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) | Draft Law, Section 21 |
| Joint Ventures (Article 2.2.1) | Draft Law, Section 19 |
| Same Financial Statements/Local Financial Statements for Statutory Reporting (Article 2.3.1) | Draft Law, Section 20 |
| Exclusion of swinging accounts and separate tracking (Article 1.2.1) | Draft Law, Section 20 |
| Using different accounting standards (Article 2.3.2) | Draft Law, Section 20 |
| Adjustments to Qualified Financial Statements/Dividend Mismatches (Article 2.3.3) | Draft Law, Section 20 |
| MNEs not required to file CbC Reports (Article 2.3.4) | Draft Law, Section 16 |
| Qualified Financial Statements for PEs (Article 2.3.5) | Draft Law, Section 20 |
| Treatment of hybrid arbitrage arrangements (Article 2.6) | Draft Law, Section 21 |
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) | Draft Law, Section 7 |
| Exclusion of certain types of General Ledger accounts and separate tracking (Article 1.2.1) | Draft Law, Section 7 |
| Exclusion of General Ledger accounts that generate standalone Deferred Tax Assets (Article 1.2.1) | Draft Law, Section 7 |
| Exclusion of swinging accounts and separate tracking (Article 1.2.1) | Draft Law, Section 7 |
| FIFO/LIFO Basis (Article 1.2.2) | Draft Law, Section 7 |
| Aggregation of Short-term DTLs (Article 1.2.3) | Draft Law, Section 7 |
| Reversal of DTLs that accrued before the Transition Year (Article 1.2.2) | Draft Law, Section 7 |
| 5 year unclaimed accrual election (Article 1.2.2) | Draft Law, Sections 6/7 |
| Recalculated deferred tax where GloBE carrying value differs from accounting carrying value (Article 2.1.2) | Draft Law, Sections 6/10 |
| Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and reverse hybrids (Article 4.1) | Draft Law, Section 6 |
| Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules (Article 4.2.3) | Draft Law, Section 17 |
| Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity (Article 5.2.2) | Draft Law, Section 2(g) |
| Non-group owners: Partially owned Flow-through Entities (Article 5.3.2) | Draft Law, Section 2(g) |
| Non-group owners: Indirect minority ownership (Article 5.3.5) | Draft Law, Section 2(g) |
| Taxes allocated to a flow-through entity (Article 5.4.2) | Draft Law, Section 2(g)/5 |
| Hybrid entities – Taxes pushed down include indirect owners (Article 5.4.2) | Draft Law, Section 5 |
| Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system (Article 5.5.4) | Draft Law, Section 2(g) |
| Extension of taxes pushed down to include Reverse Hybrids (Article 5.6.2) | Draft Law, Section 5 |
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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