Italy: Implementation of Pillar Two transitional safe harbors

Transitional country-by-country (CbC) reporting safe harbors for groups subject to the Pillar Two global minimum tax

Transitional country-by-country (CbC) reporting safe harbors

The Ministry of Economy and Finance on May 20, 2024, issued a decree implementing the transitional country-by-country (CbC) reporting safe harbors for groups subject to the Pillar Two global minimum tax (i.e., multinational enterprise (MNE) groups and large-scale domestic groups with revenues exceeding €750 million in at least two of the four fiscal years preceding the relevant fiscal year).

The CbC reporting safe harbors are optional transitional regimes that can be applied in the initial phase of the new global minimum tax rules—which is the first three fiscal years beginning by 31 December 2026 and ending by 30 June 2028 (i.e., 2024, 2025, and 2026 for groups that have a calendar tax year)—to mitigate the administrative and compliance burdens of the global minimum tax.

Under the simplified rules, passing at least one of the three different tests for a given jurisdiction in a given fiscal year is sufficient to consider that jurisdiction as low-risk and consequently reduce the group’s top-up tax to zero (in that jurisdiction and for that fiscal year), without the need for the ordinary calculation of the effective tax rate (ETR) and any top-up tax. The three tests are de minimis test, simplified ETR test, and routine profit test.

Read a June 2024 report prepared by the KPMG member firm in Italy



The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.