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August 9, 2026

Newsletter

The European Post

Policy • Diplomacy • Strategic Insight

LATEST
New EU Gas Market Rules Take Effect With Consumer SafeguardsDeforestation Regulation Holds Its December Deadline Despite CutsDigital Omnibus Delays Europe’s High-Risk AI Deadline to 2027Europe’s Schools Confront a Widening Basic Skills GapRule of Law Report Finds Progress but Trust Still LagsIRIS2 Gains 66 Satellites as Brussels Signs the Rollout DealNature Restoration Plans Come Due as Member States Race a DeadlineECB Rates Hold at 2.25 Percent as Frankfurt Waits on the DataEU Budget Talks Turn to Cohesion as Ireland Takes OverWildfire Response Stretches Europe’s Emergency Fleet ThinCan Europe’s Quantum Plan Match Its Big Ambitions?Armenia Edges West as Moscow’s Grip Slips AwayEurope Inherits the World’s Aid Bill It Cannot Fully PayAir Passenger Rights Get Their First Overhaul in Two DecadesErasmus Opens a 5 Billion Euro Round for Skills and MobilityCeuta Crisis Pushes the EU Toward Faster Migrant ReturnsBulky Parcels Face a Packaging Crackdown From August 12Can Europe Build Its Drone Wall Before 2030 Arrives?Indonesia’s Trade Deal With Europe Nears Its Final SignatureEurope Leans on Beijing to Keep Climate Talks Alive Before AntalyaNew EU Gas Market Rules Take Effect With Consumer SafeguardsDeforestation Regulation Holds Its December Deadline Despite CutsDigital Omnibus Delays Europe’s High-Risk AI Deadline to 2027Europe’s Schools Confront a Widening Basic Skills GapRule of Law Report Finds Progress but Trust Still LagsIRIS2 Gains 66 Satellites as Brussels Signs the Rollout DealNature Restoration Plans Come Due as Member States Race a DeadlineECB Rates Hold at 2.25 Percent as Frankfurt Waits on the DataEU Budget Talks Turn to Cohesion as Ireland Takes OverWildfire Response Stretches Europe’s Emergency Fleet ThinCan Europe’s Quantum Plan Match Its Big Ambitions?Armenia Edges West as Moscow’s Grip Slips AwayEurope Inherits the World’s Aid Bill It Cannot Fully PayAir Passenger Rights Get Their First Overhaul in Two DecadesErasmus Opens a 5 Billion Euro Round for Skills and MobilityCeuta Crisis Pushes the EU Toward Faster Migrant ReturnsBulky Parcels Face a Packaging Crackdown From August 12Can Europe Build Its Drone Wall Before 2030 Arrives?Indonesia’s Trade Deal With Europe Nears Its Final SignatureEurope Leans on Beijing to Keep Climate Talks Alive Before Antalya

Minimum Tax Rules Face a Fresh Fight Over Company Tax Loopholes

Christian Torp
Directive Tracker, Social Affairs and Employment

Milan: In the boardrooms of northern Italy’s exporters, tax directors are following a quiet but consequential argument in Brussels over how far the European Union’s minimum tax should reshape the rest of the rulebook. The dispute pits the promise of a cleaner system against the fear of new loopholes.

The minimum tax, drawn from the OECD’s Pillar Two deal and written into EU law as Directive 2022/2523, sets a floor of 15 per cent on the effective rate paid by the largest multinational groups. Where profits are taxed below that line, governments can levy a top-up charge to claw back the difference, a mechanism designed to blunt the appeal of shifting earnings into low-tax havens.

Its reach is narrow by design. The rules bite only on groups with annual revenue above 750 million euro, which covers barely more than two per cent of the Union’s multinational companies. That leaves the vast majority of firms untouched, and it sharpens the question of how the minimum tax should sit alongside the older anti-avoidance tools already on the books.

Those older tools are now the flashpoint. The Commission has floated a carve-out that would spare companies already caught by Pillar Two from separate controlled-foreign-company rules, which tax profits parked in low-tax subsidiaries abroad. The logic is to avoid taxing the same income twice and to lighten the compliance load on businesses juggling overlapping regimes.

Independent analysts have pushed back. In a policy note published on 20 July, the EU Tax Observatory warned against treating the controlled-foreign-company rules as redundant, arguing that Pillar Two’s high revenue threshold and technical gaps leave plenty of avoidance the minimum tax never touches. Scrap the older safeguards, they caution, and Europe could quietly reopen doors it spent years closing.

The debate lands as the bloc weighs a broader tax agenda. Ministers are still chasing a political deal on a long-delayed overhaul of tobacco excise, pencilled in for an October meeting of finance ministers, while a wider simplification package inches through the machinery without agreement. Each file tests the same tension between easing burdens on business and protecting national revenues.

For Italy’s manufacturers, the stakes are practical rather than abstract. Firms that trade across borders want fewer overlapping rules and clearer obligations, yet they also depend on public investment that leaky tax bases cannot fund. How Brussels balances simplicity against safeguards will shape not only their tax bills but the credibility of a minimum-tax project the Union has staked considerable political capital on.

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