Ireland: Legislation implementing Pillar Two signed into law

President signed the Finance (No. 2) Bill 2023

President signed the Finance (No. 2) Bill 2023

The president of Ireland on 18 December 2023 signed the Finance (No. 2) Bill 2023, which includes legislation regarding the implementation of Pillar Two. The signing by the president marks the final step in the implementation process and therefore the Pillar Two rules have now become law in Ireland. The final legislation is yet to be published online, but based on the final text  [PDF 1.7 MB] previously published by the Minister for Finance, the legislation closely follows the OECD global anti-base erosion (GloBE) model rules and the EU minimum tax directive.

The income inclusion rule (IIR) and qualified domestic minimum top-up tax (QDMTT) provisions will apply for fiscal years beginning on or after 31 December 2023. The undertaxed profits rule (UTPR) will apply for fiscal years beginning on or after 31 December 2024.

The legislation also provides for the following:

  • DMTT: According to the explanatory notes, the Irish domestic top-up tax (DMTT) has been designed to obtain “qualified status” under the OECD Inclusive Framework peer review process (in accordance with the OECD QDMTT guidance) and to be eligible for the QDMTT Safe Harbour. In particular, the legislation clarifies that the DMTT computation would need to be based on a local financial accounting standard (provided certain conditions are satisfied) with reference to the OECD QDMTT Safe Harbour guidance.
  • Additional OECD guidance: The Irish legislation makes reference to the OECD Commentary and the OECD Administrative Guidance as a relevant source for interpreting the local legislation. Future OECD guidance, including the Administrative Guidance released in December 2023, will only apply once approved by the Minister (by Ministerial Order).
  • Safe harbours: The expected safe-harbours are adopted—transitional country-by-country (CbC) reporting safe harbour, QDMTT safe harbour, and the UTPR safe harbour.
  • AdministrationEach constituent entity would be required to file a GloBE information return (GIR) and pay any top-up tax liability within 15 months after the end of the reporting fiscal year (18 months for the transitional year). An option is provided to transfer the obligation to file the GIR to another constituent entity. A QDMTT return is also required to be filed, however it’s possible to form a QDMTT group and file a single QDMTT return for all Irish companies together.
  • PenaltiesIn case of incomplete, non-compliance, or delayed fulfilment of GIR filing requirements, a penalty of €10,000 per month will be charged (maximum penalty €480,000).
  • Accompanying measures: Irish general anti-avoidance rules will also apply to the new Pillar Two legislation. In addition, amendments have been made to the Irish CFC provisions to allow for a credit for a Pillar Two QDMTT paid by a controlled foreign corporation (CFC) in another jurisdiction. Furthermore, amendments have been made to Ireland’s double tax relief rules to provide relief for foreign QDMTT arising on foreign dividends or foreign branch profits taxable in Ireland. However, double tax relief will not be available with respect to top-up taxes incurred under a foreign IIR or UTPR.

For more information, contact a tax professional from the KPMG member firm in Ireland:

Cillein Barry |



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