2025: The Year of Pillar Two Compliance

The introduction of the OECD’s Global Anti-Base Erosion (GloBE) Model Rules in 2021, the so-called Pillar Two, represents the beginning of a new era for corporate taxation.

Pillar Two rules apply to multinational enterprises (MNEs) with annual consolidated revenue of EUR 750 million and provide a coordinated system of interlocked rules through which a top-up tax should be collected each time that the effective tax rate (ETR) of a MNE in a given jurisdiction is below 15%. These rules are the (qualified) domestic minimum top-up tax (Q)DMTT, the income inclusion rule (IIR), both generally effective in the European Union and in some other major jurisdictions around the world since 2024 (i.e., 31 December 2023), and the undertaxed profit rule (UTPR), which will generally apply in respect of the fiscal years beginning from 31 December 2024.

The new Pillar Two reality: Action plan

The application of Pillar Two creates new compliance obligations, that are being implemented in the domestic legislation of many jurisdictions. For that reason, MNEs must evaluate the impact of the rules in every jurisdiction where the group operates (i.e. new registration obligations, domestic Pillar Two returns, differences in accounting systems).

Kris Lievens

Partner, Head of Corporate Tax | Tax, Legal & Accountancy

KPMG in Belgium

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Accordingly, 2025 is the year where Pillar Two in-scope groups must take actions and begin with their compliance obligations in the jurisdictions where they operate. In that scenario, a timely and organized planning for Pillar Two must include the following actions:

Scoping analysis of the group structure under Pillar Two rules.
Identification of data points required by Pillar Two and data gap analysis.
Transitional country-by-country report (CbCR) safe harbour analysis using 2024 figures, including the assessment of data from “Qualified” Financial Statements.
If the requirements for the application of transitional CbCR safe harbours are not met, detailed Pillar Two calculations and top-up exposure must be performed.
Assessment of the Pillar Two impact on the group’s financials for fiscal year 2024, in order to comply with the statutory audit review.
Design and implementation of Pillar Two compliance strategy within the group.
Assessment of potential optimization opportunities.

Focus on Belgium: Five steps for Pillar Two compliance

The first return related to the Pillar Two rules will have to be submitted in Belgium by November 30^th, 2025 (for groups with a calendar financial year). For that reason, and in addition to the actions needed in each jurisdiction, MNEs should have a special focus on Pillar Two compliance in Belgium. The (Q)DMTT return will be required for all groups in-scope with constituent entities in Belgium, regardless of the application of transitional CbCR safe harbours.

To be ready for Pillar Two compliance in 2025 in Belgium, MNEs should:

Perform a (preliminary) (Q)DMTT calculation as defined by the Belgian Law on Minimum Taxation. It should include the analysis of elements such as data review, (qualified) financial statements, impact of tax incentives on ETR, applicable accounting method (i.e Belgian GAAP, IFRS).
Verify the Group’s Pillar Two number. Groups with a presence in Belgium should be registered in the Crossroads Bank for Enterprises (CBE). At this stage, the Pillar 2 CBE number should be available, and ready to use for Pillar Two compliance. See: Deadline GloBE registration extended - KPMG Belgium and Belgian Law on minimum taxation amended - KPMG Belgium.
Consider the prepayment system. Belgium introduced a prepayment system for the (Q)DMTT and the IIR Top-up Tax. Under this system, quarterly prepayments can be made, with a first due date on 20 December 2024. These prepayments trigger bonifications which are then deductible against a standard surcharge applied on the Top-up Taxes due (9% for 2024). See: Prepayment system for P2 minimum taxation operational - KPMG Belgium.
Consider Mandate for Pillar Two compliance. For the filing of the Belgian (Q)DMTT return and other Pillar Two compliance obligations in Belgium, groups must make sure that they have access to the restricted “MyMinfin” site, and/or grant access to their Pillar Two advisors.
Perform the filing of the Belgian Domestic Minimum Top-up Tax Return (DMTT). The filing deadline is the last day of the 11^th month following the closure of the fiscal year, which means that the first deadline is 30 November 2025 (i.e., when the fiscal year coincides with the calendar year).

How can KPMG help you?

Given the compliance obligations in Belgium and the timeline for implementation, MNEs should take action and organize their Pillar Two compliance strategy to meet this deadline in a well-prepared manner. For both groups beginning their Pillar Two journey and those that have taken steps forward already, our experienced Pillar Two team would be happy to help you further and discuss the proposed next steps so that the group has sufficient time to prepare for Pillar Two compliance in 2025.