The EU Minimum Tax Directive—A conceptual discussion of a bold policy move

Abstract The century old international tax system is in the middle of being rebuilt. In the ongoing multilateral efforts to reform international taxation to better accord with the challenges imposed by digitalisation and globalisation, the EU has taken in very active role. In the end of 2022, this has resulted in the adoption of the Minimum Tax Directive (2022/2325), which obliges EU Member States to implement the soft‐law compromise achieved at the level of the OECD and the Inclusive Framework on Global Anti‐Base Erosion (GLoBE) Model Rules. Particularly against the background of the EU's traditional reluctance to become active in this area, the author aims to contextualise this remarkable policy step in EU economic policy. The author demonstrates that implementing minimum taxation rules in the form of a legally binding and enforceable directive is, in principle, the proper thing to do in a setting characterised by heterogeneous interests of states and high tax competitive pressures. However, the institutional framework governing the implementation of the directive and its future development is not viable. Unanimous decision‐making in the Council under Article 115 TFEU risks locking Member States into a specific version of an international soft law compromise, which continues to evolve outside the EU, without any guarantee that Member States will maintain consistent positions in this context. This reinforces the need for a serious debate on the adequacy of Article 115 TFEU as a legal basis for direct tax harmonisation.