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On December 6, 2024, the Federal Ministry of Finance issued a Second Discussion Draft on amendments to the Minimum Tax Act.
This follows the First Discussion Draft, issued on August 20, 2024 which focused on the implementation of the December 2023 OECD Administrative Guidance, particularly with regard to amendments to the Transitional CbCR Safe Harbour.
The updated Second Discussion Draft includes amendments for the June 2024 OECD Administrative Guidance, including amendments for aggregated deferred tax categories (including a new 5-year unclaimed accrual election) and the extension of the hybrid pushdown to include reverse hybrid entities.
December 2023 OECD Administrative Guidance
Aspects of the December 2023 OECD Administrative Guidance included in the draft law include:
| Provision | Law |
|---|---|
| Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) (Article 1) | Law, Section 87a |
| Joint Ventures (Article 2.2.1) | Law, Section 85 |
| Same Financial Statements/Local Financial Statements for Statutory Reporting (Article 2.3.1) | Law, Section 87 |
| Exclusion of swinging accounts and separate tracking (Article 1.2.1) | Law, Section 87 |
| Using different accounting standards (Article 2.3.2) | Law, Section 87 |
| Adjustments to Qualified Financial Statements/Dividend Mismatches (Article 2.3.3) | Law, Section 87 |
| MNEs not required to file CbC Reports (Article 2.3.4) | Law, Section 84 |
| Qualified Financial Statements for PEs (Article 2.3.5) | Law, Section 87 |
| Treatment of hybrid arbitrage arrangements (Article 2.6) | Law, Section 87b |
| Amendments to Blended CFC Rules (Article 4.2) | Law, Section 88 |
June 2024 OECD Administrative Guidance
The draft law includes a number of amendments and additions arising from the June 2024 OECD Administrative Guidance. The table below shows an overview of the provisions.
| Provision | Law |
|---|---|
| Aggregate Deferred Tax Liabilities Category basis (Article 1.2.1) | Law, Section 50a |
| Exclusion of certain types of General Ledger accounts and separate tracking (Article 1.2.1) | Law, Section 50a |
| Exclusion of General Ledger accounts that generate standalone Deferred Tax Assets (Article 1.2.1) | Law, Section 50a |
| Exclusion of swinging accounts and separate tracking (Article 1.2.1) | Law, Section 50a |
| FIFO/LIFO Basis (Article 1.2.2) | Law, Section 50a |
| Aggregation of Short-term DTLs (Article 1.2.3) | Law, Section 50a |
| Reversal of DTLs that accrued before the Transition Year (Article 1.2.2) | Law, Section 50a |
| 5 year unclaimed accrual election (Article 1.2.2) | Law, Section 50 |
| Recalculated deferred tax where GloBE carrying value differs from accounting carrying value (Article 2.1.2) | Law, Section 50 |
| GloBE and accounting carrying values and the Transition Rules (Article 2.1.2) | Law, Section 64 |
| Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and reverse hybrids (Article 4.1) | Law, Section 50 |
| Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules (Article 4.2.3) | Law, Section 50 |
| Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity (Article 5.2.2) | Law, Section 7(32) |
| Non-group owners: Partially owned Flow-through Entities (Article 5.3.2) | Law, Section 7(32) |
| Non-group owners: Indirect minority ownership (Article 5.3.5) | Law, Section 7(32) |
| Taxes allocated to a flow-through entity (Article 5.4.2) | Law, Section 49 |
| Hybrid entities – Taxes pushed down include indirect owners (Article 5.4.2) | Law, Section 7(32) |
| Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system (Article 5.5.4) | Law, Section 7(32) |
| Extension of taxes pushed down to include Reverse Hybrids (Article 5.6.2) | Law, Section 49 |
For detailed information on the application of the GloBE Rules in Germany, based on the latest 2024 Second Discussion Draft, see our:
OECD Administrative Guidance: Domestic Implementation Matrix
Transitional CbCR Safe Harbour: Domestic Implementation Matrix
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