Browse all rules ↓

Jurisdictional Top-up Tax

Applies
FY2024 onwards
Reviewed
Rule
P2-JTUT-2024.1
By

How is Pillar Two top-up tax calculated for a jurisdiction?

The ETR's shortfall below 15%, applied to Net GloBE Income less the SBIE, plus Additional Current Top-up Tax, less any QDMTT payable.

Per GloBE Model Rules (Pillar Two), December 2021, Articles 5.1 and 5.2, Determination of Effective Tax Rate; Top-up Tax

The Effective Tax Rate of the MNE Group for a jurisdiction is the sum of the Adjusted Covered Taxes of each Constituent Entity located in it divided by its Net GloBE Income, that income being the positive amount of the GloBE Income of all such Constituent Entities less their GloBE Losses. The Top-up Tax Percentage is the positive percentage point difference between the Minimum Rate and the Effective Tax Rate. The Excess Profit is the positive amount of the Net GloBE Income less the Substance-based Income Exclusion. The Jurisdictional Top-up Tax is the positive amount of the Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax payable under a Qualified Domestic Minimum Top-up Tax.

The computation itself. Its output is the Jurisdictional Top-up Tax, which Article 5.2.4 then allocates between the Constituent Entities in proportion to their GloBE Income, which Chapter 2 charges to a Parent Entity or to UTPR jurisdictions, and which the de minimis exclusion or a GloBE Safe Harbour can deem to be zero regardless.

Five formulas, in the articles' order

The sequence

  • 5.1.2 — Net GloBE Income = GloBE Income of all Constituent Entities less their GloBE Losses
  • 5.1.1 — Effective Tax Rate = Adjusted Covered Taxes divided by Net GloBE Income
  • 5.2.1 — Top-up Tax Percentage = Minimum Rate less Effective Tax Rate
  • 5.2.2 — Excess Profit = Net GloBE Income less the Substance-based Income Exclusion
  • 5.2.3 — Jurisdictional Top-up Tax = (Top-up Tax Percentage × Excess Profit) + Additional Current Top-up Tax − Domestic Top-up Tax

Four of those quantities floor at zero by their own terms

Net GloBE Income, the Top-up Tax Percentage, the Excess Profit and the Jurisdictional Top-up Tax are each defined as "the positive amount, if any" or "the positive percentage point difference, if any". Dropping any one produces a negative figure that looks like a refund and is not one, so each is applied explicitly and each has its own test.

Points the Commentary settles

  • The Effective Tax Rate is a percentage rounded to the fourth decimal place, and that is the figure measured against the Minimum Rate
  • The Substance-based Income Exclusion is the sum of each entity's exclusion and is not limited by that entity's own income: a loss-making entity's payroll and assets shelter the profit of others in the jurisdiction
  • Additional Current Top-up Tax is worked out before the Domestic Top-up Tax is deducted
  • Where the Domestic Top-up Tax takes the figure to nil, nothing has to be allocated between the entities

The Domestic Top-up Tax is deducted inside the floor

Article 5.2.3(d) deducts the amount payable under a Qualified Domestic Minimum Top-up Tax from the whole expression, and the floor applies to the result. A domestic tax larger than the computed figure leaves nil, never a negative amount carried to a Parent Entity.

Negative Adjusted Covered Taxes — carried forward, not charged at more than the Minimum Rate

Where a jurisdiction has Net GloBE Income and negative Adjusted Covered Taxes, the formula would give a Top-up Tax Percentage above the Minimum Rate. The Commentary makes the Excess Negative Tax Expense administrative procedure mandatory: the negative amount is excluded from the year, the rate is computed on nil taxes, and the amount becomes an Excess Negative Tax Expense Carry-forward. In each later year with GloBE Income and positive Adjusted Covered Taxes, the balance reduces those taxes — not below zero — before the rate is computed. The carry-forward stays with the group even if the entities are sold.

The Domestic Top-up Tax must be payable

The amount deducted is the Qualified Domestic Minimum Top-up Tax accrued for the Fiscal Year, leaving out any amount the group challenges in a judicial or administrative proceeding, or that the tax authority has determined is not assessable or collectible on constitutional grounds, other superior law or a specific agreement such as a tax stabilisation agreement. An amount left out is brought back, for the year it relates to, once it is paid and no longer contested. A domestic tax larger than the GloBE figure does not create a refund or a credit against later years.

