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De minimis exclusion

Applies
FY2024 onwards
Reviewed
Rule
P2-DEMIN-2024.1
By

What is the Pillar Two de minimis exclusion?

By election, top-up tax is nil where average GloBE revenue is under EUR 10 million and average GloBE income is under EUR 1 million or a loss.

Per GloBE Model Rules (Pillar Two), December 2021, Article 5.5, De minimis exclusion

At the election of the Filing Constituent Entity, and notwithstanding the other requirements of Chapter 5, the Top-up Tax for the Constituent Entities located in a jurisdiction is deemed to be zero for a Fiscal Year if the Average GloBE Revenue of the jurisdiction is less than the published revenue limit and the Average GloBE Income or Loss of the jurisdiction is a loss or is less than the published income limit. The averages are taken over the current and the two preceding Fiscal Years, a year with no Constituent Entities with GloBE Revenue or GloBE Losses in the jurisdiction being excluded. The election is an Annual Election and does not apply to a Stateless Constituent Entity or an Investment Entity.

A small-jurisdiction relief. It removes the Top-up Tax for a jurisdiction altogether where the group's presence there is small, but only if the filer elects, year by year.

Two limbs, an average, and an election

5.5.1 — both limbs are required

  • (a) the Average GloBE Revenue of the jurisdiction is less than the published revenue limit
  • (b) the Average GloBE Income or Loss of the jurisdiction is a loss, or is less than the published income limit
  • Each is "less than": a figure exactly at the limit does not meet it

5.5.2 — an average of three years

The average of the current Fiscal Year and the two preceding ones. If there were no Constituent Entities with GloBE Revenue or GloBE Losses located in the jurisdiction in the first or second preceding year, that year is excluded from the average — it is not counted as zero, which would drag both averages down.

5.5.3 — what is averaged

  • GloBE Revenue: the revenue of all Constituent Entities located in the jurisdiction, with the adjustments of Chapter 3
  • GloBE Income or Loss: the Net GloBE Income of the jurisdiction if any, or its Net GloBE Loss

Points the Commentary settles

  • GloBE Revenue is accounting revenue with only those Chapter 3 adjustments that affect revenue — excluded dividends and equity gains, shipping income, transfer pricing — and not the adjustments that are only to expenses
  • A short Fiscal Year is scaled up to a full year before it is averaged
  • A year in which the jurisdiction had only dormant entities, and any year before the GloBE Rules applied, is left out — so in a group's first year the test is on that year alone
  • Minority-Owned Constituent Entities are included in the jurisdiction's averages: they are not tested separately for this purpose
  • Figures of an entity before it was acquired are not counted; figures of an entity later sold stay in the years it was in the group
  • A later recalculation that increases an earlier year's income or revenue can take the exclusion away for that year; one that reduces them cannot grant it retrospectively
  • A group reporting in another currency translates at the average rate for December of the calendar year before the Fiscal Year begins

What the election saves — and what it does not

For an elected jurisdiction there is no need to compute Adjusted Covered Taxes, the Effective Tax Rate or the Top-up Tax. The income and revenue must still be computed, and filing obligations can remain — for instance to track whether an earlier deferred tax liability reversed in time. A jurisdiction that leaves the exclusion later has its Article 9.1 opening attributes taken at the start of the first year the exclusion does not apply.

The election

The exclusion applies at the election of the Filing Constituent Entity and is an Annual Election: made year by year. Meeting both limbs without an election leaves the Top-up Tax to be computed under Chapter 5.

5.5.4 — who it does not reach

The election does not apply to a Stateless Constituent Entity or an Investment Entity, and the revenue and GloBE Income or Loss of those Entities are left out of the averages.

Order of testing

  1. 1

    Inputs requiring your determination

    The current year's figures and both preceding years must be addressed — each with figures, or marked as a year with no Constituent Entities. An undecided election is asked for once the limbs are met, and is never read as a no.

  2. 2

    Average GloBE Revenue and Average GloBE Income or Loss

    Both limbs must be met, each strictly. Revenue exactly at its limit fails; income exactly at its limit fails; a loss meets the income limb however large.

