Pillar Two sets a 15% minimum effective tax rate, country by country, for groups with consolidated revenue of EUR 750 million or more. Low-taxed profit is topped up first by the local country through a qualified domestic minimum top-up tax, then by the parent's country through the income inclusion rule, and as a backstop by other countries through the undertaxed profits rule. Implementation differs across markets, and a side-by-side package agreed in January 2026 gives US-parented groups relief from the income inclusion and undertaxed profits rules from 2026.
Who is in scope and how the tax works
The rules apply to groups whose consolidated revenue is EUR 750 million or more in at least two of the four preceding fiscal years. For each country where the group operates, an effective tax rate is computed under the GloBE rules; if it is below 15%, a top-up tax brings it up to 15%.
Three collection mechanisms sit in an order of priority. A qualified domestic minimum top-up tax lets the country where the low-taxed profit arises collect the top-up itself. If it does not, the parent's country collects it under the income inclusion rule. The undertaxed profits rule is a backstop that lets other countries in the group collect any remaining top-up. EU Member States may elect a qualified domestic top-up tax, and many countries outside the EU have done the same.123
Where the eight markets stand
Germany's Minimum Tax Act applies to fiscal years beginning after 30 December 2023, with its undertaxed profits rule applying from fiscal years beginning after 30 December 2024. The UAE applies a domestic minimum top-up tax under Cabinet Decision No. 142 of 2024 for financial years starting on or after 1 January 2025; it covers mainland and free zone entities, so a 0% free zone rate can be topped up for in-scope groups. Singapore applies an income inclusion rule and a domestic top-up tax from financial years starting on or after 1 January 2025, but has not adopted the undertaxed profits rule.
France and the UK have implemented Pillar Two, but we could not open official pages confirming their dates. We also could not confirm on an official page whether India or Saudi Arabia has enacted Pillar Two legislation. These points are listed as gaps and should be checked before relying on them.456789
The United States and the side-by-side package
The United States has not adopted the GloBE rules. Following a G7 statement in June 2025, the OECD/G20 Inclusive Framework released a side-by-side package on 5 January 2026. Under it, top-up tax is deemed zero for income inclusion rule and undertaxed profits rule purposes for groups headquartered in a jurisdiction with a qualified side-by-side regime, for fiscal years beginning on or after 1 January 2026, and the United States is currently the only jurisdiction listed.
The relief is narrower than an exemption. Qualified domestic minimum top-up taxes and information return obligations continue, so a US group's subsidiaries in the UAE, Germany or Singapore can still pay local top-up tax. The package also extends the transitional country-by-country reporting safe harbour by a year and adds a permanent simplified safe harbour and a substance-based tax incentive safe harbour.101112
| Market | Domestic top-up tax | Income inclusion rule | Undertaxed profits rule | Confidence |
|---|---|---|---|---|
| Germany | Yes (MinStG) | Yes, fiscal years beginning after 30 December 2023 | Fiscal years beginning after 30 December 2024 | Official legislation opened |
| UAE | Yes, from financial years starting on or after 1 January 2025 | Not confirmed | Not confirmed | Official announcement opened; date from secondary source |
| Singapore | Yes, from financial years starting on or after 1 January 2025 | Yes (called MTT), same date | Not adopted at this stage | Secondary source |
| France | Implemented; dates not confirmed | Not confirmed | Not confirmed | Gap |
| UK | Implemented; dates not confirmed | Not confirmed | Not confirmed | Gap |
| India | Not confirmed | Not confirmed | Not confirmed | Gap |
| Saudi Arabia | Not confirmed | Not confirmed | Not confirmed | Gap |
| United States | No GloBE adoption; side-by-side safe harbour for US-parented groups from fiscal years beginning on or after 1 January 2026 | Not applicable | Not applicable | Secondary source |
Decisions to make
- Is the group within scope, or likely to be within two years?1The EUR 750 million test looks at two of the four preceding years of consolidated revenue, so growth or an acquisition can bring a group into scope.
- Do incentives and free-zone rates still deliver value?127For in-scope groups, a domestic top-up tax can collect the difference up to 15%; the substance-based incentive safe harbour may preserve some incentives.
- Does the side-by-side safe harbour apply to our group?1011It depends on where the ultimate parent is headquartered and on an election; local domestic top-up taxes still apply.
Documents usually needed
- Consolidated financial statements for the four preceding fiscal years (scope test)
- Country-by-country report data (safe harbour tests)
- Jurisdictional effective tax rate calculations under the GloBE rules
- Registrations and returns for each domestic top-up tax and the GloBE Information Return
- Side-by-side or other safe harbour elections
Common mistakes
- Assuming a UAE free zone 0% rate survives for groups above EUR 750 million revenue.
- Assuming US-parented groups are outside Pillar Two entirely; domestic top-up taxes still apply to their foreign subsidiaries.
- Testing scope on the latest year only rather than two of the four preceding years.
- Assuming every country has the same start dates and rules; Singapore, for example, has no undertaxed profits rule at this stage.