No Net GloBE Income is not a rate of zero

Article 5.1.1 computes the rate for a jurisdiction with Net GloBE Income. Dividing by zero is not a rate. That case is reported on its own, and Additional Current Top-up Tax can still arise on it, which Article 5.2.5 contemplates expressly.

5.1.3 — Investment Entities are left out of the rate and the income

The Adjusted Covered Taxes and GloBE Income or Loss of Constituent Entities that are Investment Entities are excluded from both the Effective Tax Rate and the Net GloBE Income.

The Substance-based Income Exclusion — Article 5.3

  • A payroll carve-out and a tangible asset carve-out, computed from the Eligible Payroll Costs and Eligible Tangible Assets of the Constituent Entities located in the jurisdiction
  • Transitional percentages apply under Chapter 9
  • Supplied here as one figure, computed by the reader

What this rule does not do

  • Article 5.2.4 allocates the figure between Constituent Entities in proportion to their GloBE Income
  • Chapter 2 decides who pays it — the Income Inclusion Rule, then the Undertaxed Profits Rule
  • Article 5.5 (de minimis) and Article 8.2 (GloBE Safe Harbours) can deem it to be zero at the Filing Constituent Entity's election
  • Article 5.6 computes Minority-Owned Constituent Entities apart

Order of testing

  1. 1

    Inputs requiring your determination

    The GloBE Income, GloBE Losses, Adjusted Covered Taxes and Substance-based Income Exclusion must all be supplied, in one currency. Enter nil for an exclusion that is not claimed; an unanswered input is never read as nil.

  2. 2

    Net GloBE Income of the jurisdiction

    Where the losses are not less than the income, the Net GloBE Income is nil, no Effective Tax Rate is computed, and any Additional Current Top-up Tax still stands less any Domestic Top-up Tax.

  3. 3

    Effective Tax Rate against the Minimum Rate

    Where the rate is not below the Minimum Rate, the Top-up Tax Percentage is nil and no Top-up Tax arises on the Excess Profit.

  4. 4

    Excess Profit after the Substance-based Income Exclusion

    Where the exclusion is not less than the Net GloBE Income, the Excess Profit is nil and no Top-up Tax arises on it, whatever the rate gap.

  5. 5

    Top-up Tax on the Excess Profit

    The Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax, and not below nil.

  6. 6

    Excess Negative Tax Expense

    Negative Adjusted Covered Taxes in a year with Net GloBE Income are excluded and carried forward; a balance brought forward reduces positive Adjusted Covered Taxes, not below zero, before the rate is computed.

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 rate below the minimum, with excess profit

Constituent Entities with GloBE Income of EUR 500 million, GloBE Losses of EUR 100 million, Adjusted Covered Taxes of EUR 40 million and a Substance-based Income Exclusion of EUR 100 million.

Computed

A Jurisdictional Top-up Tax of EUR 15,000,000 arises for FY2026 as computed: the Effective Tax Rate is 10% — Adjusted Covered Taxes of EUR 40,000,000 over Net GloBE Income of EUR 400,000,000 — which is 5 percentage points below the Minimum Rate of 15%, and that percentage applied to Excess Profit of EUR 300,000,000 (the Net GloBE Income less the Substance-based Income Exclusion of EUR 100,000,000) gives the figure above. This is the jurisdictional figure only. Article 5.2.4 allocates it between Constituent Entities, Chapter 2 decides who pays it, and the de minimis exclusion (Article 5.5) or a GloBE Safe Harbour (Article 8.2) can deem it to be zero regardless. Based on the figures you supplied.

