23 January 2025

Global equalization tax – rules from 2025

Since the beginning of 2025, the provisions on the global equalization tax have been in force in Poland.

The change with global equalization tax is the result of the adoption of Council Directive (EU) 2022/2523, the aim of which is to provide a global minimum tax rate for international groups of enterprises and large domestic groups in the EU, applicable from 1 January 2024.

According to the Directive, the minimum tax will apply to capital groups whose consolidated annual revenues exceed EUR 750 million. If the effective tax rate of the group in any jurisdiction is lower than 15%, the group will be required to pay the global minimum tax to make up the difference.

Global equalization tax – who qualifies?

The basis for determining whether an entity is within the scope of the minimum tax (meets the EUR 750 million threshold) remains the accounting data from the consolidated financial statements of the MNE.

The main purpose of the Directive is to implement the OECD Global Anti-Base Erosion (GloBE) principles throughout the EU. These rules aim to ensure that tax rates in participating jurisdictions do not fall below a minimum threshold, thereby reducing the incentive for MNEs to shift profits to low-tax regions.

Effective tax rate

The effective tax rate of an MNE or large domestic group is calculated, provided there is qualifying net income in the jurisdiction, as follows:

Adjusted qualifying taxes of constituent entities
[divided by]
Qualifying net income of constituent entities

To calculate the equalization tax in a given jurisdiction, start by multiplying the excess profit by the equalization tax percentage. This percentage is determined by subtracting the effective tax rate (ETR) calculated for the jurisdiction from the minimum rate of 15%.

The ultimate aim of the Directive is to create a “level playing field” for tax competition, meaning that tax rates will be harmonized at a minimum level of 15%. This will reduce the importance of tax rates as a factor in investment decisions, as jurisdictions with lower tax rates will no longer offer significant advantages for investment.