  3. 3

    The annual election

    Where both limbs are met, the Top-up Tax is deemed to be zero only if the election is made.

Examples

Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.

A small jurisdiction, elected

Three years of low revenue and income in a small jurisdiction, with the annual election made.

Computed

The Top-up Tax for the Constituent Entities located in the jurisdiction is deemed to be zero for FY2026 as computed, on the election you indicated: the Average GloBE Revenue of EUR 7,000,000 is less than EUR 10,000,000 and the Average GloBE Income or Loss of EUR 400,000 is less than EUR 1,000,000, as Article 5.5.1 requires, over 3 Fiscal Years. The election is an Annual Election and does not extend to a Stateless Constituent Entity or an Investment Entity. Based on the figures you supplied.

Workings

FY2026 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 8,000,000
FY2026 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 500,000
FY2025 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 7,000,000
FY2025 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 400,000
FY2024 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 6,000,000
FY2024 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 300,000
Average GloBE RevenueArticle 5.5.2 — the average of 3 Fiscal Years. Limb (a): less than the published EUR 10,000,000
EUR 7,000,000
Average GloBE Income or (Loss)Article 5.5.2 — the average of 3 Fiscal Years. Limb (b): less than the published EUR 1,000,000
EUR 400,000
Both limbs metArticle 5.5.1 — both (a) and (b) are required; 1 means met, 0 means not met
1

Decided by the average globe revenue and average globe income or loss

Met, but no election

The same figures where the Filing Constituent Entity does not make the election: the Top-up Tax stays to be computed.

Computed

Both limbs of Article 5.5.1 are met as computed — an Average GloBE Revenue of EUR 7,000,000 and an Average GloBE Income or Loss of EUR 400,000 — but the Top-up Tax is deemed to be zero only at the election of the Filing Constituent Entity, and you have indicated none is made. The Top-up Tax for the jurisdiction therefore stays to be computed under Chapter 5. Based on the figures you supplied.

Workings

FY2026 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 8,000,000
FY2026 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 500,000
FY2025 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 7,000,000
FY2025 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 400,000
FY2024 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 6,000,000
FY2024 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 300,000
Average GloBE RevenueArticle 5.5.2 — the average of 3 Fiscal Years. Limb (a): less than the published EUR 10,000,000
EUR 7,000,000
Average GloBE Income or (Loss)Article 5.5.2 — the average of 3 Fiscal Years. Limb (b): less than the published EUR 1,000,000
EUR 400,000
Both limbs metArticle 5.5.1 — both (a) and (b) are required; 1 means met, 0 means not met
1

Decided by the annual election

A large year offset by two small ones

A current year over the revenue limit on its own, brought under it by the average of three years.

Computed

The Top-up Tax for the Constituent Entities located in the jurisdiction is deemed to be zero for FY2026 as computed, on the election you indicated: the Average GloBE Revenue of EUR 7,333,333.33 is less than EUR 10,000,000 and the Average GloBE Income or Loss of EUR 400,000 is less than EUR 1,000,000, as Article 5.5.1 requires, over 3 Fiscal Years. The election is an Annual Election and does not extend to a Stateless Constituent Entity or an Investment Entity. Based on the figures you supplied.

Workings

FY2026 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 14,000,000
FY2026 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 500,000
FY2025 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 4,000,000
FY2025 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 400,000
FY2024 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 4,000,000
FY2024 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 300,000
Average GloBE RevenueArticle 5.5.2 — the average of 3 Fiscal Years. Limb (a): less than the published EUR 10,000,000
EUR 7,333,333.33
Average GloBE Income or (Loss)Article 5.5.2 — the average of 3 Fiscal Years. Limb (b): less than the published EUR 1,000,000
EUR 400,000
Both limbs metArticle 5.5.1 — both (a) and (b) are required; 1 means met, 0 means not met
1

Decided by the average globe revenue and average globe income or loss

A new jurisdiction

The group first had Constituent Entities here this year, so both preceding years are left out of the average rather than counted as zero — and the single year is over the limit.

