Five major EU Member States commit to swift implementation of Pillar Two by any possible legal means

  • While Hungary is currently blocking unanimity on the European Union (EU) Pillar Two Directive, five major EU Member States have decided to move forward with coordinated unilateral implementation of Pillar Two based on the latest compromise text.

  • In addition, a first discussion was held between Finance Ministers of EU Member States on more diversity in the cooperation between EU Member States, with less reliance on the hard law instrument of Directives only.

  • The coming weeks will show whether the example set by the five Member States will be followed by other Member States, or will convince Hungary to give up its veto.

Executive summary

On 9 September 2022, France, Germany, Italy, the Netherlands, and Spain, issued a joint statement committing to the swift implementation of Pillar Two in 2023 ‘’by any possible legal means.’’ With the statement, five of the largest economies of the EU, have signaled their willingness to implement the global effective minimum tax unilaterally if no agreement is reached among all Member States, putting pressure on Hungary that persists in its veto.

The statement was made in the margins of the informal meeting of the Economic and Financial Affairs Council (ECOFIN or the Council) that took place in Prague, Czech Republic on 9-10 September. During their meeting, EU Finance Ministers discussed the development of the European framework for direct taxation to promote economic growth. The statement is illustrative of the wish of Member States to explore ways of cooperating on direct taxation when full unanimity cannot be reached. Investigating such ways of cooperation was an element of the discussion on deepening and diversifying EU cooperation on direct taxation.

On the sidelines of the meeting, Finance Ministers continued discussion on the implementation of the minimum tax rules even though no formal decisions can be taken in informal meetings. Their next formal meeting will be held on 4 October 2022.

Detailed discussion


On 22 December 2021, the European Commission (the Commission) published its proposal for a Directive on ensuring a global minimum level of taxation for multinational groups.Adoption of the Directive requires a unanimous decision by the 27 Member States.

Since the beginning of 2022, negotiations among Member States are ongoing but agreement has not yet been reached. Hungary is currently the only Member State that holds veto on adoption.2 The progress made in the negotiations among Member States on the technical aspects of the Directive are reflected in this latest compromise text (pdf) that was published on 21 June 2022. On 8 September 2022, during the IFA/EU panel at the annual congress of the International Fiscal Association in Berlin, a representative of one of the five Member States which signed the commitment stated that this compromise text will not be subject to any further changes. This step ensures that unilateral implementation by EU Member States does not result in uncoordinated unilateral actions as long as the latest compromise text is respected.

Commitment to minimum tax implementation

On Friday and Saturday, 9-10 September 2022, EU Finance Ministers held an informal ECOFIN meeting in Prague, Czech Republic. On 9 September, France, Germany, Italy, the Netherlands, and Spain published a joint statement on global minimum taxation (pdf) in the sidelines of the informal ECOFIN meeting. The countries are apparently determined to introduce global minimum taxation even if the negotiations on an EU Directive on the topic is currently stalled:

As inflation hits heavily the spending power of our fellow citizens, companies must pay their fair share of the burden to alleviate the impact of the global energy crisis. This is why we reaffirm today our strengthened commitment to swiftly implement the global minimum effective corporate taxation. It is a key lever for further tax justice through a more efficient fight against tax optimization and evasion.

At the June 2022 Ecofin, 26 out of 27 EU member states expressed their willingness to implement this important step towards tax justice, and our first goal remains to gather a consensus. Should unanimity not be reached in the next weeks, our governments are fully determined to follow through on our commitment. We stand ready to implement the global minimum effective taxation in 2023 and by any possible legal means.

In addition, the joint statement also commits to the goal of signing a multilateral convention for the implementation of Pillar One by mid-2023.

The joint declaration ties in with a statement published by the German Federal Government coalition on 4 September 2022. In the third relief package announced by the German Government (pdf) it stated that Germany intends to start introducing minimum taxation nationally:

The Federal Government will now start nationally with the implementation of the internationally agreed global minimum taxation. The tax will lead to additional revenues amounting to billions in the long run.

Informal ECOFIN – discussion on future

On the second day of the informal ECOFIN meeting, Ministers discussed the sustainability of public finances in European countries and the further development of the European framework for direct taxation to promote economic growth and remove obstacles to cross-border investment.

On the second topic, the Czech Council Presidency opened the debate on whether for some of the EU-wide measures taken in the field of direct taxation, a more diverse way of EU cooperation could be considered instead of only considering hard law in the form of Directives. In preparation for the meeting, the Czech Government issued a background paper (pdf) that was meant to facilitate the discussion. With regard to Directives, the Czech Council Presidency sees a risk that this form of legislative action will merely bring small benefits, which would be outweighed by administrative costs for businesses and tax administrations.As no formal decisions are made at informal meetings of ECOFIN, no concrete actions were taken on this agenda item. The discussion was not accessible to the public and no details have been made available on the views expressed by the participants.

Next steps

The Czech Council Presidency is still aiming to reach a unanimous agreement at the EU level on the Pillar Two Directive during one of the upcoming ECOFIN meetings. To the press, the Czech Finance Minister Zbynek Stanjura indicated that the Presidency is negotiating patiently to find a solution “that all Member States can be happy with.” The next formal ECOFIN meeting will take place on 4 October 2022, followed by meetings on 8 November and 6 December 2022.

As indicated, a representative of one of the five Member States stated publicly that the latest version of the compromise text is final and will not change, suggesting that also timelines as described in the compromise text should not change and that this compromise text could be taken as a leading document for coordinated unilateral introduction of Pillar Two.

While no specific follow-up is expected to the discussion on the use of other mechanisms for tax coordination and harmonization in the EU, the EU is already making use of alternative instruments. The Code of Conduct Group continues its existing review and listing process while discussion on revision of its mandate is ongoing.4 Other alternative instruments that are also under consideration include standardized forms and procedures for withholding tax purposes (a proposal expected to be released soon following a public consultation last year) and measures to address the role of enablers that facilitate tax evasion and aggressive tax planning in the EU (public consultation is open until 12 October 2022).


With 26 Member States having committed to adoption of the Pillar Two Directive and with one country blocking, the next weeks will show whether Hungary will be willing to join the consensus.

The public announcement by the five Member States shows a firm commitment to the coordinated unilateral introduction of the global effective minimum tax if Hungary continues to hold its veto.

As influential Member States have reiterated their commitment to Pillar Two and since EU policy makers have stated that the draft compromise text remains unchanged, companies should urgently consider which further steps towards readiness are needed. As the EU compromise text stands, the Income Inclusion Rule would come into effect for fiscal years starting on or after 31 December 2023.

Accordingly, companies should continue to monitor the developments as the Pillar Two policy environment continues to evolve in the coming weeks.


For additional information with respect to this Alert, please contact the following:

EY Société d’Avocats, Paris
  • Jean-Pierre Lieb

Ernst & Young Belastingadviseurs LLP, Rotterdam
  • Marlies de Ruiter

  • Maikel Evers

Ernst & Young Belastingadviseurs LLP, Amsterdam
  • Konstantina Tsilimigka

Ernst & Young LLP (United States), Global Tax Desk Network, New York
  • Jose A. (Jano) Bustos

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.