Workings

GloBE Income of all Constituent EntitiesArticle 5.1.2(a) — as supplied
EUR 500,000,000
GloBE Losses of all Constituent EntitiesArticle 5.1.2(b) — as supplied
(EUR 100,000,000)
Net GloBE Income of the jurisdictionArticle 5.1.2
EUR 400,000,000
Adjusted Covered TaxesArticle 5.1.1 — as supplied
EUR 40,000,000
Effective Tax RateArticle 5.1.1 — Adjusted Covered Taxes divided by Net GloBE Income, to the fourth decimal place
10%
Minimum RateArticle 5.2.1 — published value for FY2026
15%
Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less the Effective Tax Rate
5%
Substance-based Income ExclusionArticle 5.2.2(b), determined under Article 5.3 — your figure, not one computed here
(EUR 100,000,000)
Excess ProfitArticle 5.2.2
EUR 300,000,000
Additional Current Top-up TaxArticle 5.2.3(c) — as supplied
EUR 0
Domestic Top-up TaxArticle 5.2.3(d) — as supplied
EUR 0
Jurisdictional Top-up TaxArticle 5.2.3 — the Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax, and not below nil
EUR 15,000,000

Decided by the top-up tax on the excess profit

The same, with a domestic top-up tax

The same figures where a Qualified Domestic Minimum Top-up Tax of EUR 6 million is payable in the jurisdiction, and is deducted.

Computed

A Jurisdictional Top-up Tax of EUR 9,000,000 arises for FY2026 as computed: the Effective Tax Rate is 10% — Adjusted Covered Taxes of EUR 40,000,000 over Net GloBE Income of EUR 400,000,000 — which is 5 percentage points below the Minimum Rate of 15%, and that percentage applied to Excess Profit of EUR 300,000,000 (the Net GloBE Income less the Substance-based Income Exclusion of EUR 100,000,000), after deducting the Domestic Top-up Tax of EUR 6,000,000 gives the figure above. This is the jurisdictional figure only. Article 5.2.4 allocates it between Constituent Entities, Chapter 2 decides who pays it, and the de minimis exclusion (Article 5.5) or a GloBE Safe Harbour (Article 8.2) can deem it to be zero regardless. Based on the figures you supplied.

Workings

GloBE Income of all Constituent EntitiesArticle 5.1.2(a) — as supplied
EUR 500,000,000
GloBE Losses of all Constituent EntitiesArticle 5.1.2(b) — as supplied
(EUR 100,000,000)
Net GloBE Income of the jurisdictionArticle 5.1.2
EUR 400,000,000
Adjusted Covered TaxesArticle 5.1.1 — as supplied
EUR 40,000,000
Effective Tax RateArticle 5.1.1 — Adjusted Covered Taxes divided by Net GloBE Income, to the fourth decimal place
10%
Minimum RateArticle 5.2.1 — published value for FY2026
15%
Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less the Effective Tax Rate
5%
Substance-based Income ExclusionArticle 5.2.2(b), determined under Article 5.3 — your figure, not one computed here
(EUR 100,000,000)
Excess ProfitArticle 5.2.2
EUR 300,000,000
Additional Current Top-up TaxArticle 5.2.3(c) — as supplied
EUR 0
Domestic Top-up TaxArticle 5.2.3(d) — as supplied
(EUR 6,000,000)
Jurisdictional Top-up TaxArticle 5.2.3 — the Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax, and not below nil
EUR 9,000,000

Decided by the top-up tax on the excess profit

A rate at or above the minimum

The same figures with Adjusted Covered Taxes of EUR 80 million, giving an Effective Tax Rate above the Minimum Rate.

Computed

No Top-up Tax arises on the Excess Profit as computed: the Effective Tax Rate of 20% — Adjusted Covered Taxes of EUR 80,000,000 over Net GloBE Income of EUR 400,000,000 — is not below the Minimum Rate of 15% for FY2026, so the Top-up Tax Percentage under Article 5.2.1 is nil, that article defining it as the positive percentage point difference if any. This is the jurisdictional figure only. Article 5.2.4 allocates it between Constituent Entities, Chapter 2 decides who pays it, and the de minimis exclusion (Article 5.5) or a GloBE Safe Harbour (Article 8.2) can deem it to be zero regardless. Based on the figures you supplied.

