Pillar Two Advisory services

Pillar Two isn't just a tax matter; it's a business transformation waiting to happen. Are you ready?

Pillar Two is relevant for multiple stakeholders within organizations (Finance, Tax & Legal, Accounting & Reporting, Data & Technology) and requires a holistic approach and careful collaboration and alignment across various organizational functions. Deloitte’s Transformations experts are ready to guide organizations in the broadest way possible by bringing a coherent, holistic view to projects by taking collaboration to the next level through creation of one multidisciplinary team consisting of experts in tax, legal, audit, risk and consultancy. We provide coordinated and structured advice from design to implementation to guarantee your organization is in alignment with your business model and strategy and fit for the future. Our experts ensure that you can navigate with confidence through the Pillar Two requirements.

As with every form of taxation, compliance is an essential part of an organizations obligation towards tax authorities. More than currently observed with other forms of taxation, having access to the right financial and accounting data to perform the necessary Pillar Two calculations (i.e., safe harbour calculations as well as full jurisdictional Effective Tax Rate calculations) requires adjustments to the current ERP and (tax) accounting systems. Deloitte NL's tax technology experts are able to guide business towards a data and accounting set-up that meets all future Pillar Two requirements.

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The tax line items in the annual accounts of a company refer to the amount of taxes an organization owes, has paid or accrued during the fiscal year. Determination thereof in an integral part of the annual audit cycle of an organization. Whereas this line item used to include taxes on income, as well as other taxes such as property taxes or sales taxes, Pillar Two impact will have to be separately disclosed and reported as per IASB regulations. To ensure that the Pillar Two tax line item is accurate, reflects the corresponding tax obligations for the organization and meets accounting standards, it will have to be separately audited.

Under most major accounting standards a disclosure is required in relation to the expected Pillar Two impact in the year-end 2023 financial statements in countries that have enacted Pillar Two legislation. 

We are aware that this disclosure is a key part of many auditor conversations currently happening. Your auditor will expect you to substantiate the disclosure in relation to Pillar Two. Besides that, please note that the auditor will also want to be able to audit a conclusion that there is no (significant) Pillar Two impact. 

Pillar Two – Navigating the dynamic Safe Harbours

Pillar Two is already highly relevant in all tax transformative processes: M&A activities, post-deal integration, restructuring and intra-group transfers and legal entity reduction. Besides local tax considerations (e.g., corporate income tax, withholdings taxes, real estate transfer taxes etc.), advisory around such topics will to include an additional Pillar Two paragraph and analysis to ensure tax efficiency in the short- and long run.

Multinationals are facing challenges following the implementation of Pillar Two legislation on a global level and amendments to the legal entity, financing and operating structure of multinationals may be needed as a result of Pillar Two. With multidisciplinary teams including our Deloitte’s Legal experts we assess which changes are required and design a roadmap to implementation. After the design of this roadmap Deloitte Legal experts within our multidisciplinary team will guide the multinationals and its organization through the implementation phase, from preparation of legal documentation by our Deloitte Legal experts around the globe up to execution and legal implementation of any such required restructuring measures (e.g. change of entity-type, cross-border migrations or mergers, liquidations, IP or business transfers, finance transformations).

The commercial profit is the starting point of Pillar Two based on accepted financial reporting standards and the commercial accounts become pivotal in determining the GloBE income tax base. Our Accounting & Reporting Advisory specialists have the skillset crucial to adopt and de-risk Pillar Two, turning accounting foundations of GloBE Income into an opportunity. Our Accounting & Reporting capabilities help anticipating audit readiness and weigh in to achieving Pillar Two tax effectiveness.

With our proven Accounting Diagnostic for Pillar Two, we provide insights into accounting driven implementation efforts (i.e. emerging accounting topics, aligning accounting conducive to Pillar Two efficiency and data gathering/quality issues) and highlight potential risks and opportunities, offering targeted insights for a smooth adoption of Pillar Two, including financial reporting requirements on Pillar Two adoption in financial statements.

Technical and industry expertise for optimal tax outcomes

Deloitte’s Pillar Two Advisory professionals draw on deep collective tax knowledge, industry experience, and new technology to inform your tax approach to transactions and business strategies. Whatever your business objectives, we can help you optimize the Pillar Two related tax consequences of supply chains, M&As, government grants and incentives, or cross-border operations. We help simplify tax management, build new processes and prove oversight while providing global visibility for informed strategic decisions—all with the benefits of working with a single global provider.