International Tax

Pillar Two

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In October 2021, more than 130 jurisdictions agreed to implement the second of two pillars in the OECD’s framework aiming to reform the taxing of the digital economy.
Pillar Two Recent Updates
Read the latest updates on the OECD‘s two-pillar approach to address tax challenges from the digitalization of the economy.
Pillar Two Recent Updates
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Pillar Two consists of two domestic and one treaty based rules, together referred to as the Global Anti-Base Erosion (GloBE) rules.

The GloBE rules introduce a global minimum Effective Tax Rate (ETR) of 15% for multinational enterprise (MNE) groups with consolidated revenue over €750m, regardless of the local tax rate or local tax base. This change will mean that in any jurisdiction where the effective tax rate is less than 15%, the tax paid must be topped up somewhere within the group (most likely by the group’s parent company).

Challenges of Pillar Two

The introduction of Pillar Two brings unprecedented changes to the international tax landscape, the likes of which haven’t been seen for decades. The rules will create a fundamental shift in the way certain groups are taxed as well as an additional global compliance and reporting obligation for those within scope of the rules.

We have identified key areas that businesses should consider in advance of the rules:

  • Timeline: EU Member States have until 31 December 2023 to transpose the EU’s Minimum Tax Directive into domestic law. The Pillar Two rules are therefore expected to be in place in Ireland as soon as 2024. There will be limited time between when the rules are brought into Irish law and when they come into effect in Ireland, so relevant stakeholders will need to understand the rules and their expected impact ahead of time in order to be Pillar-Two ready.
  • Data: The Pillar Two calculations are complex and will require a significant amount of data. It is likely that some required data will not exist, may not be available to those who need it, may not be in the right format and may come from many systems or locations. Because of the tight implementation timeline, it is essential to have systems in place now which allow for the gathering of necessary group financial reporting and tax data in time for Pillar Two.
  • Education & training: The introduction of Pillar Two is likely to create an additional burden for the group’s internal tax and finance teams. These rules are complex and will require responsive and agile solutions that are adaptable to business needs. Ensuring sufficient education and training, such that these teams understand the Pillar Two rules ahead of time, will help to map out the responsibilities of the group going forward.
  • Tax exposure: Pillar Two could create an additional tax risk for businesses. Understanding the eligibility for any of the transitional safe harbours, followed by calculation of the forecasted ETR and jurisdictional top-up tax could help in planning for any additional tax payable.

Grant Thornton support

Getting ready for Pillar Two can be overwhelming and can put a strain on business resources. At Grant Thornton, we have a network of local and international tax, accounting and finance experts who can help you understand the potential impact of these rules on your business, as well as how you might prepare for and mitigate against same. We have spent time developing a suite of service offerings tailored to our clients’ needs which will enable  us to  deliver a robust and customised plan for wherever you are on your Pillar Two journey.


How Grant Thornton can help

Safe harbour analysis and impact assessment

We will look at your organisation as a whole and perform a ‘heat mapping’ exercise to help you visualise which jurisdictions are high risk, which are of lesser concern and which may benefit from transitional safe harbours or exclusions. Our analysis will assess the availability of any exemptions provided for under the rules, helping us to identify and design your target operating model to allow for a smooth transition to Pillar Two. 

Risk evaluation

The results of our impact assessment will allow us to calculate the potential tax impact of Pillar Two for your group. We will undertake model Pillar Two calculations to determine the estimated ETR and top-up tax for each jurisdiction where you operate. These calculations will assess the readiness of the organisation for the implementation and identify any gaps in the necessary data.

Data mapping and gap analysis

In order for a group to effectively plan for the introduction of these rules, the necessary data to perform Pillar Two calculations will need to be identified and gathered for all in-scope entities. It is often unlikely that groups will have the level of data (i.e. financial and non-financial data, individual and consolidated, structured and unstructured) all in one place or in a usable format. We can assist you mapping out the different types of data required under Pillar Two, identify where there may be organisational gaps, and implement measures to help you close these gaps.


The rules will be implemented globally on different dates. Understanding the group’s compliance and reporting obligations in separate jurisdictions on a real-time basis will ensure the global reporting obligations are satisfied as they arise. In collaboration with our Financial Accounting Advisory Services and Audit teams, we will inform you of the group’s annual reporting requirements and assist you in completing the annual GloBE Information Return as well as the local returns, where required.

Expert support

Compliance with Pillar Two rules will likely require collaboration across different departments within your organisation. Our Pillar Two service offering will provide you with a technical analysis of the Pillar Two rules and how these may specifically impact your business. 

In Ireland and across the globe, Pillar Two legislation is still being drafted and debated. Each jurisdiction will need to adapt the rules to fit existing domestic legislation. It is therefore not yet clear what the rules will look like in different jurisdictions, and there will likely be many changes and nuances in each jurisdiction’s interpretation. Our domestic and international teams will continue to monitor legislative changes in the jurisdictions in which you operate and provide you with ongoing support as needed.

Support in selecting appropriate Pillar Two tools

We will provide an overview of the Pillar Two software and tools available on the market and advise you on the  offerings that are most suitable, based on your specific business needs. Different software can assist during different steps of Pillar Two. From data retrieval to preparation of calculations and statutory reporting, having the appropriate IT support in place can be essential to seamlessly integrate Pillar Two into your current operations.