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Transitional UTPR safe harbour

Applies
FY2024 onwards
Reviewed
Rule
P2-TUTPRSH-2026.1
By

What is the transitional UTPR safe harbour?

The UTPR is nil in the UPE's jurisdiction for transition years where its corporate income tax rate is at least 20%.

Per Consolidated Commentary to the GloBE Model Rules (May 2026), Annex A, Chapter 4, Transitional UTPR Safe Harbour

The UTPR Top-up Tax Amount calculated for the UPE Jurisdiction is deemed to be zero for each Fiscal Year during the Transition Period if the UPE Jurisdiction has a corporate income tax that applies at a rate of at least the published rate. The Transition Period is the Fiscal Years which run no longer than 12 months, begin on or before 31 December 2025 and end on or before 3 January 2027.

It reaches the UPE Jurisdiction only. A UTPR allocation to any other jurisdiction is computed as usual, and the transition period cannot be extended.

Four things the result turns on

Which jurisdiction

  • Only the UTPR Top-up Tax Amount calculated for the UPE Jurisdiction — where the Ultimate Parent Entity is located — is deemed zero
  • The relief exists because the UPE Jurisdiction is the one place a group cannot structure out of the UTPR

The Transition Period

  • The Fiscal Year runs no longer than 12 months
  • It begins on or before 31 December 2025
  • It ends on or before 3 January 2027 (31 December 2026 before the May 2026 guidance)

52-53-week Fiscal Years

A group whose Fiscal Year always ends on the same day of the week has a year of 52 or 53 weeks. The guidance gives a 53-week year starting on 28 December 2025 and ending on 2 January 2027 as inside the relief, so the 12-month limit is read to allow such a year.

A nominal rate, not an effective one

The test is the corporate income tax rate generally imposed on in-scope MNE Groups on a comprehensive measure of income. Sub-national taxes count only where the combined rate generally applicable is at least the threshold in every sub-national jurisdiction.

More than one safe harbour

A group that qualifies for more than one transitional safe harbour in a jurisdiction may choose which to apply — for example the Transitional CbCR Safe Harbour, to avoid losing it under the once-out-always-out approach.

Order of testing

  1. 1

    Inputs requiring your determination

    The two dates, whether the Fiscal Year is 52 or 53 weeks, whether this is the UPE Jurisdiction, whether it has a corporate income tax and at what nominal rate.

  2. 2

    The Transition Period

    Tested first. The Fiscal Year must begin and end in time and run no longer than 12 months, or be a 52-53-week year.

  3. 3

    The UPE Jurisdiction

    The relief reaches only that jurisdiction.

  4. 4

    The corporate income tax rate of the UPE Jurisdiction

    The nominal statutory rate must be at least the published rate.

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 calendar year, 25% rate

The group's Fiscal Year is calendar 2025 and the UPE Jurisdiction taxes companies at a nominal 25%.

Computed

The UTPR Top-up Tax Amount calculated for the UPE Jurisdiction is deemed to be zero for this Fiscal Year as computed: it falls within the Transition Period and the nominal statutory rate of 25% is at least the 20% that Box 4.1 requires. Where the group also qualifies for the Transitional CbCR Safe Harbour in the jurisdiction it may choose which to apply (Commentary paragraph 7). Based on the figures you supplied.

Workings

Fiscal Year startBox 4.1 paragraph 2 — as supplied
2025-01-01
Fiscal Year endBox 4.1 paragraph 2 — as supplied; no later than 2027-01-03
2025-12-31
Nominal statutory corporate income tax rateBox 4.1 paragraph 1 and Commentary paragraph 5 — as supplied
25%
Required rateBox 4.1 paragraph 1 — published value. The rate is at least it
20%

Decided by the corporate income tax rate of the upe jurisdiction

A 53-week year

The Fiscal Year starts on 28 December 2025 and ends on 2 January 2027. Before the May 2026 guidance it fell outside the relief.

Computed

The UTPR Top-up Tax Amount calculated for the UPE Jurisdiction is deemed to be zero for this Fiscal Year as computed: it falls within the Transition Period and the nominal statutory rate of 25% is at least the 20% that Box 4.1 requires. Where the group also qualifies for the Transitional CbCR Safe Harbour in the jurisdiction it may choose which to apply (Commentary paragraph 7). Based on the figures you supplied.

Workings

Fiscal Year startBox 4.1 paragraph 2 — as supplied
2025-12-28
Fiscal Year endBox 4.1 paragraph 2 — as supplied; no later than 2027-01-03
2027-01-02
Nominal statutory corporate income tax rateBox 4.1 paragraph 1 and Commentary paragraph 5 — as supplied
25%
Required rateBox 4.1 paragraph 1 — published value. The rate is at least it
20%

Decided by the corporate income tax rate of the upe jurisdiction

A rate below the line

A calendar 2025 year in a UPE Jurisdiction with a nominal 17% rate.

Computed

The Transitional UTPR Safe Harbour is not met as computed: the nominal statutory rate of 17% is below the 20% the safe harbour requires. Box 4.1 paragraph 1 requires a corporate income tax that applies at a rate of at least 20 percent, so the UTPR Top-up Tax Amount for the UPE Jurisdiction is computed under the ordinary rules. Based on the figures you supplied.

Workings

Fiscal Year startBox 4.1 paragraph 2 — as supplied
2025-01-01
Fiscal Year endBox 4.1 paragraph 2 — as supplied; no later than 2027-01-03
2025-12-31
Nominal statutory corporate income tax rateBox 4.1 paragraph 1 and Commentary paragraph 5 — as supplied
17%
Required rateBox 4.1 paragraph 1 — published value. The rate is below it
20%

Decided by the corporate income tax rate of the upe jurisdiction

A year that starts too late

A calendar 2026 year begins after 31 December 2025, so it is outside the Transition Period.

Computed

The Transitional UTPR Safe Harbour does not apply to this Fiscal Year as computed: it begins on 2026-01-01, after 2025-12-31. Box 4.1 paragraph 2 limits the relief to Fiscal Years that run no longer than 12 months, begin on or before 2025-12-31 and end on or before 2027-01-03. The Commentary says the transition period cannot be extended. No rate test is computed, because none could carry the relief.

Decided by the transition period

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 first day of the Fiscal Year, as a calendar date?
  • What is the last day of the Fiscal Year, as a calendar date?
  • Does the group's Fiscal Year always end on the same day of the week, making it 52 or 53 weeks long under its financial accounting standard? The May 2026 guidance reads such a year as within the 12-month limit.
  • Is the jurisdiction you are asking about the one where the Ultimate Parent Entity is located (the UPE Jurisdiction)?

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.transitional_utpr_rate
20% · 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