On 20 December 2021, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) released the Pillar 2 Global Anti-Base Erosion (GloBE) model rules which introduce a global minimum tax for large multinational groups (MNEs).
On 15 December 2022, the Council of the EU formally adopted the EU Minimum Taxation Directive (“Directive”):
- Once transposed into domestic law, this Directive will set a new global minimum tax of 15% on large multinational and domestic groups with a consolidated group revenue of €750 million or more in at least two of the past four fiscal years immediately preceding the tested fiscal year.
- These new rules may apply to alternative structures even though they were not originally designed to specifically tackle this industry.
- We recommend players to already prepare themselves now: this is because these new rules will apply for fiscal years beginning from 31 December 2023 for the Income Inclusion Rule (IIR) and 31 December 2024 for the Undertaxed Profits Rule (UTPR).
Please refer to this newsletter for a comprehensive overview of the Directive and a comparison with the OECD GloBE model rules.
When assessing the impact of Pillar 2 in Luxembourg, it will notably be paramount to determine what are the accounting consolidation rules applying locally to the entities within your structure and whether certain local exemptions may validly apply.
Another key consideration for Luxembourg alternative players would be to assess whether an exclusion for investment entities will in practice be available to their fund vehicles as well as to the typical holding infrastructure underneath it.
We have developed a high level assessment tool to help you navigate through these rules and assess the likelihood that Pillar 2 may apply to you. This assessment is just preliminary feedback for informational purposes only and we recommend that you discuss your results with us.
High level Pillar 2 scoping assessment
Question 1
Which Luxembourg entities are included in your structure?
- Luxembourg fund vehicle(s)
- Luxembourg holding entity(ies)
- Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
Luxembourg fund vehicle(s)
Question 2
Does one of your foreign investors consolidate your Luxembourg fund vehicle on a line-by-line basis?
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
Luxembourg fund vehicle(s)
Question 3A
Does the consolidated revenue in the consolidated financial statements of the foreign investor (including revenue of excluded entities) amount to €750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year?
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
Luxembourg fund vehicle(s)
Question 3B
Is your Luxembourg fund vehicle required to consolidate (line-by-line) without benefiting from an exemption?*
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
*Exemption based on Luxembourg company law, or Luxembourg investment fund law, e.g. RAIF Law or SIF Law.
Luxembourg fund vehicle(s)
Question 4
Does the consolidated revenue in the consolidated financial statements (including revenue of excluded entities) of your Luxembourg fund vehicle amount to at least €750 million in two of the four fiscal years immediately preceding the tested fiscal year?
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
Luxembourg fund vehicle(s)
In principle, your Luxembourg fund vehicle may be out of scope. However, this depends on how the annual consolidated revenue is assessed and how your foreign investor consolidates your fund vehicle. Contact us to make sure you are not caught by Pillar 2.
Luxembourg fund vehicle(s)
Your Luxembourg fund vehicle could benefit from a carve-out. Further analysis is needed for the lower-tier portfolio companies that could be in scope of Pillar 2.
Luxembourg fund vehicle(s)
Further analysis is needed (i) for the lower-tier portfolio companies that could be in scope of Pillar 2, and (ii) to check if there is a deemed consolidation requirement for your foreign investor.
Luxembourg fund vehicle(s)
In principle, your Luxembourg fund vehicle may be out of scope. However, this depends on how the annual consolidated revenue is assessed. Contact us to make sure you are not caught by Pillar 2.
Luxembourg fund vehicle(s)
Your Luxembourg fund vehicle could benefit from a carve-out. Further analysis is needed for the lower-tier portfolio companies that could be in scope of Pillar 2.
Please contact us for a first assessment of your situation
Please contact us for a first assessment of your situation
Please contact us for a first assessment of your situation
Please contact us for a first assessment of your situation
Luxembourg holding entity(ies)
Question 2
Does one of your foreign shareholders consolidate your Luxembourg holding entity on a line-by-line basis?
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
Luxembourg holding entity(ies)
Question 3A
Does the consolidated revenue in the consolidated financial statements of the foreign shareholder (including revenue of excluded entities) amount to €750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year?
