Pillar Two

Pillar Two

Pillar Two establishes a minimum tax system with a minimum effective tax rate (ETR) of 15% at the jurisdictional level. Companies with global turnover above EUR 750m will be within the scope of Pillar Two. Where the effective tax rate (ETR) is below the agreed minimum, the new system will top up the tax liability so that the overall rate will reach the established minimum in each jurisdiction where the taxpayer is resident. 

With respect to the ETR calculation, Pillar 2 introduces two new concepts: The GloBE tax base is the Arm’s length Profit Before Tax from the financial accounts after a number of a significant amount of adjustments and eliminations. The covered tax is the accounting tax actually paid plus and/or minus withholding taxes and a number of other adjustments.

Impact analysis

To get clear insights into how Pillar Two may impact your business, PwC has developed a pilot. The goal of the pilot is to get insight in the Financial Impact of Pillar Two and the Data-Gap and complexity. This insight can be used to prepare an internal business case for Pillar Two. Download the Pillar Two pilot phase flyer to learn more about our approach.

Financial impact and data gap analysis

The GloBE rules

The main rule of Pillar Two is the so-called Income Inclusion Rule (IIR), which imposes a top-up tax at the parent level on a jurisdictional basis in case an entity (or entities) is (or are) not subject to the consolidated ETR of 15% within that jurisdiction. In addition, the Undertaxed Payments Rule (UTPR) will act as a backstop and will apply where the IIR has not captured the entire top-up tax, including in the jurisdiction of the Ultimate Parent. The IIR and the UTPR are together referred to as the GloBE-rules.

When will these rules come into effect?

These rules are expected to enter into effect on 31 December 2023, with the exception of the Undertaxed Payment Rule (UTPR) that is to enter into effect on 31 december 2024.

Impact of Pillar Two - our service offering

Businesses may need to consider the impact of Pillar Two in forecasts and factor into decisions going forwards together with the implications of Pillar Two for their compliance systems. We can help companies with the following questions:

  • How does Pillar Two impact my company? We also have a Pillar 1 and 2 impact modeling tool available.

  • What is the impact on the effective group tax rate and how much top-up tax is payable on Pillar Two?

  • What are the (compliance) requirements from Pillar Two for my company and where do we stand now? 

  • How can the tax, accounting, consolidation, reporting and IT processes including data flows be improved to become Pillar Two ready?

  • How can we adjust our structure to be(come) Pillar Two ready?

PwC's Market Taxation Analyser (MARTA) tool

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To get clear insights into how the OECD two pillars proposal may impact your business, PwC has developed the Market Taxation Analyser (MARTA). This tool uses a combination of publicly available information and your own readily available data, submitted via an Excel based information. The tool is part of the pilot impact analysis as described above.

The Netherlands publishes draft Pillar II legislation

On Monday 24 October 2022, the Dutch Government submitted the draft legislative proposal ‘Minimum Tax Act 2024 (Pillar 2)’ to public consultation. By doing so, the Netherlands takes the next step in implementing Pillar 2 as of 1 January 2024. Please refer to our Newsflash for more information on the Draft Dutch legislation for Pillar 2.


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Liesbeth De Groot - Meijer

Liesbeth De Groot - Meijer

Senior manager Tax, PwC Netherlands

Tel: +31(0) 6 51051741

Reinout Van Gelder

Reinout Van Gelder

Partner - ITS, PwC Netherlands

Tel: Tel: +31 88 792 6472 | Mobile: +31 6 1483 95 98