Workings

GloBE Income of all Constituent EntitiesArticle 5.1.2(a) — as supplied
EUR 500,000,000
GloBE Losses of all Constituent EntitiesArticle 5.1.2(b) — as supplied
(EUR 100,000,000)
Net GloBE Income of the jurisdictionArticle 5.1.2
EUR 400,000,000
Adjusted Covered TaxesArticle 5.1.1 — as supplied
EUR 80,000,000
Effective Tax RateArticle 5.1.1 — Adjusted Covered Taxes divided by Net GloBE Income, to the fourth decimal place
20%
Minimum RateArticle 5.2.1 — published value for FY2026
15%
Top-up Tax PercentageArticle 5.2.1 — nil, being defined as the positive percentage point difference if any
0%
Substance-based Income ExclusionArticle 5.2.2(b), determined under Article 5.3 — your figure, not one computed here
(EUR 100,000,000)
Excess ProfitArticle 5.2.2
EUR 300,000,000
Additional Current Top-up TaxArticle 5.2.3(c) — as supplied
EUR 0
Domestic Top-up TaxArticle 5.2.3(d) — as supplied
EUR 0
Jurisdictional Top-up TaxArticle 5.2.3 — the Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax, and not below nil
EUR 0

Decided by the effective tax rate against the minimum rate

A low rate, but the substance exclusion covers the income

A capital-intensive group with the same low Adjusted Covered Taxes but a Substance-based Income Exclusion of EUR 450 million, which exceeds the Net GloBE Income.

Computed

No Top-up Tax arises on the Excess Profit as computed: the Effective Tax Rate of 10% is below the Minimum Rate of 15%, giving a Top-up Tax Percentage of 5%, but the Substance-based Income Exclusion of EUR 450,000,000 is not less than the Net GloBE Income of EUR 400,000,000, so the Excess Profit under Article 5.2.2 is nil. This is the jurisdictional figure only. Article 5.2.4 allocates it between Constituent Entities, Chapter 2 decides who pays it, and the de minimis exclusion (Article 5.5) or a GloBE Safe Harbour (Article 8.2) can deem it to be zero regardless. Based on the figures you supplied.

Workings

GloBE Income of all Constituent EntitiesArticle 5.1.2(a) — as supplied
EUR 500,000,000
GloBE Losses of all Constituent EntitiesArticle 5.1.2(b) — as supplied
(EUR 100,000,000)
Net GloBE Income of the jurisdictionArticle 5.1.2
EUR 400,000,000
Adjusted Covered TaxesArticle 5.1.1 — as supplied
EUR 40,000,000
Effective Tax RateArticle 5.1.1 — Adjusted Covered Taxes divided by Net GloBE Income, to the fourth decimal place
10%
Minimum RateArticle 5.2.1 — published value for FY2026
15%
Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less the Effective Tax Rate
5%
Substance-based Income ExclusionArticle 5.2.2(b), determined under Article 5.3 — your figure, not one computed here
(EUR 450,000,000)
Excess ProfitArticle 5.2.2 — nil, being defined as the positive amount if any; the exclusion exceeds the Net GloBE Income
EUR 0
Additional Current Top-up TaxArticle 5.2.3(c) — as supplied
EUR 0
Domestic Top-up TaxArticle 5.2.3(d) — as supplied
EUR 0
Jurisdictional Top-up TaxArticle 5.2.3 — the Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax, and not below nil
EUR 0

Decided by the excess profit after the substance-based income exclusion

A 9% jurisdiction whose domestic top-up tax covers the whole figure

A group's entities in a jurisdiction with a 9% corporate tax: Net GloBE Income of EUR 200 million, Adjusted Covered Taxes of EUR 18 million and a Substance-based Income Exclusion of EUR 30 million. A Qualified Domestic Minimum Top-up Tax of EUR 10.2 million is payable there, which leaves nothing for a Parent Entity's Income Inclusion Rule to collect.

Computed

No Jurisdictional Top-up Tax remains for FY2026 as computed: the Effective Tax Rate of 9% is 6 percentage points below the Minimum Rate of 15%, and that percentage applied to Excess Profit of EUR 170,000,000 gives EUR 10,200,000 — which the Domestic Top-up Tax of EUR 10,200,000 payable under a Qualified Domestic Minimum Top-up Tax covers in full (Article 5.2.3(d)). Nothing is left for the Income Inclusion Rule or the Undertaxed Profits Rule to charge; an excess of domestic tax is not refunded or carried forward. This is the jurisdictional figure only. Article 5.2.4 allocates it between Constituent Entities, Chapter 2 decides who pays it, and the de minimis exclusion (Article 5.5) or a GloBE Safe Harbour (Article 8.2) can deem it to be zero regardless. Based on the figures you supplied.

