A practical update on the Dutch Minimum Tax Act and CbCR developments
The first Pillar Two filing is due this June. For in-scope groups, that means the practical question has shifted: not whether Pillar Two applies, but how to get the first filing cycle over the finish line. In this article, we set out where we stand today and which developments are still on the near-term horizon.
Key Takeaways:
- The first Dutch deadline is near. For groups with a December year-end that fell into the Dutch scope from fiscal year 2024, the bijheffing-informatieaangifte is due on 30June 2026, with the top-up tax return and payment following by 31 August 2026. Groups entering scope for the first time in 2024 receive an extra five months to file the information return (until 31 August 2026).
- Filing is not optional, even if no top-up tax is due. The information return obligation exists regardless of the outcome of the calculation. A group that exceeds the 15% threshold in every jurisdiction, or that qualifies for a Safe Harbour everywhere, still has to prepare and file.
- Your regular ‘ETR’ is not the Pillar Two ETR. The WMB 2024 calculation starts from financial accounting data, applies its own jurisdictional blending, and ignores several Dutch-specific items that reduce the standard CIT burden, most notably the innovatiebox and liquidatieverliesregeling. A group sitting above the 15% threshold on its regular Dutch ETR can find itself below that under Pillar Two, which is why the Netherlands implemented the QDMTT.
- CbCR has become a core part of the Pillar Two workstream. The two regimes share the same € 750 million threshold, the same notion of ‘group’ and largely the same data infrastructure. CbCR data feeds directly into the Pillar Two calculation and, where the transitional CbCR Safe Harbour applies, it forms the very basis on which the GloBE calculation is replaced.
- The Side-by-Side Package is a structural change, but not for this first filing cycle. Agreed at OECD Inclusive Framework level on 5 January 2026, the package introduces a Side-by-Side Safe Harbour (exempting US-parented groups from IIR and UTPR), a UPE Safe Harbour, and the permanent Simplified ETR Safe Harbour. The Dutch implementing legislation is expected before summer 2026 and will apply to fiscal years starting on or after 1 January 2026. For fiscal years 2024 and 2025, the existing framework applies in full. Below we set out the effect of the Side-by-Side regime in a few examples.
A Timeline of the Developments Related to Pillar Two
The Dutch Wet minimumbelasting 2024 [‘WMB 2024’] has been in force since 31 December 2023, implementing the EU Pillar Two Directive in the Netherlands. The Income Inclusion Rule [‘IIR’] has applied since fiscal year 2024, the Undertaxed Profits Rule [‘UTPR’] since 2025 – and critically, the first Dutch Pillar Two information returns (bijheffing-informatieaangiften) are due at the end of June 2026. From 2027 onwards, the filing deadline for the top-up tax information return is fifteen months after the end of the reporting year, and the tax return itself must be filed and paid within seventeen months. For most groups with a December year-end, that means the clock is ticking:
At the same time, the international landscape around Pillar Two had been anything but static. Since the original OECD model rules were adopted, a steady stream of Administrative Guidance has followed, clarifying – and sometimes complicating – the detailed mechanics. Most recently, on the 5th of January 2026, the OECD’s Inclusive Framework reached a significant new agreement: the so-called Side-by-Side Package. This package includes measures under which certain tax systems – most notably the US – can qualify as equivalent to Pillar Two under specific conditions, as well as simplification measures and more favorable treatment of certain tax incentives for companies with real economic substance. The Dutch State Secretary of Finance informed parliament accordingly, noting that a separate legislative proposal to implement the Side-by-Side package is expected to be submitted before the summer of 2026.
Meanwhile, Country-by-Country Reporting [‘CbCR’], the data backbone on which Pillar Two analyses are built, has moved back into the spotlight. The transitional CbCR Safe Harbour rules, which allowed groups to skip the full Global Anti-Base Erosion [‘GloBE’] calculation under certain conditions, are winding down, and the Simplified ETR Safe Harbour is taking their place.
