Pillar Two — global minimum tax

The OECD/G20 GloBE Model Rules, rule by rule, as agreed by the Inclusive Framework: scope, GloBE Income, Covered Taxes, the Top-up Tax computation, the Income Inclusion Rule, the Undertaxed Profits Rule and the safe harbours.

Reference, not tax advice. Each rule is a computation with a citation, the fiscal years it applies to, and the date its sources were last reviewed. Rules are grouped by the stage of a computation at which they are reached; each keeps a permanent address of its own, so this grouping can change without breaking anything that cites it.

Pillar Two in brief

Pillar Two is a 15% global minimum tax on the profits of large multinational groups, agreed by the OECD/G20 Inclusive Framework as the GloBE Model Rules. It reaches a group with consolidated revenue of EUR 750 million or more in at least two of the four preceding fiscal years, other than its Excluded Entities.

The test is made country by country. For each jurisdiction the group’s Adjusted Covered Taxes are divided by its Net GloBE Income to give an Effective Tax Rate. Where that is below 15%, the shortfall is applied to the profit above the substance-based income exclusion — a return on payroll and tangible assets — to give the Jurisdictional Top-up Tax.

Three charges collect it, in order: a Qualified Domestic Minimum Top-up Tax in the low-taxed jurisdiction itself, then the Income Inclusion Rule on a parent entity, then the Undertaxed Profits Rule as a backstop — order of application.

Safe harbours can remove the full computation for a jurisdiction: the Transitional CbCR Safe Harbour, the QDMTT Safe Harbour, the Simplified ETR Safe Harbour and, from 2026, the Side-by-Side Safe Harbour. The group reports on the GloBE Information Return, due fifteen months after the year end.

86 published of 86 in scope

Common questions

Which groups are in scope of Pillar Two?
MNE Groups with annual consolidated revenue of EUR 750 million or more in at least two of the four fiscal years before the one being tested — the revenue threshold. Governmental entities, pension funds, non-profits and investment funds at the top of a group are Excluded Entities.
How is the Pillar Two effective tax rate calculated?
Adjusted Covered Taxes divided by Net GloBE Income, for all the group’s entities in a jurisdiction together — the jurisdictional ETR. It is never computed entity by entity or for the group as a whole.
How is top-up tax calculated?
(15% less the Effective Tax Rate) multiplied by (Net GloBE Income less the substance-based income exclusion), plus any Additional Current Top-up Tax, less any Qualified Domestic Minimum Top-up Tax — the Jurisdictional Top-up Tax.
What is the substance-based income exclusion?
A carve-out of 5% of eligible payroll costs plus 5% of the carrying value of eligible tangible assets in the jurisdiction, with higher transitional percentages for fiscal years beginning from 2023 to 2032 — substance-based income exclusion.
What is the difference between a QDMTT, the IIR and the UTPR?
A QDMTT is charged by the low-taxed jurisdiction itself and is credited first. The IIR charges what is left to a parent entity, from the top of the group down. The UTPR allocates anything still uncollected to other jurisdictions by employees and tangible assets — order of application.
What are the three tests of the Transitional CbCR Safe Harbour?
De minimis (revenue below EUR 10 million and profit below EUR 1 million), a simplified effective tax rate of at least the transition rate (15% for years beginning in 2023 and 2024, 16% for 2025, 17% for 2026 and 2027), or profit no greater than the substance-based income exclusion. Meeting any one is enough — Transitional CbCR Safe Harbour.
When is the GloBE Information Return due?
Fifteen months after the last day of the fiscal year, or eighteen months for a group’s Transition Year, and not before 30 June 2026 — filing and notification.
What happens to losses under Pillar Two?
A loss is carried forward through deferred tax: the deferred tax asset counts as covered tax when it reverses, at no more than 15% — deferred tax expense. In a jurisdiction with no corporate income tax the GloBE Loss Election creates a deemed asset of 15% of the loss instead.
Can the top-up tax percentage be more than 15%?
No. Where covered taxes are negative in a profitable year, the negative amount is excluded and carried forward, so the percentage stops at 15% — Excess Negative Tax Expense.
What is the de minimis exclusion?
An annual election that treats the top-up tax of a jurisdiction as nil where the group’s three-year average revenue there is below EUR 10 million and its average income is below EUR 1 million, or a loss — de minimis exclusion.
What is the Side-by-Side Safe Harbour?
For fiscal years commencing on or after 1 January 2026, a group whose ultimate parent is in a jurisdiction with a Qualified Side-by-Side Regime may elect to have its top-up tax treated as nil for the IIR and the UTPR. Domestic minimum top-up taxes still apply — side-by-side and UPE safe harbours.
How does the UAE apply Pillar Two?
Through a Domestic Minimum Top-up Tax under Cabinet Decision 142 of 2024, for financial years starting on or after 1 January 2025 — UAE DMTT scope and computation.

Source documents

Published by the OECD and linked here, not reproduced. The list is kept by hand and was last reviewed on 2026-10-02; the OECD’s own page is the authority on what is current.

Model Rules

Commentary and examples

Administrative Guidance

Safe harbours

GloBE Information Return

Implementation and peer review