Representatives of 147 countries have agreed on key elements of a global minimum tax. This is intended to reduce the incentives for multinational corporations to shift profits to low-tax havens. This was announced by the Organization for Economic Cooperation and Development (OECD). However, the agreement provides an exception for US companies. The rules don’t apply to them.
The special treatment of American corporations provoked resistance in Germany. The finance ministers of the Union-led federal states called for the suspension of the global minimum tax in December. It does not create a fair environment if it is only implemented by some countries. Germany implemented the agreement.
Their basic idea is that multinational companies (usually with a turnover of more than 750 million euros) pay at least 15 percent taxes globally – no matter where they book their profits. A company that effectively pays five percent tax on its profits in a country will be asked to pay additional money – through three possible mechanisms: The low-tax country can collect the difference itself up to 15 percent. Then the money stays in the country. The country in which the parent company is based can recover the difference if a subsidiary abroad pays too little. If that doesn’t work, other countries can increase the group’s tax payments up to the minimum tax and distribute the proceeds among themselves.
Biden promoted the agreement, Trump torpedoed it
In addition to Germany and France, active supporters of this agreement also included the USA under the Biden administration. However, President Donald Trump ended US participation by government decree on his first day in office. The agreement, known as Pillar Two of the OECD/G20 “Inclusive Framework,” has no impact on U.S. corporations, according to Bessent. However, America’s multinational companies are subject to a national minimum tax, which, according to tax experts, gives companies greater leeway. Trump had threatened tariffs and “revenge taxes” on foreign companies in the USA if US corporations were subjected to additional burdens by foreign tax administrations. “This deal risks nearly a decade of global progress on corporate taxation – only to allow the largest and most profitable American companies to continue parking profits in tax havens,” said Zorka Milin, policy director at Fact Coalition, a tax transparency nonprofit.
Other major countries that have not yet implemented the rules include China and India, each of which also does not have a national minimum tax. Researchers at the University of Mannheim and the Tax Foundation Europe therefore come to the conclusion that the agreement primarily disadvantages European corporations. This emerges from an essay published in November 2025 by the Mannheim Center for Economic Research. “Our estimates show that the additional costs for affected European companies amount to 1.2 billion to 2.0 billion euros.”
EU countries have to fear for the competitiveness of their companies
According to the scientists, the problem with the regulation is “geographical asymmetry”. What this means is the following: Low-tax countries collect additional taxes because they have an incentive to increase the effective tax burden of the companies operating in their country to 15 percent before other countries access the profits. High-tax countries, on the other hand, are unlikely to generate any additional revenue, according to the calculations. They even lose out because companies generally book the significant compliance costs in the country where the parent company is based. And these are usually high-tax countries.
“This raises the question of why high-tax countries – like the majority of EU member states – should support policies that have such negative consequences for the competitiveness of their multinational companies and for their budget revenues,” the researchers write. They also warn that the Pillar Two project could replace global tax competition with less transparent subsidy competition – with the result that state budgetary leeway could also shrink.