For readers who want to revisit the basics and the background of Pillar Two, our earlier Pillar Two, Pillar Who? FAQ still holds up as a primer on the framework itself:
An Overview of Where we Stand Today with Pillar Two.
Who is in Scope and Who is Not?
The WMB 2024 applies to entities that are part of a multinational (or domestic group) with consolidated annual revenues of at least €750 million in at least two of the four preceding years. For Pillar Two purposes, these entities are referred to as Constituent Entities. An entity qualifies as a Constituent Entity where it is connected to the group through ownership or control and is fully consolidated on a line-by-line basis in the consolidated financial statements of the Ultimate Parent Entity [‘UPE’].
The € 750 million threshold mirrors the CbCR threshold. This alignment is intentional: both regimes share the same policy DNA and, to a large extent, rely on the same underlying data infrastructure.
‘Group’ for WMB 2024 purposes is defined by reference to common control under the financial accounting standard used for the. The size of an individual entity is irrelevant. A small Dutch holding company with a few employees on its payroll can be fully in scope if its UPE exceeds €750 million on a consolidated basis. Furthermore, permanent establishments [‘PE’s’] are treated as separate constituent entities.
And whether or not the group actually owes any top-up tax is irrelevant: the information return (bijheffing-informatieaangifte) exists regardless.
Certain entities are carved out for WMB 2024 purposes. This includes: government bodies, international organizations such as the UN and the OECD, and, under certain circumstances, their subsidiaries, non-profit organizations, and qualifying investment vehicles serving as UPE. This carve-out, however, has a nuance: excluded entities remain relevant when assessing the € 750 million threshold, but their income and taxes are subsequently excluded from the calculation. Groups with mixed structures – part commercial, part public-interest – cannot therefore assume that the exclusion applies without carefully assessing the requirements.
How is the ETR Calculated?
The Pillar Two effective tax rate [‘ETR’] is calculated per jurisdiction, not per entity, and is not the same as a group’s existing corporate income tax rate. Both the income and tax parts of the calculation start with financial accounting data, not the fiscal accounts.
On the income side: the starting point is the net income or loss of each constituent entity as reported under the UPE’s accounting standard, before consolidation eliminations. That figure is then adjusted. Certain income items drop out of the WMB 2024 base, this includes dividends and capital gains from qualifying interests in subsidiaries.
On the tax side: ‘covered taxes’ include taxes imposed on a group entity’s income or profits – including deferred taxes – but, of course, not without exclusions: amounts not expected to be paid within five years, taxes on excluded income, and uncertain tax position reserves do not count. Critically, the top-up taxes themselves are not covered taxes; they do not roll back into the ETR formula.
The ETR Formula
The ETR formula is straightforward: ETR = B / I * 100%, where B is the sum of adjusted covered taxes as described above (the numerator) and I is the net income as also described above (the denominator), both rounded to four decimal places. As a rule, this blended jurisdictional ETR – as occurs from the so-called ‘jurisdictional blending’ – pools all constituent entities in any given jurisdiction into a single calculation. There are important carve-outs: investment entities, stateless entities, minority-owned constituent entities, and joint ventures get their own separate calculation.
Two further elements must be taken into account to arrive at the ‘final’ ETR. The substance-based carve-out reduces the taxable base by a fixed percentage of payroll costs and the net book value of tangible assets in the jurisdiction. This reflects the principle that a basic return on genuine economic activity should lie outside the scope of Pillar Two. The applicable percentages will step down over time: for fiscal years starting on or after 31 December 2025, the payroll percentage is 9.4%, and the tangible assets percentage is 7.4%, with both continuing to decline gradually towards 5% by 2032. Groups with meaningful Dutch substance (staff, machinery, and real estate) will want to ensure these figures are correctly captured, as they directly reduce the base on which any top-up is calculated.
