Starting in January 2024, a new European directive will be implemented, which will have a significant impact on how the big players in the business world pay taxes. This directive stipulates that the minimum profit tax to be set at 15% for large groups of companies, representing an important first step in the reform of the European tax system. The directive, named no. 2523, was adopted at the end of 2022 to implement the OECD agreement, and harmonize taxation throughout the European Union.
This change is motivated by several major objectives. First, it is desired to simplify and harmonize taxation at the level of the European Union. Thus, the fragmentation and complexity of the different tax regimes in the Member States will be eliminated, facilitating the cross-border activities of companies. It also aims to stabilize inflation and reduce tax evasion, which will contribute to strengthening the public finances of the member states.
Another crucial objective is to eliminate unfair tax competition between states. To date, some countries have offered significant tax advantages to attract foreign investment, leading to unfair competition between states and undermining the fiscal resources of other states. The new minimum corporate tax will end this practice and ensure a fairer approach to corporate taxation across the European Union.
The directive applies to both multinational companies and large national groups with annual revenues of over EUR 750 million. This ensures that all large companies will contribute appropriately to Member States' tax revenues and to the funding of essential public services.
Creating a stable and predictable tax framework is essential for both companies and individual tax jurisdictions. This will promote ethical and fair taxation solutions, which is essential for confidence in the business environment and for stimulating investment.
In the medium to long term, this fiscal change can bring significant benefits in crisis situations, such as those we have seen increasingly over the last decade. The minimum corporate tax will generate more stable and valuable tax revenues for Member States' governments, enabling them to better cope with economic crises and provide support in difficult times.
This directive also promotes increased transparency and public reporting of financial information, which will allow for greater trust and monitoring of corporate taxation. Reducing profit shifting between tax jurisdictions is also an important measure to prevent aggressive tax practices and tax evasion.
For Romania, the measure will come along with other major changes that will significantly impact the investments, but which will create a more stable environment.
In this context, it is recommended that companies take early measures to comply with the new fiscal rules and to ensure the necessary resources for their implementation. Nexia ABS team, with experience and expertise in the tax field, can promptly support you in your financial operations and help you successfully adapt to the new tax requirements.
In conclusion, the implementation of the minimum profit tax of 15% for large groups of companies represents a significant change in corporate taxation in the European Union. This measure has the potential to bring long-term benefits, contributing to fiscal stability, transparency, and fairness in the European business environment.