Navigating Pillar Two: Understanding the Global Minimum Tax in Central Europe

Pillar Two, also known as the Global Anti-Base Erosion (GloBE) proposal, is a significant development in international tax reform. The new framework aims to level the tax playing field by discouraging countries from reducing their corporate income tax to attract foreign business investment. Essentially, it introduces a global minimum tax rate (15%) to encourage multinational enterprises to pay their fair share of taxes. Pillar Two aims to drive these tax outcomes by impacting the financial accounting policies and processes in place at these companies.​

Naturally, Pillar Two introduces significant complexity and uncertainty into the economic environment. This is poised to disrupt business operations extensively. The new rules are expected to materially influence corporate strategies, especially in areas such as restructuring, M&A, site selection, and other key operational and investment decisions. As countries around the world work toward implementing Pillar Two, it is crucial that businesses understand its implications and adapt their strategies accordingly.​

How Is Pillar Two Being Implemented Across Central Europe?​

In this publication, we specifically look at the implementation of Pillar Two within Central European jurisdictions. We examine whether GloBE rules (IIR, UTPR) and the Domestic Minimum Top-up Tax (DMTT) have been implemented or are expected to be, along with their effective dates. Additionally, we discuss the applicable accounting standards, potential qualification for the OECD’s QDMTT safe harbor, and any material deviations from the OECD Model Rules. Finally, we highlight local tax benefits that may impact the jurisdiction's Pillar Two Effective Tax Rate (ETR).​

We hope you find this overview insightful and valuable to your work going forward.