Where the ETR falls below 15%, the top-up percentage (bijheffingspercentage) is the positive percentage difference between 15% and the calculated ETR. That percentage is applied to the net qualifying income after the substance-based carve-out (overwinst), to arrive at the top-up tax due per jurisdiction: S = P * O, where P is the top-up percentage, and O is the net qualifying income. The top-up tax is allocated among the profitable constituent entities in that jurisdiction in proportion to their qualifying income.
This is Niche, so be Aware that Accounting-Based ETR Calculations can Be Different!
A note of caution for Multinational Enterprises [‘MNE’s’] already running an ETR calculation for other purposes: the WMB 2024 ETR can deviate from the figure your group already produces, and the difference can be material. A prime example: the Dutch Innovation Box. It is effective for Dutch CIT purposes but does not produce a corresponding WMB 2024 adjustment. A group comfortably above 15% on its standard Dutch CIT ETR may find itself well below that on the WMB 2024 ETR once the Innovation Box income is included in the denominator without matching a covered tax entry in the numerator. This also applies to the liquidatieverliesregeling.
And these are not edge cases; they are why the Netherlands implemented the QDMTT rather than relying on other jurisdictions to collect the income.
Pillar Two’s Three ‘Top-Up Mechanisms’
The WMB 2024 operates through three distinct top-up mechanisms, applied in a fixed priority order. The architecture is designed so that the tax ‘revenue’ stays as close to the source as possible.
1: The Qualified Domestic Minimum Top-up Tax (“QDMTT”)
The first and preferred mechanism is the Qualified Domestic Minimum Top-up Tax [‘QDMTT’]. Where a group’s ETR in the Netherlands falls below 15%, the default expectation under the Pillar Two framework is that the Netherlands itself collects the top-up, keeping the revenue local rather than handing it to the UPE’s home state. The government’s explanatory memorandum to the WMB 2024 is rather direct about this: the QDMTT was implemented primarily for budgetary reasons. The QDMTT applies at the jurisdictional level: where a Dutch group has multiple constituent entities, the top-up, as explained above, is calculated on a blended basis across all of them, and, by legal fiction, one entity files and pays. On the filing side, where multiple Dutch entities may be in scope, they may designate a single local entity to file on their behalf, relieving the others of their individual obligations.
2: The Income Inclusion Rule (“IRR”)
The second mechanism is the IIR. This mechanism applies when the low-taxed jurisdiction has not implemented a qualifying QDMTT, or the QDMTT fails to collect the full top-up. The obligation under the framework then shifts upward in the group structure: in principle, to the UPE, or, if the UPE is located in a non-IIR jurisdiction, cascading down to the next parent entity in an IIR jurisdiction. The IIR has been in place in the Netherlands since 1 January 2024. Given that most major jurisdictions have now implemented some form of a qualifying QDMTT, the IIR is not expected to be the primary mechanism in most cases. However, it does matter for groups with low-taxed subsidiaries in jurisdictions that have not implemented a QDMTT.
3: The Undertax Profits Rule (“UTPR”)
The third mechanism, the UTPR, operates as a ‘backstop’, and it is a meaningfully different beast. Unlike the IIR, the UTPR requires no ownership link between the charging entity and the low-taxed one. Instead, the UTPR top-up is allocated across all jurisdictions where the group is active and has implemented the rule, based on a formula that weights headcount and tangible assets equally (50/50). The UTPR entered into force on 31 December 2024. It is furthermore worth mentioning that the UTPR is precisely the mechanism that is most directly affected by the Side-by-Side package, which, once implemented domestically, will exempt US-parented from it entirely. More on that below.
The Filing Deadline: Sooner than it Feels
For groups with a December year-end that fell within scope from the first reporting year (fiscal year 2024), the first Dutch bijheffing-informatieaangifte [‘GIR’] is due on 30 June 2026. The top-up tax return itself and payment need to be made before the 31st of August 2026. That means the clock is ticking.
A transitional rule applies to groups entering scope for the first time in 2024: they have 20 months from year-end, rather than 15 for the GIR, giving them until 31August 2026 for the information return as well. It is not expected that there will be extensions for the filing dates. The OECD’s suggestion to mitigate penalties during the early years provides some comfort on the enforcement side, but not the filing deadline or compliance itself.
