Minimum tax for multinationals: France and Germany say they are ready to act without Hungary

France and Germany are ready to move forward without Hungary. In fact, they are part of the group of five European countries that affirmed on Friday their willingness to implement the minimum tax of 15% on the profits of multinationals from 2023. And this, while Hungary blocks the adoption of this reform at the level of the European Union.

“If unanimity is not reached (within 27) in the coming weeks, our governments are (…) ready to implement the minimum taxation in 2023 and by all possible legal means,” declare in a common text the finance ministers of these EU countries, which also include Spain, Italy and the Netherlands.

“A European priority” for Bruno Le Maire

“In Germany we have made the decision to implement the minimum tax at the national level … if there is no European agreement on this point,” German Finance Minister Christian Lindner said. According to the five countries, corporate minimum taxation worldwide is “a key lever to strengthen tax justice through a more effective fight against tax avoidance and evasion.”

Transposition to European law blocked

Budapest blocks the transposition into European law of the minimum 15% tax on the profits of multinationals, a historic project approved last year by nearly 140 countries – including Hungary – under the auspices of the OECD, after five years of debate.

The unanimous vote of the 27 member countries is necessary to validate the directive prepared by the European Commission. It had first been blocked for months by Poland, which finally raised its opposition. But Hungary, which had agreed in a vote in early April, vetoed it in June, citing the impact of the war in Ukraine on the economy.

Budapest is suspected of pressuring the EU to give the green light to its recovery plan, endowed with 7.2 billion euros in subsidies, still blocked by an insufficient fight against corruption.

The global minimum tax is only one part (known as pillar 2) of the OECD agreement. The first pillar, which is especially aimed at digital giants, provides for the taxation of the companies where they obtain their profits in order to put an end to certain tax evasion practices. It requires an international agreement that is not yet finalized.