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
Luxembourg holding entity(ies)
Question 3B
Is your Luxembourg holding entity required to consolidate (line-by-line) without benefiting from an exemption?*
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
*Exemption based on Luxembourg company law, or Luxembourg investment fund law, e.g. RAIF Law or SIF Law.
Luxembourg holding entity(ies)
Question 4
Does the consolidated revenue in the consolidated financial statements (including revenue of excluded entities) of your Luxembourg holding entity amount to €750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year?
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
*Exemption based on Luxembourg company law, or Luxembourg investment fund law, e.g. RAIF Law or SIF Law.
Luxembourg holding entity(ies)
In principle, your Luxembourg holding entity may be out of scope. However, this depends on how the annual consolidated revenue is assessed and how your foreign shareholder consolidates your holding entity. Contact us to make sure you are not caught by Pillar 2.
Luxembourg holding entity(ies)
Your Luxembourg holding entity could benefit from a carve-out. Further analysis is needed of the lower-tier portfolio companies that could be in scope of Pillar 2. Get in touch.
Luxembourg holding entity(ies)
Further analysis is needed (i) for the lower-tier portfolio companies that could be in scope of Pillar 2, and (ii) to check if there is a deemed consolidation requirement for your foreign shareholder. Get in touch.
Luxembourg holding entity(ies)
In principle, your Luxembourg holding entity may be out of scope. However, this depends on how the annual consolidated revenue is assessed. Contact us to make sure you are not caught by Pillar 2.
Luxembourg holding entity(ies)
Your Luxembourg holding entity could benefit from a carve-out. Further analysis is needed for the lower-tier portfolio companies that could be in scope of Pillar 2. Get in touch.
Please contact us for a first assessment of your situation
Please contact us for a first assessment of your situation
Please contact us for a first assessment of your situation
Please contact us for a first assessment of your situation
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
Question 2
Does one of your foreign investors consolidate your Luxembourg fund vehicle on a line-by-line basis?
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
Question 3A
Does the consolidated revenue in the consolidated financial statements of the foreign investor (including revenue of excluded entities) amount to €750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year?
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
Question 3B
Is your Luxembourg fund vehicle required to consolidate (line-by-line) without benefiting from an exemption? *
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
*Exemption based on Luxembourg company law, or Luxembourg investment fund law, e.g. RAIF Law or SIF Law.
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
Question 4
Is your Luxembourg holding entity required to consolidate (line-by-line) without benefiting from an exemption?*
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
*Exemption based on Luxembourg company law, or Luxembourg investment fund law, e.g. RAIF Law or SIF Law.
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
Question 5
Does the consolidated revenue in the consolidated financial statements (including revenue of excluded entities) of your Luxembourg fund vehicle amount to €750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year?
- Yes
- No
- Not sure
- I prefer to discuss this with a KPMG specialist
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
In principle, your Luxembourg fund vehicle and its Luxembourg subsidiaries may be out of scope. However, this depends on how the annual consolidated revenue is assessed and how your foreign investor consolidates your fund vehicle. Contact us to make sure you are not caught by Pillar 2.
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
Further analysis is needed (i) of the lower-tier portfolio companies that could be in scope of Pillar 2, and (ii) to check if there is a deemed consolidation requirement for your foreign investor. Get in touch.
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
Your Luxembourg fund vehicle and its Luxembourg subsidiaries could benefit from a carve-out. Further analysis is needed for the lower-tier portfolio companies that could be in scope of Pillar 2. Get in touch.
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
In principle, your Luxembourg fund vehicle and its Luxembourg subsidiaries may be out of scope. However, this depends on how the annual consolidated revenue is assessed. Contact us to make sure you are not caught by Pillar 2.
Luxembourg fund vehicle(s) holding Luxembourg holding entity(ies)
Your Luxembourg fund vehicle could benefit from a carve-out. Further analysis is needed for the lower-tier portfolio companies that could be in scope of Pillar 2. Get in touch.
