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EU: EC notice confirming application of Pillar Two side-by-side package under EU minimum tax directive

Notice published on January 12, 2026

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january 13, 2026

The European Commission (EC) on January 12, 2026, published a notice in the official journal of the EU acknowledging the adoption by the OECD/G20 Inclusive Framework of the Pillar Two side-by-side package and confirming the application of the following safe harbors through Article 32 of the EU minimum tax directive:

  • Simplified effective tax rate (ETR) safe harbor
  • Extension of transitional country-by-country (CbC) reporting safe harbor
  • Substance-based tax incentive safe harbor
  • Side-by-side safe harbor
  • Ultimate parent entity (UPE) safe harbor

KPMG observation

The notice does not state any intention to amend the EU minimum tax directive, but EU countries may still see a need to amend their domestic Pillar Two laws.

Subject to local implementation, the side-by-side package will apply for fiscal years commencing on or after January 1, 2026 (with one exception for the simplified ETR safe harbor, which can be implemented by jurisdictions for fiscal years beginning on or after December 31, 2025).

Read a January 2026 report prepared by KPMG’s EU Tax Centre

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