Mapping the Model Rules to the EU Global Minimum Tax Directive

On December 22, 2022, the EU Global Minimum Tax Directive (the ‘EU Directive’) was published in the EU official journal as Council Directive (EU) 2022/2523 of 14 December 2022. 

EU member states  are required to enact laws, regulations and administrative provisions necessary to comply with the EU Pillar Two Directive by 31 December 2023.

Whilst the EU Directive is based on the OECD Model Rules, there are differences between them.

A big difference to the OECD Model Rules is that the EU Directive extends the application of the GloBE Rules to purely domestic groups.

Another difference is that the OECD Model Rules provide that where a UPE is a low-taxed entity, top-up tax is applied via the UTPR rather than the IIR. 

However, in the EU this would only happen when the UPE is located outside the EU. If the UPE was in the EU it applies the IIR to itself and to its domestic subsidiaries.  

Below we map, on an Article-by-Article basis, the EU Directive to the OECD Model Rules. We also identify provisions in the EU Directive which have no equivalent in the Model Rules.