One filing-related point that could catch groups off guard is that even when no top-up tax is due – because the ETR exceeds the 15% threshold in all jurisdictions – the GIR obligation still applies. The return needs to be filed regardless of whether any tax is ultimately due.
What Has Changed Since 2022: Administrative Guidance and the Side-by-Side Package
The OECD model rules published in late 2021 were always meant to be the starting point. Since then, the Inclusive Framework [‘IF’] has published several rounds of supplementary Administrative Guidance: in 2022, 2023, 2024, and January 2025. This guidance clarifies, and, in some cases, materially adjusts, how the GloBE rules should be applied in practice. Some of this guidance has already been incorporated in the WMB 2024 and other legislation. The remainder has been addressed through the WMB 2024 amendment bill, which forms part of the 2026 Tax Plan, published on Prinsjesdag in September 2025, and introduces several technical corrections with retroactive effect from 31 December 2023 for most measures.
The Side-by-Side Package
The influential and consequential recent development is the Side-by-Side package, agreed by the OECD’s Inclusive Framework on 5 January 2026.
The package is the formal codification of a political agreement reached at G7 level in June 2025: a framework under which the US tax system – in particular its domestic and CFC taxation rules – is treated as sufficiently equivalent to the Pillar Two rules to exempt US-parented groups from the IIR and the UTPR going forward.
The mechanics of the package work through a new Safe Harbour: the Side-by-Side Safe Harbour. If a UPE is resident in a jurisdiction recognized as having a ‘Qualified Side-by-Side Regime’, it may elect to treat its IIR and UTPR top-up tax as zero across all constituent entities, joint ventures, and stateless entities worldwide. As of January 2026, the US is the only jurisdiction listed on the OECD’s Central Records as meeting those criteria. This means that concerns with an MNE situated in a US jurisdiction are excluded from top-up tax. QDMTTs are deliberately carved out: they continue to apply in all implementing jurisdictions regardless of any Side-by-Side election, including for US-parented groups. The logic is straightforward: QDMTTs protect the local tax base and ensure that revenues are taxed where they are earned.
The package also introduces a UPE Safe Harbour, a targeted measure that effectively eliminates UTPR exposure for constituents of entities located in the UPE’s home jurisdiction. In doing so, it replaces the transitional UTPR Safe Harbour that existed until 31December 2025. Alongside this, a new permanent Simplified ETR Safe Harbour is introduced. This regime is intended to succeed the transitional CbCR Safe Harbour rules that allow many groups to sidestep the full GloBE calculation during the run-in period. The Simplified ETR Safe Harbour is designed as a structural simplification mechanism and will generally apply to fiscal years starting on or after 31December 2026, with optional earlier adoption from 31 December 2025 under specific conditions.
Early adoption of Simplified ETR Safe Harbour is not automatic. A filing entity may only elect into the regime for a tested jurisdiction at the beginning of 2026 if one of the following conditions is met:
- QDMTT Safe Harbour applies: the tested jurisdiction already qualifies for the QDMTT Safe Harbour. In practical terms, this means that the jurisdiction has implemented a qualifying domestic minimum top-up tax, allowing any top-up tax for Pillar Two purposes to be deemed nil.
- Single taxing jurisdiction: only one jurisdiction has taxing rights over said jurisdiction under the GloBE rules. This will typically be the jurisdiction of the UPE applying the IIR.
- Universal consent: where multiple jurisdictions have taxing rights (e.g. under the UTPR or IIR), early adoption is only possible if all relevant jurisdictions have made the Simplified ETR Safe Harbour available in their domestic legislation for fiscal years starting on or after 31 December 2025. In that case, the group must apply the election consistently across those jurisdictions.
To apply the Simplified ETR Safe Harbour, in the early adoption phase or from 31 December 2026 and onwards, the tested jurisdiction must meet the following set of objective criteria:
- Minimum ETR or loss position: the jurisdiction must demonstrate an ETR of at least 15%, calculated as ‘simplified taxes’ over ‘simplified income’. Alternatively, a loss position can also qualify.
