EU Minimum Tax Directive 2022/2523 was transposed on February 20, 2024, by the European Union Global Minimum Level of Taxation for Multinational Enterprise Groups and Large-Scale Domestic Groups Regulations, 2024. The Commissioner for Tax and Customs released guidelines simultaneously to make their implementation easier.

The EU Minimum Tax Directive, a significant legislative intervention, aims to facilitate the implementation of a 15% minimum tax rate for major domestic and international firms operating in the EU. These regulations leverage synergies from established concepts in the exchange of information (e.g., CbCR). They are modelled after the Model Rules issued by the OECD/G20 Inclusive Framework on BEPS, which were formalised following extensive negotiations at the level of the OECD Inclusive Framework meetings. It’s important to note that these rules only apply to individuals who are part of a large-scale domestic group or a multinational enterprise group with an annual revenue of at least €750,000,000.

Using the exception provided by the Pillar Two Directive, Malta has postponed its implementation for a maximum of six consecutive fiscal years, starting on December 31, 2023. Malta will, therefore, not implement the Income Inclusion Rule, the Undertaxed Profits Rule, or a qualifying domestic top-up tax during the 2024 fiscal year. Despite the election, Malta was obliged to implement the directive’s provisions that make the pillar two systems more straightforward to use inside and outside the EU. Therefore, “in scope” ultimate parent entities located in Malta would still be required to file during this temporary period to designate, among other things, a designated filing entity in another Member State or a third country for that latter entity to be able to file a “top-up tax” information return. Note that these ultimate parent entities within scope may be subject to the undertaxed payment regulations in other jurisdictions during this transitional period, guaranteeing that minimal taxation is imposed regardless. Therefore, to manage these new tax risks, such companies should take the appropriate steps to assess tax-optimized alternatives.

If you need further help, please get in touch with GERAI LTD for a brief consultation to learn how these regulations may affect your company.