Workings

GloBE Income of all Constituent EntitiesArticle 5.1.2(a) — as supplied
EUR 200,000,000
GloBE Losses of all Constituent EntitiesArticle 5.1.2(b) — as supplied
EUR 0
Net GloBE Income of the jurisdictionArticle 5.1.2
EUR 200,000,000
Adjusted Covered TaxesArticle 5.1.1 — as supplied
EUR 18,000,000
Effective Tax RateArticle 5.1.1 — Adjusted Covered Taxes divided by Net GloBE Income, to the fourth decimal place
9%
Minimum RateArticle 5.2.1 — published value for FY2026
15%
Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less the Effective Tax Rate
6%
Substance-based Income ExclusionArticle 5.2.2(b), determined under Article 5.3 — your figure, not one computed here
(EUR 30,000,000)
Excess ProfitArticle 5.2.2
EUR 170,000,000
Additional Current Top-up TaxArticle 5.2.3(c) — as supplied
EUR 0
Domestic Top-up TaxArticle 5.2.3(d) — as supplied
(EUR 10,200,000)
Jurisdictional Top-up TaxArticle 5.2.3 — the Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax, and not below nil
EUR 0

Decided by the top-up tax on the excess profit

A zero-tax jurisdiction with substance

A regional headquarters in a jurisdiction that charges no corporate income tax: Net GloBE Income of EUR 120 million, no Adjusted Covered Taxes, and a Substance-based Income Exclusion of EUR 20 million from its payroll and offices. The whole Minimum Rate applies, but only to the profit above the exclusion.

Computed

A Jurisdictional Top-up Tax of EUR 15,000,000 arises for FY2026 as computed: the Effective Tax Rate is 0% — Adjusted Covered Taxes of EUR 0 over Net GloBE Income of EUR 120,000,000 — which is 15 percentage points below the Minimum Rate of 15%, and that percentage applied to Excess Profit of EUR 100,000,000 (the Net GloBE Income less the Substance-based Income Exclusion of EUR 20,000,000) gives the figure above. This is the jurisdictional figure only. Article 5.2.4 allocates it between Constituent Entities, Chapter 2 decides who pays it, and the de minimis exclusion (Article 5.5) or a GloBE Safe Harbour (Article 8.2) can deem it to be zero regardless. Based on the figures you supplied.

Workings

GloBE Income of all Constituent EntitiesArticle 5.1.2(a) — as supplied
EUR 120,000,000
GloBE Losses of all Constituent EntitiesArticle 5.1.2(b) — as supplied
EUR 0
Net GloBE Income of the jurisdictionArticle 5.1.2
EUR 120,000,000
Adjusted Covered TaxesArticle 5.1.1 — as supplied
EUR 0
Effective Tax RateArticle 5.1.1 — Adjusted Covered Taxes divided by Net GloBE Income, to the fourth decimal place
0%
Minimum RateArticle 5.2.1 — published value for FY2026
15%
Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less the Effective Tax Rate
15%
Substance-based Income ExclusionArticle 5.2.2(b), determined under Article 5.3 — your figure, not one computed here
(EUR 20,000,000)
Excess ProfitArticle 5.2.2
EUR 100,000,000
Additional Current Top-up TaxArticle 5.2.3(c) — as supplied
EUR 0
Domestic Top-up TaxArticle 5.2.3(d) — as supplied
EUR 0
Jurisdictional Top-up TaxArticle 5.2.3 — the Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax, and not below nil
EUR 15,000,000

Decided by the top-up tax on the excess profit

Negative covered taxes in a profitable year

The first example with Adjusted Covered Taxes of minus EUR 4 million — a deferred tax credit on a permanent difference. The rate is not minus 1% and the percentage is not 16 points: the negative amount is excluded and carried forward, and the Minimum Rate applies to the Excess Profit.