- Clean record requirement: for a first-time election, the group must not have incurred any top-up tax liability in that jurisdiction in the 24 months preceding the first day of the relevant fiscal year.
- Scope of entities: the regime is broadly accessible. Most constituent entities, including non-material constituent entities, qualify. However, stateless entities and investment entities are generally excluded, as they remain subject to specific calculation rules under the standard Pillar 2 framework.
- Although distinct, the Simplified ETR Safe Harbour sits alongside other simplification measures such as the Side-by-Side Safe Harbour, which is particularly relevant for groups headquartered in jurisdictions that have a Qualified Side-by-Side Regime. The regimes share a common objective: reducing compliance friction where effective taxation outcomes are already aligned with the Pillar Two policy goals.
A key feature of the Simplified ETR Safe Harbour is its flexibility over time. Unlike the transitional CbCR Safe Harbour which operates on a strict ‘once out, always out’ basis, the Simplified ETR Safe Harbour allows a group to re-enter the regime after a 24-month cooling-off period, provided no top-up tax liability arose in that period.
To ensure continuity, the transitional CbCR Safe Harbour has been extended by one additional year, now covering fiscal years beginning on or before 31 December 2027. This creates a phased transition from CbCR-based simplifications to the more robust permanent Simplified ETR Safe Harbour framework. We will address the CbCR Safe Harbour (and its practical implications) here.
Implications for Netherlands-Based Groups
For NL-based groups and NL-based intermediate parent entities, the Side-by-Side package will, in most cases, not affect the current (first) filing cycle. The Side-by-Side Safe Harbour applies to fiscal years starting on or after January 1, 2026, meaning that fiscal years 2024 and 2025 remain fully in-scope and have to be dealt with under the existing framework. The Dutch State Secretary of Finance has informed Parliament that separate legislation on the Side-by-Side package is expected before the summer of 2026. Until that legislation is enacted, the Safe Harbour is not available in the Netherlands under the domestic WMB 2024.
For the current filing cycle, groups should therefore proceed on the basis that the existing rules apply in full and that no exemption is provided by this new package.
Examples of the Side-by-Side Package’s Effects
Because the US has been designated by the Inclusive Framework as a jurisdiction with a Qualifying Side-by-Side regime, the US UPE in the example can elect for the Side-by-Side Safe Harbour. This entails that for the entire group, the top-up tax under the IIR and the UTPR is deemed to be nil. Consequently, the Netherlands cannot levy top-up tax under the UTPR on profits in Bermuda, because the rules in the US, such as NCTI, are considered equivalent. However, the Safe Harbour has no impact on the QDMTT in the Netherlands. If the Dutch entity is low-taxed, it must still pay the Dutch domestic top-up tax, regardless of the Side-by-Side status of the US UPE.
Here, the status of the UPE is decisive. The Side-by-Side Safe Harbour can only be elected by groups whose UPE is established in a qualifying Side-by-Side jurisdiction. Because the UPE is located in Bermuda (which does not have a qualifying Side-by-Side regime), the group as a whole is not exempt under the Side-by-Side Safe Harbour. The US intermediate parent may still have to apply the US equivalent of IIR (NCTI previously known as GILTI) to low-taxed subsidiaries, but this does not relieve the other jurisdictions from UTPR obligations with regard to the remaining group entities. The Side-by-Side Safe Harbour neutralizes IIR top-up taxation at the level of an intermediate parent only if the UPE is located in a Side-by-Side jurisdiction. If the UPE is located in a non-qualifying Side-by-Side jurisdiction, the regular Pillar Two systematics continue to apply.