Questions businesses ask
Our group revenue is EUR 600 million. Does Pillar Two affect us?
Not directly while you stay below EUR 750 million in at least three of every four preceding years. Plan ahead if growth or acquisitions could take you over the threshold in two of four years.1
We are a US-headquartered group with a German subsidiary. What applies?
For fiscal years beginning on or after 1 January 2026, the side-by-side safe harbour can deem income inclusion rule and undertaxed profits rule top-up tax to be zero, subject to eligibility and an election. Germany's domestic top-up tax and information return obligations continue to apply.51011
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- The OECD side-by-side package details rely on a secondary summary; the OECD publication of 5 January 2026 could not yet be checked.
- UK and France implementation dates, and whether India or Saudi Arabia has enacted Pillar Two legislation, could not be confirmed on an official page because of fetch rate limits.
- Whether the UAE has introduced an income inclusion rule or undertaxed profits rule was not confirmed.
- Singapore details rely on a secondary source; the IRAS page was rate-limited.
- Registration and filing deadlines for domestic top-up taxes and the GloBE Information Return were not researched in this part.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 18 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
The EU Pillar Two Directive applies to constituent entities of groups with annual consolidated revenue of EUR 750 million or more in at least two of the four fiscal years immediately preceding the tested year. Multinational groups and large-scale domestic groups in the EU; excluded entities (for example certain governmental, pension and investment entities) are outside scope.
The Pillar Two minimum tax rate is 15%. Measured as a jurisdictional effective tax rate under the GloBE rules.
EU Member States may elect to apply a qualified domestic top-up tax, so that top-up tax on low-taxed local profits is collected locally rather than by another country. Article 11(1) of Directive (EU) 2022/2523.
Germany's Minimum Tax Act (MinStG) applies to group entities where the ultimate parent reports consolidated revenue of EUR 750 million or more in at least two of the four preceding fiscal years, and applies notwithstanding double tax treaties. Domestic constituent entities, joint ventures and qualifying permanent establishments; threshold pro-rated for short or long fiscal years.
Germany's Minimum Tax Act applies for the first time to fiscal years beginning after 30 December 2023, and its secondary (undertaxed profits) top-up tax rule in § 11 applies to fiscal years beginning after 30 December 2024. § 11 does not apply in the first period to groups whose ultimate parent is in an EU Member State that used the Article 50(1) deferral option.
The page refers to § 11 without naming it; § 11 MinStG is the secondary top-up tax (UTPR) provision.
The UAE introduced a Domestic Minimum Top-up Tax through Cabinet Decision No. 142 of 2024, applying to multinational enterprise groups with annual global revenues of EUR 750 million or more in at least two of the four preceding financial years, closely aligned with the OECD GloBE Model Rules. UAE constituent entities of in-scope groups; mainland and free zone entities alike. Transitional relief applies in a group's initial phase of international activity in some cases.
The UAE Domestic Minimum Top-up Tax is effective for financial years starting on or after 1 January 2025, imposing a 15% minimum effective tax rate under Federal Decree-Law No. 60 of 2023. In-scope multinational groups (EUR 750 million threshold).
Secondary source: the Ministry of Finance announcement page stating the effective date blocked automated access.
Singapore's Multinational Enterprise (Minimum Tax) Act 2024 applies an income inclusion rule (called the Multinational Enterprise Top-up Tax) and a Domestic Top-up Tax for financial years starting on or after 1 January 2025. In-scope multinational groups; the Domestic Top-up Tax applies to Singapore constituent entities with an effective tax rate below 15%.
Secondary source: the IRAS page could not yet be checked. Confirm on iras.gov.sg.
Singapore has not adopted the undertaxed profits rule (UTPR) at this stage. Position as stated by the source at the time of checking.
Secondary source; confirm on iras.gov.sg.
The OECD/G20 Inclusive Framework released a side-by-side package on 5 January 2026 under which top-up tax is deemed zero for IIR and UTPR purposes for groups headquartered in a jurisdiction with a qualified side-by-side regime, effective for fiscal years beginning on or after 1 January 2026; the United States is currently the only jurisdiction listed. Elective safe harbour; group must meet eligibility criteria. It follows the G7 statement of June 2025.
Secondary source: the OECD release itself could not yet be checked (search budget exhausted and OECD topic page did not carry the detail). Confirm against the OECD Inclusive Framework publication of 5 January 2026.
Under the side-by-side package, qualified domestic minimum top-up taxes and GloBE Information Return obligations continue to apply, including to local subsidiaries of US-parented groups. Relief covers the IIR and UTPR only.
Secondary source; confirm against the OECD publication.
The side-by-side package extends the transitional country-by-country reporting safe harbour by one year (generally to fiscal year 2027 for calendar-year groups) and adds a permanent simplified effective tax rate safe harbour intended for fiscal years beginning on or after 1 January 2027, plus a substance-based tax incentive safe harbour. Simplified ETR test stays at 17% for the extension year.
Secondary source; confirm against the OECD publication.
Questions on this topic
12 statements on global minimum tax (pillar two)