Computed

A Jurisdictional Top-up Tax of EUR 45,000,000 arises for FY2026 as computed: the Effective Tax Rate is 0% — Adjusted Covered Taxes of EUR 0 over Net GloBE Income of EUR 400,000,000 — which is 15 percentage points below the Minimum Rate of 15%, and that percentage applied to Excess Profit of EUR 300,000,000 (the Net GloBE Income less the Substance-based Income Exclusion of EUR 100,000,000) gives the figure above. The Adjusted Covered Taxes are negative, so the Commentary to Article 5.2.1 requires the Excess Negative Tax Expense procedure: EUR 4,000,000 is excluded from the year, the rate is computed on nil taxes so that the percentage does not exceed the Minimum Rate, and the carry-forward to later years is EUR 4,000,000. This is the jurisdictional figure only. Article 5.2.4 allocates it between Constituent Entities, Chapter 2 decides who pays it, and the de minimis exclusion (Article 5.5) or a GloBE Safe Harbour (Article 8.2) can deem it to be zero regardless. Based on the figures you supplied.

Workings

GloBE Income of all Constituent EntitiesArticle 5.1.2(a) — as supplied
EUR 500,000,000
GloBE Losses of all Constituent EntitiesArticle 5.1.2(b) — as supplied
(EUR 100,000,000)
Net GloBE Income of the jurisdictionArticle 5.1.2
EUR 400,000,000
Adjusted Covered TaxesArticle 5.1.1 — as supplied
(EUR 4,000,000)
Excess Negative Tax Expense excluded from the yearCommentary to Article 5.2.1, paragraph 15.3 — the negative Adjusted Covered Taxes are excluded and carried forward; the procedure is mandatory where there is GloBE Income
EUR 4,000,000
Adjusted Covered Taxes used in the Effective Tax RateAfter the Excess Negative Tax Expense administrative procedure
EUR 0
Effective Tax RateArticle 5.1.1 — Adjusted Covered Taxes divided by Net GloBE Income, to the fourth decimal place
0%
Minimum RateArticle 5.2.1 — published value for FY2026
15%
Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less the Effective Tax Rate
15%
Substance-based Income ExclusionArticle 5.2.2(b), determined under Article 5.3 — your figure, not one computed here
(EUR 100,000,000)
Excess ProfitArticle 5.2.2
EUR 300,000,000
Additional Current Top-up TaxArticle 5.2.3(c) — as supplied
EUR 0
Domestic Top-up TaxArticle 5.2.3(d) — as supplied
EUR 0
Jurisdictional Top-up TaxArticle 5.2.3 — the Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax, and not below nil
EUR 45,000,000
Excess Negative Tax Expense Carry-forward to later yearsCommentary to Article 4.1.5, paragraph 21.5 — the balance brought forward, less what was applied, plus any negative Adjusted Covered Taxes excluded this year
EUR 4,000,000

Decided by the top-up tax on the excess profit

The following year, with the carry-forward

The same jurisdiction a year later, with Adjusted Covered Taxes of EUR 40 million and the EUR 4 million Excess Negative Tax Expense Carry-forward brought in. The rate is computed on EUR 36 million.

Computed

A Jurisdictional Top-up Tax of EUR 18,000,000 arises for FY2027 as computed: the Effective Tax Rate is 9% — Adjusted Covered Taxes of EUR 36,000,000 over Net GloBE Income of EUR 400,000,000 — which is 6 percentage points below the Minimum Rate of 15%, and that percentage applied to Excess Profit of EUR 300,000,000 (the Net GloBE Income less the Substance-based Income Exclusion of EUR 100,000,000) gives the figure above. An Excess Negative Tax Expense Carry-forward of EUR 4,000,000 has been applied against the Adjusted Covered Taxes before the rate was computed (Commentary to Article 4.1.5, paragraph 21.5), leaving EUR 0 to carry forward. This is the jurisdictional figure only. Article 5.2.4 allocates it between Constituent Entities, Chapter 2 decides who pays it, and the de minimis exclusion (Article 5.5) or a GloBE Safe Harbour (Article 8.2) can deem it to be zero regardless. Based on the figures you supplied.

