Policy Disallowed Expenses
- Applies
- FY2024 onwards
- Reviewed
- Rule
- P2-PDE-2024.1
Are fines and bribes deductible for GloBE Income?
No. Bribes and other illegal payments are always added back, and so are fines and penalties of EUR 50,000 or more.
Per GloBE Model Rules (Pillar Two), December 2021, Article 3.2.1(g), Policy Disallowed Expenses
A Constituent Entity's Financial Accounting Net Income or Loss is increased by Policy Disallowed Expenses: expenses accrued by the Constituent Entity for illegal payments, including bribes and kickbacks; and expenses accrued for fines and penalties that equal or exceed the published amount, or its equivalent in the functional currency in which the Constituent Entity's Financial Accounting Net Income or Loss was calculated.
One of only two adjustments that always run one way: it only ever increases GloBE Income.
No threshold for bribes; a per-fine threshold for fines
Illegal payments
Disallowed whatever the amount. A payment is illegal if it is illegal under the laws applicable to the Constituent Entity that made it or to the Ultimate Parent Entity.
Fines and penalties are tested one at a time
A fine at or above the published amount is disallowed in full; a fine below it remains an expense. Separate fines for the same kind of offence, such as traffic tickets, are not added together.
Except a periodic fine
A fine levied periodically for the same activity until it is corrected — a daily penalty — is tested on its total for the year.
Not a fine
Interest charged for late payment of tax or another liability to a governmental unit is not a fine or penalty and is not added back.
Order of testing
- 1
Inputs requiring your determination
Every input the computation reaches must be supplied; nil is entered, not left blank.
- 2
Illegal payments, and fines at or above the amount
Illegal payments in full; each fine against the published amount, 'equal or exceed'.
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.
One large fine and several small ones
A EUR 2 million regulatory fine, a EUR 12,000 late-filing penalty and EUR 30,000 of parking fines entered as one line.
Computed
Policy Disallowed Expenses of EUR 2,000,000 are added back to Financial Accounting Net Income or Loss as computed (Article 3.2.1(g)): EUR 0 of illegal payments, disallowed whatever the amount, and EUR 2,000,000 from 1 of the 3 fines or penalties, each of which equals or exceeds EUR 50,000. A fine below that amount remains an expense. Based on the figures you supplied.
Workings
- Illegal paymentsPolicy Disallowed Expenses, paragraph (a) — disallowed whatever the amount
- EUR 0
- Amount at or above which a fine is disallowedParagraph (b) — published value for FY2026
- EUR 50,000
- Fine or penalty — Securities regulatorParagraph (b) — equals or exceeds the amount: disallowed in full
- EUR 2,000,000
- Fine or penalty — Late filing penaltyParagraph (b) — below the amount: remains an expense
- EUR 12,000
- Fine or penalty — Parking fines, one lineParagraph (b) — below the amount: remains an expense
- EUR 30,000
- Policy Disallowed ExpensesArticle 3.2.1(g) — added to Financial Accounting Net Income or Loss
- EUR 2,000,000
Decided by the illegal payments, and fines at or above the amount
A daily penalty
A penalty of EUR 500 a day for 150 days on the same breach: EUR 75,000 for the year.
Computed
Policy Disallowed Expenses of EUR 75,000 are added back to Financial Accounting Net Income or Loss as computed (Article 3.2.1(g)): EUR 0 of illegal payments, disallowed whatever the amount, and EUR 75,000 from 1 of the 1 fines or penalties, each of which equals or exceeds EUR 50,000. A fine below that amount remains an expense. Based on the figures you supplied.
Workings
- Illegal paymentsPolicy Disallowed Expenses, paragraph (a) — disallowed whatever the amount
- EUR 0
- Amount at or above which a fine is disallowedParagraph (b) — published value for FY2026
- EUR 50,000
- Fine or penalty — Daily environmental penalty, 150 daysParagraph (b) — equals or exceeds the amount: disallowed in full
- EUR 75,000
- Policy Disallowed ExpensesArticle 3.2.1(g) — added to Financial Accounting Net Income or Loss
- EUR 75,000
Decided by the illegal payments, and fines at or above the amount
A small illegal payment
A EUR 4,000 facilitation payment and no fines.
Computed
Policy Disallowed Expenses of EUR 4,000 are added back to Financial Accounting Net Income or Loss as computed (Article 3.2.1(g)): EUR 4,000 of illegal payments, disallowed whatever the amount, and EUR 0 from 0 of the 0 fines or penalties, each of which equals or exceeds EUR 50,000. A fine below that amount remains an expense. Based on the figures you supplied.
Workings
- Illegal paymentsPolicy Disallowed Expenses, paragraph (a) — disallowed whatever the amount
- EUR 4,000
- Amount at or above which a fine is disallowedParagraph (b) — published value for FY2026
- EUR 50,000
- Policy Disallowed ExpensesArticle 3.2.1(g) — added to Financial Accounting Net Income or Loss
- EUR 4,000
Decided by the illegal payments, and fines at or above the amount
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
1 input still need your determination:
- What expenses were accrued for illegal payments, including bribes and kickbacks — illegal under the laws applicable to the Constituent Entity or to the Ultimate Parent Entity? Enter nil if there are none.
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.policy_disallowed_fines_threshold
- EUR 50,000 · 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
GloBE Model Rules (Pillar Two), December 2021 — Article 3.2.1(g), Policy Disallowed Expenses
The adjustment this rule encodes
https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/12/tax-challenges-arising-from-digitalisation-of-the-economy-global-anti-base-erosion-model-rules-pillar-two_eed81a23/782bac33-en.pdfGloBE Model Rules (Pillar Two), December 2021 — Article 10.1, definition of Policy Disallowed Expenses
The two kinds of expense and the amount
https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/12/tax-challenges-arising-from-digitalisation-of-the-economy-global-anti-base-erosion-model-rules-pillar-two_eed81a23/782bac33-en.pdfConsolidated Commentary to the GloBE Model Rules (May 2026) — Commentary to Article 3.2.1, paragraph (g)
Paragraphs 75 to 78: illegality in 76, periodic fines and late-payment interest in 78
https://www.oecd.org/content/dam/oecd/en/publications/reports/2026/05/tax-challenges-arising-from-the-digitalisation-of-the-economy-consolidated-commentary-to-the-global-anti-base-erosion-model-rules-2026_24289ddf/4377e89f-en.pdf