CFE Opinion Statement calling for a temporary pause application extra-territorial rules under Pillar Two
Opinion Statement FC 2/2025
CFE Tax Advisers Europe has published an Opinion Statement calling for a temporary pause in the application of the extra-territorial rules under the EU Minimum Tax Directive—specifically the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR)—on the basis of Article 32 of the Directive.
Executive Summary
- Global implementation of Pillar Two has stalled, with key trading partners such as the US, China and India yet to adopt the measures.
- EU groups face a competitiveness disadvantage, being disproportionately subject to IIR and UTPR compared to non-EU counterparts.
- A temporary pause via Article 32 would reduce the IIR and UTPR rates to 0% for a defined period, pending a coordinated international solution.
- Existing domestic minimum taxes (QDMTTs) would still secure the 15% floor, preserving the integrity of the EU regime.
- CFE urges the European Commission and Council to adopt this approach as a matter of legal feasibility and economic necessity.
