Suspension and Simplification of the Global Minimum Tax
Preventing competitive disadvantages for the European businesses
Global Minimum Tax is Questioned
July 2025
Since its inception, the BDI has constructively participated in the discussion on the global minimum tax and supported the OECD's efforts to establish a "global level playing field" and therefore minimize taxinduced distortions of competition. However, the global minimum tax has evolved into an overly complex bureaucratic burden. It imposes a significant administrative burden on taxpayers and presents tax authorities with an almost unmanageable enforcement challenge, especially in light of their limited resources. It is therefore not surprising that some state tax authorities, as well as Chancellor Merz, have openly called for a suspension of the minimum tax.
The G7's June 2025 agreement to exclude U.S. companies from the global minimum tax must be implemented without delay. However, this effectively undermines the foundation of the minimum tax. Without U.S. participation, the tax loses its global character, primarily resulting in competitive disadvantages for Germany and Europe as business locations. Therefore, we expressly welcome the German government’s clear stance that German companies should not be disadvantaged when other countries depart from the global consensus.
Global Agreement Remains Out of Reach
The original global consensus is clearly no longer intact. This year's actions by the United States have made that abundantly clear. Not only did the U.S. withdraw from the global minimum tax, but it also threatened to retaliate against any country that applies the minimum tax to U.S. companies. India and China have not implemented the global minimum tax either, meaning the vast majority of the global economy now falls outside its scope.
It is primarily the European Union that has mandated the implementation of the global minimum tax through its directive, a step that was already legally questionable in terms of EU competencies and that, in light of shifting geopolitical realities, presents growing strategic challenges
Competitive Disadvantages for the German Economy
Under the G7 agreement, US companies are not subject to the Income Inclusion Rule (IIR) and Undertaxed Profit Rule (UTPR), but rather to existing US regulations, particularly the Global Intangible Low-Taxed Income (GILTI) rule. This creates multiple distortions in the competition landscape. US companies are relieved of administrative burdens, as they have significantly reduced compliance costs for the global minimum tax. In contrast, German and European multinational enterprises in equivalent situations must not only comply with the rules of the global minimum tax, but also with applicable U.S. regulations. Moreover, German companies are additionally required to apply the provisions of Germany’s controlled foreign company (CFC) rules as well as further requirements under the two EU AntiTax Avoidance Directives (ATAD I and II).
Disproportionate Complexity
The global minimum tax is an entirely new tax system based on a new terminology that combines the already complex areas of corporate tax law and accounting in accordance with international standards. The process resulted in a large number of "adjustments," which created a significant administrative burden for taxpayers and tax authorities. In some cases, these adjustments are virtually impossible to comply with. Much of this complexity is unnecessary, and no real simplifications have yet been identified.
In addition, German taxpayers are already subject to the CFC rules under the Foreign Tax Act, which ensure the higher taxation of low-taxed foreign income. They must also comply with the extensive requirements of the EU Anti-Tax Avoidance Directives (ATAD I and II).
Negligible Tax Revenue
Our members consistently assume that the anticipated primary top-up tax under the global minimum tax will not have a material impact on them. The additional tax revenue expected in Germany as a result of the global minimum tax is marginal. The administrative burden on those affected, including taxpayers and tax authorities, is disproportionate to this.
German Business Calls for Action
The objective of a global minimum tax is no longer being achieved in light of current developments in 2025. A response to these developments is now urgently needed. European companies are facing significant competitive disadvantages compared to globally active enterprises from third countries, while the European minimum tax imposes a disproportionate additional administrative burden. The BDI therefore calls for:
1. Suspension of the Minimum Tax
The G7 agreement of late June 2025 to fully exclude U.S. companies from the scope of the global minimum tax must be implemented promptly, but it effectively removes the very foundation of the minimum tax. Germany must therefore, as a first step, advocate at the EU level for a temporary suspension of the EU Minimum Tax Directive, allowing Member States to once again decide independently how to respond to the changed overall situation. Without such a suspension, the competitive position of the German and European economy will continue to deteriorate.
2. Further Simplifications
If the EU fails to take appropriate action, Germany must, as a second step, push for substantial and genuine simplification of the global minimum tax rules. A key priority must be the improvement and extension of the CbCR Safe Harbor, which is currently limited to the end of 2025 and provides critical simplifications. Efforts must also be made to reduce overlapping rules, such as the CFC regime. In addition, redundant provisions that lead to excessive compliance burdens for businesses must be evaluated and eliminated. This applies in particular to the parallel application of the minimum tax and the CFC rules.
3. Collaboration with the OECD
The OECD can and should continue to play a central role. The OECD developed the global minimum tax under different circumstances. However, it no longer aligns with global economic reality.
During the suspension phase, the OECD should further develop the global minimum tax in a way that reflects the changed geopolitical framework conditions, incorporates initial experiences with implementing the rules, and addresses justified points of criticism. This would allow the tax to evolve into a genuine "global minimum tax" one that prevents, rather than creates, distortions of competition. This would align with the OECD's mandate to promote cooperation and economic development among its member states
Imprint
Bundesverband der Deutschen Industrie e.V. (BDI)
Breite Straße 29, 10178 Berlin www.bdi.eu
T: +49 30 2028-0
German Lobbyregister Number: R000534
Transparency Register Number: 1771817758-48
Editorial
Dr. Monika Wünnemann
Deputy Head Tax and Financial Policy
T: +49 30 2028-1507 m.wuennemann@bdi.eu
Tobias Kohlstruck
Senior Manager
T: +49 30 2028-1727 t.Kohlstruck@bdi.eu
Nadine Fetzer
Senior Manager
T: +32 27921012 n.fetzer@bdi.eu
BDI Document number: D 2119