The idea was to have a fairer distribution of the wealth generated by the largest companies in the world. Donald Trump’s idea is different
First iPhones and iPads get more expensive, then Teslas prices rise to the pike and in the end we even have to pay more for services like Spotify or Netflix. Tariffs have appeared as the big problem that the United States of America (USA) present to the European Union, but the discreet exit from a global agreement that provided for the taxation of large multinationals may have a longer long -term effect.
Among the various executive orders he signed on the night of January 20, the day he took office as 47th President of the, decided to remove the country from the global political agreement made by the organization for Economic Cooperation and Development (OECD), and which provided for a minimum rate of 15% for all companies that generate annual business volumes equal to or greater than 750 million euros.
The idea is a fairer distribution of the wealth generated, as large companies from being able to find forms of fiscal award and thus gain competitive advantages in the market. This was what happened in the Republic of Ireland, where Apple had a business structure to be able to operate near the European market, but without paying the fees that other European Union Member States required.
Dublin gave a more advantageous fiscal regime to the American giant, but Brussels was in cases of such cases – so much so that Apple was ordered to pay a fine of 13 billion euros in compensation for taxes that did not pay on community soil – and , driven by France and Germany, decided to create a universal tax.
João Ochôa, a professor and researcher at the Institute of Austrian and International Fiscal Law at the University of Vienna, explains to CNN Portugal that none of the companies that already have physical business in Europe, such as Apple, for example, will leave European soil. Not only because it would be too expensive, but because the tax would eventually apply to it, since the compensation logic always works – “is the beauty of this system,” says the supervisor. In practice, and in a hypothetical exercise, if Apple pays 15% of taxes in Portugal and pay only 10% in the United States, the company will have to distribute the money that is missing in the United States to reach 15% to all countries where It is forced to comply with the rules. The point is that Apple can leave Portugal, of course, but it will not leave Canada, Japan, Australia or all other countries that ratified the agreement.
Instead of seeing companies leave, what Europe can see is a two -way price increase: multinationals will push with a final price climb, justifying this with the rise of taxes; The European Union may increase the rates of US products in a retaliatory logic that would give rise to a trade war with unpredictable consequences, especially for a European economy that is far from its peak and depends much on US consumption. For now this decision seems only a threat, in what João Ochôa sees as an attempt by Donald Trump to extend the current regime, in which the United States has not yet entered, which still gives freedom to its companies.
“Europe is a bit of a stalemate,” admits the expert, noting that Portugal was from the last countries to transpose the European directive to national law, which is explained by the political crisis that overthrew the government of António Costa, but also by a “Passive posture” of Portuguese politicians.
Employment, costs … Europe waiting to know
Without the real possibility that US companies leave all countries that have signed this agreement, Donald Trump can turn inside and take a law aimed at protecting US companies.
It is – which has the title “duplicate tax rates of citizens or companies from certain foreign countries – and that the now president mentioned in the statement entitled.” The Treasury Secretary, in consultation with the Secretary of Commerce and the Commercial Representative From the United States, it will investigate whether a foreign country applies to citizens or companies in the United States discriminatory or extraterritorial taxes under the 891 section of the United States Code, ”can be read in a sentence that can almost be seen as a threatens similar to “all who tax us will be taxed to bend.”
João Ochôa says this means that the president of the United States can, if he understands that there is that kind of violation in the logic of US interests, order the application of fees to double to companies in the countries that Trump management understands that they are undermining national interests.
The same expert states that this would be a “brutal retaliation for European companies,” which could have to pay double from 15% to 30% in the United States. In a European Union scenario in downstairs (0.9% in 2024, 1.5% in 2025 and 1.8% in 2026, according to forecasts, which are still worse for the eurozone), the effect that it Type of measure would be devastating.
Let us think of the German case, the largest economy in the European Union, but it has been following in recession for two years with a serious car crisis, but not only. According to, the United States was the main destination of German exports in November 2024, the last of which there is discriminated data. A turnover that meant 14 billion euros in a single month, and of which most were cars of brands such as Volkswagen or BMW.
According to those of the leading German automotive manufacturer, the first three quarters of 2024 accounted for 1.5% of the brand in the US market. A volume that translates into the delivery of 769,000 vehicles out of a total of 11.8% of all exports. And yet the brand is in crisis, with thousands of dismissal and a great threat to its future. Now, looking at Portugal, think about what would be companies like Autoeuropa, which depend on Volkswagen to continue to exist.
“It is nonetheless scary. Of course this will make the European operation more expensive in the United States if it goes ahead. Then prices increase in US companies and, as a result, in European companies in the US, ”warns João Ochôa.
“If this climbs, everyone loses. There is a reduction in trade, at the end of the day they lose Americans, who pay more to import, lose Europeans, who pay more to export, lose companies because they are more taxed, ”laments João Ochôa.
Continuous, and in a pessimistic but highly possible scenario, European companies stop selling so much, generating less business volume and creating even more difficulty in being able to grow. This leads to even more dismissals and a crisis announced in the European Union at the economic level. In addition to this, and as the “consumer suffers twice”, we began to pay more for the products that the United States market here, in a pre-war logic, beyond the trade war.
“The market reduction of European companies in the United States is expected. In terms of competitiveness, the United States becomes a kind of fiscal paradise in which less taxation applies than in the rest of the world, with the competitive position of Europe to be impaired in the medium term, ”says the university professor.
And, in a more future logic, there is yet another consequence: any company that now comes up in the United States will have great reticence to put themselves in Europe, as it will not be taxed on the OECD Law.
Let’s tax the multinationals
The source of all this is the idea of taxation of the digital economy, with the OECD to launch, in 2013, the so -called base erosion and profit transfer (known as beps), that the European Union tries to implement since 2013, making its own Intent with the 2018 Digital Service Act (STD), where a way to tax not only performance, but conventional, but the volume of business was sought.
Arriving at the US presidency in 2017, Donald Trump did not find a joke to what the 27 were trying to do, and soon began to directly threaten France, namely by the direct application of tariffs on products such as wine and cheese.
Trying to reach an agreement, the OECD was based on a political understanding based on two pillars, the second being the most relevant, and also the one that Donald Trump now calls into question.
It has come to the conclusion that it has to remain the state of residence, where is the company’s mother, having jurisdiction and leading the largest tax slice. But it was also concluded that it was necessary to share this “cake” with the rest of the world.
“[A OCDE] It aimed to create a minimum tax in internal legislation that applied to multinationals, such 15%. In pillar 2 we look at the group, we see on the one where jurisdictions apply the rules of Pillar 2 and where jurisdictions there is taxation below 15% (determined according to the rules created by the OECD) and in case the taxation in a Jurisdiction is below 15% one of the jurisdictions where the multinational has activity that has these rules will end up tax, ”says João Ochôa.
Let’s get in the case of the goal, for example, that operates Facebook, Instagram and WhatsApp. If one of those companies that are under the conglomerate hat will not pay taxes, the goal has to pay them in the various countries where it operates.
If Apple, which is headquartered in California, then has a company in Ireland and a subsidiary of this second in the Netherlands, the Netherlands will have to look at chain companies, for example.
The OECD regime wants to apply, and Portugal has transposed to the law at the end of 2024, says that the Netherlands will receive everything that is not taxed in Ireland. That is, if Apple pay 10% in the United States and 12.5% in Ireland, it will have to pay the 15% in the Netherlands and even distribute what has not paid to other countries to the Dutch regime. In practice, everything that does not pay in a country is distributed in compensation to those where the regime is applied.
It is the so -called insufficiently taxed profit rule (UTPR, in the original acronym), and that “Potadia Donald Trump”, as João Ochôa says. It is a rule that allows a country to increase taxes on a company if this company is part of a company larger than less than the minimum 15% proposed by the OECD. The Netherlands could thus apply more taxes to Apple’s subsidiary because Apple “mother” does not pay what is established.
A rule that upset Donald Trump, but was even inspired by an idea created by the Republican in 2017. We talk about the undeniable global performance (the Americans call it GIs), and which is a special form that the United States calculate how many foreign earnings It has an American company, then ensuring that it pays as little tax as possible.
“The European Commission had been trying to create a European tax system, a European IRC, and this is a very close thing about it. There was a veto dance between Hungary and Poland, but those who were trying to press the European Union countries to adopt Pillar 2, as well as France and Germany, was the secretary of the US Treasury Janet Yellen (Biden Administration), who made several trips to Hungary and Poland, until the European Union approved the rule, ”explains João Ochôa.
This is thus another reversal of Donald Trump to what was left by the previous administration.
NOTE: João Ochôa, assistant professor and researcher at Global Tax Policy Center at the Vienna University and International Institute of Austrian and International Fiscal Law and Business (WU) spoke personally and his opinion does not bind to the university
