In October 2021, over 130 jurisdictions reached an agreement on new international tax rules, known as Pillar Two, which introduces a global minimum tax of 15%, potentially increasing global tax revenues by $220 billion and establishing three key rules: the Qualified Domestic Minimum Top-Up Tax (QDMTT), the Income Inclusion Rule (IIR), and the Undertaxed Profits Rule (UTPR).
By 2025, 22 of the 27 EU Member States have implemented the QDMTT, IIR, and UTPR, while five countries, including Estonia and Malta, have opted for a six-year deferral. Notably, the implementation in some countries applies retroactively for 2024, despite obligations under the EU Directive.
Unlike many European nations, the US has not aligned its international tax rules with Pillar Two. In June 2025, the G7 introduced a political agreement that excluded US-parented groups from certain Pillar Two provisions, while the US’s recent tax reform, the One Big Beautiful Bill Act, implemented a distinct minimum tax on foreign income that may be stricter than the Pillar Two framework.
Source Tax Foundation Europe