In this example, the most ‘powerful’ effect of the Side-by-Side regime is visible. Normally, in the absence of a QDMTT (in this example, in China), another country – such as the Netherlands via the UTPR – would be allowed to levy top-up tax. However, because the US UPE falls under the Side-by-Side regime, the top-up tax is deemed to be nil for the rest of the world for IIR and UTPR purposes. If, in this example, China does not levy top-up tax (i.e., no QDMTT), no Pillar Two top-up tax is imposed anywhere in the world on that income, because both backstops (IIR and UTPR) are effectively switched off by the Side-by-Side Safe Harbour.
The Relevance of Country-by-Country Reporting (“CBCR”) Within the Pillar Two Framework
CbCR has been part of Dutch tax legislation since 2016, introduced as part of BEPS Action 13. In short, large MNE groups report, on a jurisdiction-by-jurisdiction basis, where they earn their profits, where they pay their taxes, and how many employees and tangible assets they hold in each jurisdiction. Tax authorities could then use that information to identify discrepancies, flag transfer pricing risks, and gain a better sense of how income was allocated across the group worldwide.
The regime applies to multinational groups with annual consolidated revenues of at least € 750 million. The report is filed by the group UPE with the tax authority of its home jurisdiction, which then automatically exchanges it with the tax authorities of all other jurisdictions in which the group has a presence.
For most in-scope groups, CbCR has been a part of the annual compliance calendar now for close to a decade. It was understood as a risk-assessment tool for tax authorities, not a mechanism for directly adjusting taxable income and certainly not for public disclosure. That last point has already shifted as multinationals are also required to publish a public country-by-country report. This, of course, serves a different policy purpose (transparency rather than enforcement), but the underlying data structure is largely the same.
So, where do CbCR and Pillar Two actually meet? Within the Pillar Two framework, certain Safe Harbours allow an MNE Group to rely on its CbCR data to skip the full GloBE calculation for a given jurisdiction (we will get to the specifics below). CbCR is therefore no longer purely a risk-assessment tool for tax authorities, but has become a direct input into the Pillar Two computation itself.
The Conceptual Link Between CBCR and Pillar TWo
The relationship between the two regimes is not coincidental. Pillar Two and CbCR share the € 750 million consolidated revenue threshold, the same definition of ‘group’, largely the same approach to identifying constituent entities, and the same jurisdictional-blending logic. That alignment was deliberate, and it goes deeper than a shared revenue figure.
This also explains why the substance-based carve-out sits at the heart of Pillar Two. As explained above, the substance-based carve-out reduces a group’s taxable base by a fixed percentage of payroll costs and the net book value of tangible assets in each jurisdiction. It is the inverse of the concern that CbCR was designed to surface: profits parked in low-tax jurisdictions without genuine economic substance. MNE Groups with genuine activity in a jurisdiction – people on the payroll, real estate, machinery – will see their Pillar Two base reduced accordingly. Groups without that substance will not. The two regimes are, in that sense, not merely built on the same data; they are essentially addressing the same underlying issue that the BEPS project set out to tackle in the first place.
Transitional CBCR Safe Harbor Rules
The formal meeting point between CbCR and Pillar Two is the Transitional CbCR Safe Harbour. This Safe Harbour applies alongside the substance-based carve-out (if applicable) as discussed in this article. The logic behind it is straightforward: in the initial years of implementation, most groups would not yet have the data infrastructure to perform the full calculation across every jurisdiction. Rather than forcing incomplete or unreliable computations from day one, the Inclusive Framework allowed groups to use their existing CbCR data – data they were already collecting and filing – as a proxy for determining whether a detailed GloBE calculation was even necessary for a given jurisdiction.
The Safe Harbour operates on a jurisdiction-by-jurisdiction basis. For each tested ‘Tested Jurisdiction’, a group can skip the full Pillar Two calculation if that jurisdiction passes at least one of the three tests, all drawing from the group’s Qualified CbCR report (i.e., one prepared using qualified financial statements, broadly aligned with the UPE’s accounts standard) and its financial accounts.
Pillar Two’s Three Tests under CBCR Safe Harbor Rules
De Minimis Test
If a jurisdiction reports total revenue below €10 million and profit before corporate income tax below €1 million in the CbCR report, the jurisdiction falls outside the Pillar Two calculation. A jurisdiction with a loss automatically satisfies the income threshold.
