KPMG report: Treatment of joint ventures (JVs) under the Pillar Two model rules
Pillar Two JV rules may characterize JVs differently for purposes of various Pillar Two rules
A joint venture (JV) generally exists under the Pillar Two model rules when a multinational enterprise (MNE) reports in its consolidated finance statements a 50% or greater equity investment in an entity (weighing equally, for this purpose, MNE equity rights to profits, capital, and reserves). This definition can include entities not treated as for accounting purposes (e.g., associates), but exclude entities treated as JVs for accounting purposes (when the holding percentage is less than 50% but there is significant influence).
In addition, the Pillar Two JV rules may characterize JVs differently for purposes of various Pillar Two rules. For example, in some circumstances the Pillar Two rules treat a Pillar Two JV entity as a “normal” constituent entity (CE), while in other instances the rules will treat the entity as being the ultimate parent entity (UPE) of a separate MNE group. In still further instances the rules will treat the entity as not being a CE at all, but rather as an “inert” equity investment holding of the MNE group.
Read an October 2025 report prepared by the KPMG member firm in Australia that examines the complex treatment of JVs under the Pillar Two model rules.