EU leaders weigh changes to global tax deal to placate trump administration
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EU governments are considering amending their implementation of a global tax deal to exclude the U.S., aiming to appease Donald Trump’s administration after his withdrawal from the agreement upon taking office for a second term.
The landmark 2021 deal, brokered through the OECD and signed by nearly 140 countries, introduced a 15% global minimum tax on multinationals with revenues over €750 million. It sought to curb tax avoidance by ensuring companies pay fair taxes where they operate. Around 40 countries — including most EU members — have already adopted the rule.
While the U.S. helped negotiate the deal, it never implemented it. Trump’s new administration has gone further, launching a review of foreign tax rules that may “disproportionately affect American companies.” Central to their objections is the “undertaxed profits rule,” which allows a country to collect top-up taxes on profits if the company’s home country fails to impose the minimum rate.
This rule, set to take effect next year, is critical for enforcing the deal globally. Critics warn that by pushing to exclude the U.S. from this provision, Washington risks unraveling the agreement’s integrity.
“The U.S. is trying to undermine the whole structure,” said Quentin Parrinello of the EU Tax Observatory.
