Pilíř 2: Možné ústupky a změny pro přistoupení USA

The Polish Presidency of the Council of the EU has reportedly presented several proposals to mitigate the current negative attitude of the United States towards the Pillar 2 rules.

The first proposal is to change the scope of qualified refundable tax credits, which, once modified, should include US incentives. The modification could potentially be more general in nature, aiming at changing the qualification rules from the current refundability test a more substance-based test, which could eventually allow for the qualification of incentives and deductions granted by EU Member States.

The second option is to limit the mechanism of the Under-taxed Profits Rule (UTPR). It could be limited, for example, by extending the application of the UTPR safe harbour to groups whose ultimate parent entity is based in a jurisdiction with a statutory corporate tax rate of at least 20%. The alternative could then be to abolish the UTPR mechanism altogether, on which, however, the Pillar 2 rules are largely based.

Thirdly, the Polish Presidency is reportedly proposing to consider a specific US taxation, the so-called GILTI, as the equivalent of the Income Inclusion Rule (IIR). Conceptually, GILTI represents a kind of intermediate step between the CFC rules and the IIR, while not applying the jurisdictional approach that is crucial for Pillar 2 at the moment.

It will certainly be interesting to follow further the development of the US position on Pillar 2 and possibly the related changes to the existing rules that could accompany a possible US accession.

For more information on Pillar 2, please do not hesitate to contact the authors or your EY team with whom you regularly work.

Authors:

Karel Hronek

Dominik Živný