Simplified ETR Test
A proxy ETR is calculated by dividing a jurisdiction’s income tax expense from its qualified financial statements, after removing amounts that would not qualify as covered tax under Pillar Two, notably the uncertain tax position reserves, by the profit before corporate income tax as reported in the CbCR report. If that simplified ETR meets or exceeds the applicable Transition rate, the jurisdiction qualifies. The Transition Rate is not a flat 15% throughout: it is 15% for fiscal years beginning 2023 and 2024, 16% for 2025, and 17% for 2026. The stepped rate is deliberate, ensuring the Safe Harbour does not function as a back door for jurisdictions sitting just above the minimum Pillar Two rate in the early years.
Routine Profits Test
The jurisdiction’s substance-based carve-out, computed in full under the Pillar Two rules, is compared to the profit before corporate income tax in the CbCR report. If the substance-based carve-out equals or exceeds the reported profit, the jurisdiction is treated as generating no excess profits on which top-up tax could be applied. Groups with significant payroll costs and tangible assets in a jurisdiction will want to run this calculation carefully; it can function as a meaningful Safe Harbour in its own right, even when the simplified ETR test is not applicable.
Procedural Points to Bear in Mind
Two procedural points are worth flagging as the first filing deadline approaches. First, the Safe Harbour operates on a ‘once out, always out’ basis within the transition period: an MNE Group that does not apply it for a given jurisdiction in a given fiscal year cannot subsequently revert to it for that jurisdiction in a later year. Given that the transition period has been extended, it now covers fiscal years beginning on or before 31 December 2027, in line with the Side-by-Side package. Groups should be deliberate about their approach from the outset rather than making ad hoc decisions.
Second, qualifying for the Safe Harbour in every jurisdiction does not exempt a group from filing the information return. Even where no top-up tax is due anywhere in the world, the bijheffing-informatieaangifte must still be prepared and filed. In that sense, CbCR data is not just an input to the Pillar Two calculation. It has become the evidential basis on which the filing obligation itself is assessed and documented.
Going from CBCR Reporting to Pillar Two Reporting
The Transitional CbCR Safe Harbour was always intended as a bridge. As the transition period will eventually wind down, groups will need to build out the more detailed data collection and computational capacity that Pillar Two actually requires. CbCR data will get you a long way, but not all the way.
The difference between CbCR and Pillar Two reporting is worth understanding. Under CbCR, the reporting is per jurisdiction and based on aggregated figures: total revenue, profit before corporate income tax, taxes paid and accrued, employees, and tangible assets. Under the WMB 2024, the calculation goes substantially deeper: deferred tax positions need to be tracked and adjusted, substance-based exclusions computed on a payroll-and-assets basis per jurisdiction, covered taxes filtered and allocated, and minority-owned constituent entities, joint ventures, and investment entities separated out for their own calculations. The WMB 2024 return is, in short, a materially more granular document than a CbCR report.
The permanent Simplified ETR Safe Harbour, introduced as part of the Side-by-Side Package is designed to ease some of that burden going forward. It replaces the transitional CbCR Safe Harbour from fiscal years starting on or after 31 December 2026, and provides a set of simplified income, revenue and tax calculation that groups can use for qualifying jurisdictions. Unlike the transitional variant, the simplified ETR Safe Harbour under the permanent framework targets a 15% ETR threshold directly, without the stepped transition rates. The underlying data requirements are broadly similar – groups still need qualified financial statements and CbCR data – but the computational framework sits closer to the actual Pillar Two rules.
The practical takeaway is straightforward: CbCR compliance and Pillar Two compliance can no longer be treated as separate workstreams. CbCR data feeds directly into the Pillar Two calculation, and, where a Safe Harbour applies, it is the very basis on which that calculation is made. Getting CbCR right has always mattered for transfer pricing risk management; it matters now just as much for Pillar Two.
