BEPS 2.0 Pillar 2: The global minimum tax rate

Following the OECD's BEPS initiative (Base Erosion and Profit Shifting), the successor project BEPS 2.0 is currently being implemented. Measures covering the reallocation of taxation rights can be found in Pillar 1. This would affect multinational groups with an annual revenue of more than EUR 20 bn - a comparatively small group. The implementation of Pillar 2 is currently still open.

Pillar 2  concerns the introduction of a global minimum tax. At the end of 2021, the OECD countries agreed on the plan to introduce a minimum tax applicable to all multinational groups with a consolidated group revenue of at least EUR 750m

Following the adoption of the BEPS measures on OECD level, countries are now required to create a legal basis for the agreed on rules. A corresponding political agreement was reached in the EU in mid-December 2022, and corresponding legislative projects have also been initiated in non-EU countries. The legislative changes require intensive preparations by the taxpayers. The Safe Harbour regulations introduced by the OECD, i.e. simplified rules applicable for a transitional period, can provide partial relief, but companies should nevertheless act now and create appropriate processes and structures.

The global minimum taxation is intended to oblige companies with a consolidated group revenue of EUR 750m or more to calculate an effective tax rate (ETR) for each country. If this is below 15 %, a "top-up tax" must be paid. It should be noted that the ETR can be below 15 per cent even if the statutory tax rate in the respective country is above this threshold. Irrespective of whether an actual minimum tax arises, companies will face comprehensive documentation and compliance obligations.

One major challenge lies in the availability and collection of relevant data. Much data that is relevant for the new regulations is not recorded in other documentation such as country-by-country reporting or commercial balance sheets. New processes and comprehensive adjustments to the information provided by group accounting are necessary in order to collect the required data efficiently. Further, all subsidiaries of a multinational group must be taken into account. This can only be achieved through close international co-operation between the tax and accounting departments. Practical experience shows that in particular globally active medium-sized companies have to catch up here and develop the required structures. Time is limited, which is why implementation should be initiated immediately.

The global minimum taxation came into force in the main EU member states and in some other countries (e.g. the UK, Switzerland, Turkey, etc.) in 2024. You can find a continuously updated implementation status here.

The first declaration obligation for German companies is to to register the so-called German Pillar 2 group leader. The group leader registration must be submitted to the Federal Central Tax Office by 28 February 2025 if the financial year equals the calendar year.

In addition, KPMG has developed a global, cloud-based technology solution which can support the collection and provision of relevant data as well as be used for  Pillar 2 calculations: KPMG BEPS 2.0 Automation Technology (KBAT). With this solution, we do not only enable the calculation of GloBE income/loss etc. according to the Income Inclusion Rule (IIR), but also a calculation of the Qualified Domestic Minimum Top-up Tax (QDMTT) for the individual countries. In addition, KBAT allows the classification of Constituent Entities as well as scenario comparisons and offers various possibilities to analyze calculation results. We are already able produce the XML file that is expected to be used for the submission of the Globe Information Return. By embedding KBAT in the KPMG Digital Gateway platform, additional tools are available to you, such as our comprehensive Legal Entity Management or our Smart Questionnaire application, which has already been customised for Pillar 2 purposes. Added to this is our GenAI Assistant, which answers Pillar 2-specific questions in all languages of the world and can thus significantly reduce the workload of your organisation.

KPMG has developed a project methodology that takes into account the company’s specific tax, accounting and IT landscape. Unlike in many tax projects, the efficient implementation of the Pillar 2 requirements demands special accounting know-how (particularly IFRS). At KPMG, we have the necessary expertise – the appropriate experts are a fundamental part of our project teams.

Projects in the BEPS 2.0 environment usually require individual solutions, because every company is different. Our team of experts from the areas of accounting, IT and international tax approaches the projects in an interdisciplinary manner and always keeps audit requirements in mind. By using our Pillar 2 solutions and cooperating with renowned third-party providers, we support your project with innovative solutions tailored to your needs. In doing so, we dock onto your existing infrastructure - the conversion of your existing IT system is usually not necessary. You also benefit from our international network. We work closely with this network to meet the requirements of the countries relevant to you.