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Insurance Europe on the EU minimum tax

On 22 December 2021, the EU Commission presented a draft directive on the introduction of a global minimum tax for multinational groups of companies. Insurance Europe sees a clear need for improvement for the insurance industry.

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With the draft of the "council directive on ensuring a global minimum level of taxation for multinational groups in the Union", the EU Commission is implementing the OECD's work on the global minimum taxation (so-called Pillar II) for the European legal area. In its statement of 5 April 2022, Insurance Europe points out the weaknesses of the draft regulation and calls for concrete improvements.

To start with, Insurance Europe points to the complexity of the regulations and the expected compliance effort for companies. The industry therefore sees the need for simplification regulations so that multinational groups of companies do not have to carry out a complete effective tax calculation for each jurisdiction in which they are represented. This applies in particular to cases in which it is clear from the outset that the minimum tax of 15% will not be undercut. In addition, the statement addresses technical deficiencies in the draft regulation. For example, the special features of RT1 capital of insurance companies were not taken into account in the regulations, unlike for the comparable tier-one capital of banks. In addition, the regulations are partly not coordinated with the special tax regulations for investment funds, which exist in Germany, among other countries. Thus, the tax exemption of investment income could lead to tax burdens being triggered according to the regulations of the draft directive, although this does not correspond to the objective of the minimum tax concept of the draft directive.

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