Cross-border Tax Talks

Pillar Two: A German Perspective

Doug McHoney, PwC’s International Tax Services Global Leader, is at PwC’s Global Transfer Pricing Conference in Berlin, Germany. Doug honors Ocktoberfest by donning lederhosenis to host Arne Schnitger, PwC International Tax Partner based in Berlin. Arne hosts the German tax podcast Frisch Serviert - der Steuerpodcast. They discuss Pillar Two issues in the EU, the US, and Germany, the differences approaches each jurisdiction takes when calculating the tax, the US book minimum tax, GILTI, refundable credits, allocation of expenses, the German implementation process, tax return filing, operational readiness, German anti-hybrid rules, and German Section 49.

Timestamps:

• 5:30: Germany, Spain, Italy, the Netherlands and France released a joint statement on Pillar Two. What did they announce?
• 7:50 - German draft Pillar Two rules may be released in the last quarter of 2022 or the first quarter of 2023. How does the German legislative process work?
• 9:45 - When would the income inclusion rule (IIR) and undertaxed payment rule (UTPR) be effective in Germany?
• 14:50 - It was projected that if we didn’t get unanimity on the EU directive, then there would be a discussion on enhanced cooperation. How has Germany’s perspective changed when it comes to enacting Pillar Two?
• 18:10 - What are the realities for taxpayers as jurisdictions begin to enact legislation and their rules begin to deviate from the model rules as we saw in the first iteration of BEPS.
• 23:05 - Does Arne anticipate Germany implementing the QDMTT?
• 23:40 - What we’ve learned is that whether you start with the modeling or the compliance, the Pillar Two question starts with operational readiness. Do companies have the resources and data?
• 27:50 - What is Section 49 in German law and where are we?
• 33:30 - What can we expect in the near-term as we wait for Germany to release anti-hybrid related decrees?

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