Computed

The de minimis exclusion is not available as computed: Article 5.5.1 requires both an Average GloBE Revenue of less than EUR 10,000,000 and an Average GloBE Income or Loss that is a loss or less than EUR 1,000,000. The income limb is met at EUR 500,000, but the revenue limb is not at EUR 12,000,000. The test is on the average of the current and two preceding Fiscal Years, and both limbs are strict. Based on the figures you supplied.

Workings

FY2026 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 12,000,000
FY2026 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 500,000
Average GloBE RevenueArticle 5.5.2 — the average of 1 Fiscal Year; FY2025 and FY2024 left out, there being no Constituent Entities with GloBE Revenue or GloBE Losses in the jurisdiction in those years. Limb (a): not less than the published EUR 10,000,000
EUR 12,000,000
Average GloBE Income or (Loss)Article 5.5.2 — the average of 1 Fiscal Year; FY2025 and FY2024 left out, there being no Constituent Entities with GloBE Revenue or GloBE Losses in the jurisdiction in those years. Limb (b): less than the published EUR 1,000,000
EUR 500,000
Both limbs metArticle 5.5.1 — both (a) and (b) are required; 1 means met, 0 means not met
0

Decided by the average globe revenue and average globe income or loss

A loss-making jurisdiction

Low revenue and a net loss on average: the income limb is met because the average is a loss.

Computed

The Top-up Tax for the Constituent Entities located in the jurisdiction is deemed to be zero for FY2026 as computed, on the election you indicated: the Average GloBE Revenue of EUR 7,000,000 is less than EUR 10,000,000 and the Average GloBE Income or Loss of (EUR 1,266,666.67) is a loss, as Article 5.5.1 requires, over 3 Fiscal Years. The election is an Annual Election and does not extend to a Stateless Constituent Entity or an Investment Entity. Based on the figures you supplied.

Workings

FY2026 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 8,000,000
FY2026 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
(EUR 3,000,000)
FY2025 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 7,000,000
FY2025 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
(EUR 1,000,000)
FY2024 GloBE RevenueArticle 5.5.3(a) — as supplied
EUR 6,000,000
FY2024 Net GloBE Income or (Loss)Article 5.5.3(b) — as supplied
EUR 200,000
Average GloBE RevenueArticle 5.5.2 — the average of 3 Fiscal Years. Limb (a): less than the published EUR 10,000,000
EUR 7,000,000
Average GloBE Income or (Loss)Article 5.5.2 — the average of 3 Fiscal Years. Limb (b): a loss, which meets the limb
(EUR 1,266,666.67)
Both limbs metArticle 5.5.1 — both (a) and (b) are required; 1 means met, 0 means not met
1

Decided by the average globe revenue and average globe income or loss

Try it

Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.

The tested Fiscal Year

The jurisdiction's GloBE Revenue and Net GloBE Income or Loss for the tested year, in euro. Leave out any Stateless Constituent Entity and any Investment Entity. Enter a loss as a negative figure.

The two preceding Fiscal Years

Both years must be addressed. If the group had no Constituent Entities with GloBE Revenue or GloBE Losses in the jurisdiction that year, answer No and leave the figures blank: the year is left out of the average, not counted as zero.

Not computed yet

2 inputs still need your determination:

  • What are the GloBE Revenue and the Net GloBE Income or Loss of the jurisdiction for the tested Fiscal Year — leaving out any Stateless Constituent Entity and any Investment Entity (Article 5.5.4)? Enter a loss as a negative figure.
  • Supply both preceding Fiscal Years. For a year in which there were no Constituent Entities with GloBE Revenue or GloBE Losses located in the jurisdiction, say so and Article 5.5.2 will leave the year out of the average; it is never counted as zero.

Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.

Thresholds

pillar_two.de_minimis_revenue
EUR 10,000,000 · reviewed 2026-10-04 · source
pillar_two.de_minimis_income
EUR 1,000,000 · reviewed 2026-10-04 · source

Threshold values are published separately from the rule and carried with a citation. Where none has been published for the period being computed, the rule reports that rather than applying a default.

Sources

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Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader