Redesigning the international tax system

14 June 2021

The recently announced G7 deal is a sign that the world is moving towards a new consensus for the taxation of cross-border business.

Globalization and digitalization have fundamentally changed the ways in which cross-border business is conducted, presenting a challenge to the efficacy of international tax rules which were designed nearly a century ago. 

Negotiations on the future taxation of multinational enterprises (MNEs) are currently focused on changing the taxing rights exercised by countries where MNEs are established (headquarter jurisdictions) and in the countries where they operate (market jurisdictions). This approach, adopted at the recent G7 meeting, reflects the OECD’s work on the Pillar One and Pillar Two proposals.  

With the potential for radical reform of the international tax rules on the horizon, we wanted to share this summary, which we have prepared together with tax partners at leading firms from eight key European jurisdictions. As well as explaining the proposed changes, the note reviews related developments in corporate tax policy across a number of European countries.

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This article was written in conjunction with Arendt, Arthur Cox, Chiomenti, Cuatrecasas, Gide, Gleiss Lutz and Homburger.