the Pillar Two Directive and to coordinate a unified position in multilateral forums, and invites the Commission to help them.

Committee position. The rapporteur considers the international tax framework overly complex and ineffective and says it puts EU companies at a disadvantage. She calls for strengthening coordination, correcting the imbalances created by the side-by-side approach and simplifying EU tax law to rebalance the competitiveness of EU-headquartered multinationals.

Key points

  1. Emphasises restoring EU competitiveness as a top priority and says investment attractiveness needs a stable, predictable tax environment.
  2. Welcomes OECD efforts to set a global floor for multinationals' tax obligations through a minimum effective tax rate.
  3. Regrets that global implementation of Pillar Two remains incomplete, with China and India not having implemented it, and says concurrent domestic minimum taxes cause fragmentation.
  4. Notes that structural differences between the US NCTI regime and Pillar Two disadvantage EU-headquartered multinationals in the United States, and that the side-by-side approach exempts US-headquartered multinationals from most Pillar Two obligations.
  5. Calls on the Commission to analyse and propose solutions to correct the imbalances created by the side-by-side approach and to deploy State aid and anti-subsidy measures against anti-competitive tax advantages.
  6. Notes that the side-by-side approach raises legal and administrative complexity and compliance costs for EU-headquartered multinationals operating in the United States.
  7. Welcomes the Commission's work on the Omnibus package on taxes and calls for prioritising simplification, including examining the continued necessity of the ATAD controlled foreign company provisions and reviewing the Parent-Subsidiary, Merger, Country-by-Country Reporting and DAC frameworks.
  8. Calls on the Commission to re-examine its BEFIT proposal because of incompatibilities with OECD Pillar Two rules, and is concerned that the side-by-side system was implemented as a safe harbour under Article 32 of the Pillar Two Directive rather than through a legislative process.
  9. Calls on Member States to ensure full transposition of the Pillar Two Directive, and invites the Commission to explore simplification measures for the tax administrations of smaller Member States.
  10. Welcomes Pillar Two's contribution to reducing very low effective corporate tax rates and to qualified domestic minimum top-up taxes, but notes that revenue losses from base erosion and profit shifting remain substantial and calls for intensified international cooperation.
  11. Regrets that the EU's digital services trade balance has tilted towards other jurisdictions, takes note of US concerns about unilateral digital services taxes, and says a global solution to digital taxation is the ideal way forward.
  12. Takes note of negotiations within the UN Framework Convention on International Tax Cooperation and invites Member States to strengthen coordination and present a unified position in multilateral forums, with Commission assistance.

Who is affected

  • EU-headquartered multinational enterprises, which the report says face a competitive disadvantage under the side-by-side approach.
  • US-headquartered multinational enterprises, which the report says are technically exempted from most Pillar Two obligations.
  • Member States, which are asked to fully transpose the Pillar Two Directive and coordinate in multilateral forums.
  • The Commission, which is asked to propose solutions, deploy countermeasures and simplify EU tax law.
  • Smaller Member States, whose tax administrations would benefit from simplification measures for Pillar Two.

Figures and deadlines

  • USD 100 billion to 240 billion: OECD estimate of annual global revenue losses from base erosion and profit shifting.
  • 4 to 10 %: share of global corporate income tax revenues lost to base erosion and profit shifting, per the OECD estimate.
  • 15 %: global minimum effective corporate tax rate under Pillar Two.
  • 148 jurisdictions: participants in the OECD/G20 Inclusive Framework, around one third of which have fully or partially implemented Pillar Two.
  • 750 million euros: annual revenue threshold above which multinationals fall under Pillar Two.
  • 12.6%: effective tax rate under the US NCTI regime, compared with 15% under Pillar Two.
  • 6 January 2026: date from which only the US qualifies for the side-by-side and ultimate parent entity safe harbours.

Legal basis: Article 4 and Articles 63 to 66, and Articles 113, 114 and 115, of the Treaty on the Functioning of the European Union.