Workings

GloBE Income of all Constituent EntitiesArticle 5.1.2(a) — as supplied
EUR 500,000,000
GloBE Losses of all Constituent EntitiesArticle 5.1.2(b) — as supplied
(EUR 100,000,000)
Net GloBE Income of the jurisdictionArticle 5.1.2
EUR 400,000,000
Adjusted Covered TaxesArticle 5.1.1 — as supplied
EUR 40,000,000
Excess Negative Tax Expense Carry-forward appliedCommentary to Article 4.1.5, paragraph 21.5 — the balance brought forward reduces the Adjusted Covered Taxes, not below zero
(EUR 4,000,000)
Adjusted Covered Taxes used in the Effective Tax RateAfter the Excess Negative Tax Expense administrative procedure
EUR 36,000,000
Effective Tax RateArticle 5.1.1 — Adjusted Covered Taxes divided by Net GloBE Income, to the fourth decimal place
9%
Minimum RateArticle 5.2.1 — published value for FY2027
15%
Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less the Effective Tax Rate
6%
Substance-based Income ExclusionArticle 5.2.2(b), determined under Article 5.3 — your figure, not one computed here
(EUR 100,000,000)
Excess ProfitArticle 5.2.2
EUR 300,000,000
Additional Current Top-up TaxArticle 5.2.3(c) — as supplied
EUR 0
Domestic Top-up TaxArticle 5.2.3(d) — as supplied
EUR 0
Jurisdictional Top-up TaxArticle 5.2.3 — the Top-up Tax Percentage applied to the Excess Profit, plus any Additional Current Top-up Tax, less any Domestic Top-up Tax, and not below nil
EUR 18,000,000

Decided by the top-up tax on the excess profit

Losses exceed income, with an additional current top-up

A loss-making year with no Net GloBE Income, where a recalculation under Article 5.4.1 has produced Additional Current Top-up Tax of EUR 3 million.

Computed

No Effective Tax Rate is computed: Article 5.1.1 calculates it for a jurisdiction with Net GloBE Income, and the Net GloBE Income here is nil — Article 5.1.2 defines it as the positive amount if any, and the losses of EUR 120,000,000 are not less than the income of EUR 80,000,000. A Jurisdictional Top-up Tax of EUR 3,000,000 still arises from the Additional Current Top-up Tax under Article 5.2.3(c), which Article 5.2.5 contemplates where there is no Net GloBE Income for the year. This is the jurisdictional figure only. Article 5.2.4 allocates it between Constituent Entities, Chapter 2 decides who pays it, and the de minimis exclusion (Article 5.5) or a GloBE Safe Harbour (Article 8.2) can deem it to be zero regardless. Based on the figures you supplied.

Workings

GloBE Income of all Constituent EntitiesArticle 5.1.2(a) — as supplied
EUR 80,000,000
GloBE Losses of all Constituent EntitiesArticle 5.1.2(b) — as supplied
(EUR 120,000,000)
Net GloBE Income of the jurisdictionArticle 5.1.2 — nil, being defined as the positive amount if any; the losses exceed the income
EUR 0
Additional Current Top-up TaxArticle 5.2.3(c) — as supplied
EUR 3,000,000
Domestic Top-up TaxArticle 5.2.3(d) — as supplied
EUR 0
Jurisdictional Top-up TaxArticle 5.2.3 — the Additional Current Top-up Tax alone, there being no Excess Profit, less the Domestic Top-up Tax and not below nil
EUR 3,000,000

Decided by the net globe income of the jurisdiction

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.

Not computed yet

4 inputs still need your determination:

  • What is the sum of the GloBE Income of all Constituent Entities located in the jurisdiction for the Fiscal Year, determined under Chapter 3 — leaving out Investment Entities, which Article 5.1.3 excludes?
  • What is the sum of the GloBE Losses of all Constituent Entities located in the jurisdiction for the Fiscal Year, as a positive amount, leaving out Investment Entities (Article 5.1.3)?
  • What is the sum of the Adjusted Covered Taxes of each Constituent Entity located in the jurisdiction, determined under Chapter 4, leaving out Investment Entities (Article 5.1.3)? It may be negative.
  • What is the Substance-based Income Exclusion for the jurisdiction, determined under Article 5.3 and the transitional rules of Chapter 9? It is computed from payroll and tangible assets across the Constituent Entities, which this rule does not do — the figure is yours. Enter nil if none is claimed.

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.minimum_rate
15% · 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

Share this rule

Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader