The OECD released a new package of Pillar 2 documents

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On 15 January 2025, the OECD released a new package of documents including (i) the central record of legislation with qualified domestic rules, (ii) additional Administrative Guidance, and (iii) an updated version of the GloBE Information Return (GIR), the XML scheme/user guide and a Multilateral Competent Authority Agreement. 

List of legislations with a Transitional Qualified Status

• The central record of legislation with qualified domestic rules includes a list of jurisdictions with a Qualified Income Inclusion Rule (IIR) and a list of jurisdictions with a Qualified Domestic Minimum Top-up Tax (QDMTT) that qualify for the QDMTT Safe Harbour. The list includes Belgium, Germany and the UK, amongst others. These lists will be updated regularly in the future.
• The QDMTT Safe Harbour prevents MNE Groups from making the Pillar 2 calculation twice, i.e. once on jurisdictional level (according to the QDMTT rules) and once on a more global level following the general GloBE rules charged under the Income Inclusion Rule (IIR) or Undertaxed Profits Rule (UTPR) if the jurisdiction has such a Transitional Qualified Status (assuming the switch-off rule does not apply). 
• Please note that this status is temporary and will remain in effect until a full legislative review has been performed through a peer review.
• In addition, the OECD also updated the Q&A with respect to the Qualified Status under the Global Minimum Tax.

Administrative Guidance

• Article 9.1 of the GloBE Model Rules excludes certain deferred tax expenses for purposes of computing an MNE Group’s simplified ETR for the Transitional CbCR Safe Harbour and the Pillar 2 ETR under the full calculations.
  • As a principle, deferred tax assets or deferred tax liabilities that exist at the moment a taxpayer enters the Pillar 2 rules, can be taken into account for the Pillar 2 calculation if these assets or liabilities are disclosed or recognised in the financial accounts for the Transition Year (i.e. the first year in scope of Pillar 2). 
  • However, certain deferred tax expenses attributable to deferred tax assets or deferred tax liabilities shall be excluded if they relate to items excluded from GloBE and generated in a transaction that takes place after 30 November 2021 (even though they are reflected or disclosed in the financial accounts for the Transition Year).
  • Transactions are to be interpreted broadly, also covering arrangements with a General Government, for example, where an arrangement provides the taxpayer with a specific entitlement to a tax credit or other tax relief (e.g. a tax basis step-up) that does not arise independently of the arrangement. 
  • The guidance contains a Grace Period under which the deferred tax expenses excluded on the basis of the above rule (subject to a Grace Period Limitation of 20% of the total ‘tainted’ recast deferred tax asset) can be included in the respective calculations. This Grace Period Limitation does not apply to deferred taxes resulting from elections, changes in the law, accounting methodology or the terms of the arrangement after 18 November 2024.
• Art. 8.1.4 and 8.1.5 of the GloBE Model Rules anticipated the development of a standardised template for the GloBE Information Return (GIR). 
  • The guidance rephrases the commentary to refer to the updated GloBE Information Return (see below). 
  • In principle, the GloBE Model Rules should be used for determining the GIR data points. This ensures that the data points in the GIR are completed based on a single basis (i.e. a single source of information).

GloBE Information Return (GIR), the XML scheme/user guide and a Multilateral Competent Authority Agreement

• The initial version of the GloBe Information Return (GIR), published in 2023, required several updates to reflect amongst others the additional guidance that was published in December 2023 and June 2024. 
• An updated version of the GloBE Information Return (GIR) has now been published:
  • The GIR includes a general section that applies to the MNE Group as a whole (i.e. identification of the filing entity and corporate structure) and multiple jurisdictional sections (i.e. safe harbour information and details on the ETR computation, if applicable). The jurisdictional section is based on a single template that should be filled in for every jurisdiction where the MNE Group operates.
  • An entity is not required to file the GIR locally if a GIR is filed by the Ultimate Parent Entity or Designated Filing Entity that has a Qualifying Competent Authority Agreement in effect with the respective jurisdiction. Annex B includes a notification template for jurisdictions to gather information regarding the entity that submitted the GIR.  
  • Annex C describes the common understanding on penalty relief for the first years during which the GloBE rules come into effect.
• The GIR XML Schema and User Guide reflect the content and structure of the GIR in a common electronic format.
• The GIR Multilateral Competent Authority Agreement (MCAA) and the related Commentary set out the conditions and modalities to qualify as a Qualifying Competent Authority Agreement for the automatic exchange of GIR information. 

For more details, please join our international tax webinar on OECD Pillar 1 and Pillar 2: Preparing for the Next Phase of Implementation on 6 February 2024 or reach out to your regular contact person or Pieter Deré (pieter.dere@pwc.com), Evi Geerts (e.geerts@pwc.com) or Koen De Grave (koen.de.grave@pwc.com).

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