The European Commission (EC) has initiated legal proceedings against Spain, Cyprus, Poland, and Portugal for failing to meet the deadline to introduce a minimum corporate income tax rate.
According to the EU directive, all member states were required to adopt a minimum 15 percent corporate tax rate by the end of 2023, but these four countries have yet to announce the necessary legislation.
The delay comes amid repeated warnings from the European Commission which Eurosceptics say is interfering in national affairs, although Brussels will claim it has jurisdiction in line with single market rules.
In May, the Commission issued formal warnings to Spain, Cyprus, Poland, Portugal, as well as Latvia and Lithuania, giving them two months to comply with the directive. While Latvia and Lithuania have since taken steps to address the issue, the other four countries have yet to fully implement the required measures.
Spain has made some progress, having submitted a draft law to parliament in June 2024. The Spanish government’s proposal aims to align with the EU directive, applying a minimum tax rate to companies with annual revenues exceeding €750 million. Despite Spain’s current corporate income tax rate of 25 percent, various loopholes allow many companies to pay less, making the introduction of the minimum tax critical for enforcing fairer taxation.
The European Union’s move to standardize corporate taxation is part of a broader global effort to combat tax avoidance, led by the OECD. At the start of 2024, the OECD anticipated that governments would raise between $155 billion and $192 billion in additional corporate tax revenue annually — a 6.5 percent to 8.1 percent increase. However, this estimate was a reduction from the earlier projection of $220 billion, reflecting the challenges of implementing such measures worldwide.
