The Council Directive (EU) 2022/2523, adopted on 14 December 2022, establishes a framework to ensure a global minimum level of taxation for multinational enterprise (MNE) groups and large-scale domestic groups within the European Union. The directive mandates member states to implement rules that impose a top-up tax for those entities whose effective tax rates fall below 15%, thereby addressing aggressive tax planning and profit shifting to low-tax jurisdictions. It includes provisions for an Income Inclusion Rule (IIR) and an Undertaxed Profit Rule (UTPR) aimed at creating a fairer tax environment, while also providing specific thresholds and exclusions for smaller entities and designated organisations.

This regulatory framework is designed to provide clarity and consistency across member states' tax systems, facilitating legal certainty for corporations operating within the EU. The directive outlines compliance requirements including the filing of tax information returns and incorporates measures for transitional relief during the implementation phase to mitigate any financial burden on newly affected entities.