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Italy Implements Global Minimum Taxation Under OECD’s Pillar Two Rules

Italy’s Ministry of Economy and Finance has issued a decree to implement global minimum taxation in accordance with the OECD’s pillar two rules. This decree, issued on July 1 and announced on Wednesday, July 3, includes provisions for the qualified domestic minimum top-up tax (QDMTT).

Italy Implements Global Minimum Taxation Under OECD’s Pillar Two Rules

The QDMTT was initially introduced in Italy through legislative decree number 209 in December of the previous year. This decree also aligned Italy with the pillar two global minimum tax, following an EU Council directive from 2022.

The latest decree ensures that the QDMTT takes precedence over the pillar two income inclusion rule and the undertaxed payments rule, both of which were also established by legislative decree 209. An explanatory note from the ministry stated that the new decree “clarifies the rules for identifying subjects required to pay the tax, the methods of allocating the burden between the subjects belonging to the group and their joint and several liability.”

Cyprus Company Formation

Multinational companies are now required to comply with the OECD’s pillar two agreement, which became effective on January 1. This agreement mandates that multinationals with revenues of at least €750 million ($811.6 million) must pay a minimum effective tax rate of 15% in all the countries where they operate. If a multinational’s profit is taxed below this rate in one country, other nations are authorized to impose a top-up levy.

The OECD Secretariat projected that the global minimum tax would generate an additional $220 billion in revenue annually, representing a 9% increase in global corporate tax revenues.

Despite the expected financial benefits, the implementation of pillar two rules has been described as “extraordinarily complex” by EY global tax policy leader Barbara Angus. She has predicted potential issues with the interpretation and application of these rules.



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