What the 15% global minimum tax means for groups with at least €750 million in revenue
The OECD's 15% global minimum tax applies to groups with at least €750 million in consolidated revenue in two of the four prior years.
Pillar Two is the OECD's global minimum tax. It aims to make sure that large multinational groups pay tax of at least 15% in every country where they operate. Deloitte's summary of the model rules, released by the OECD's Inclusive Framework on 20 December 2021, describes the goal in those terms.
The rules do not apply on their own. Each country chooses whether to adopt them, and the model rules serve as a template for national laws. The European Union did so through Council Directive 2022/2523, dated 14 December 2022. On 5 January 2026, the OECD also released a side-by-side arrangement that changes how the rules apply to groups whose ultimate parent is in the United States.
Which groups fall inside the €750 million line
The main test is revenue. A group is in scope when its annual consolidated revenue is €750 million or more in at least two of the four fiscal years before the year being tested, according to Deloitte's summary. The figure is measured on the group's consolidated accounts, not on each company separately.
Some kinds of entity receive limited exclusions. Deloitte lists investment funds, pension funds, government entities, international organisations and non-profits. A summary of Cyprus's draft implementing bill, published by FastForward, covers large-scale domestic groups as well as multinational groups. It gives the threshold as revenue 'exceeding' €750 million and describes the rate as a minimum effective tax rate of 15%. That article describes a draft bill, not an enacted law.
How the 15% rate is worked out for each country
The test runs one country at a time. For each country, the adjusted covered taxes and tax base of the group's constituent entities there are aggregated to give that country's effective tax rate.
The top-up percentage is the difference between that effective rate and 15%. The top-up tax is that percentage applied to the country's tax base less the substance-based income exclusion.
The exclusion lowers the base. Under oecdpillars.com's summary, it equals 5% of eligible payroll costs for staff working in the country, plus 5% of the carrying value of eligible tangible assets located there. Investment property is excluded, and payroll capitalised into tangible assets is left out of the payroll carve-out.
Transitional rates are higher in the early years. The same summary gives starting rates of 10% for payroll and 8% for tangible assets, with reductions across 2023 to 2032. Its schedule ends at 9.2% and 7.6%, while Deloitte says the rates decline gradually to 5% in 2033; the exact year-by-year path is not clear from either summary.
Any exclusion larger than a country's GloBE income is lost and cannot be carried forward. The exclusion applies automatically unless the group elects out.
Who collects the top-up tax, and in what order
The main collection route is the income inclusion rule. It works from the top down. A group taxed below 15% in one country can owe the difference, and the ultimate parent usually calculates and pays it. If the parent's country has not adopted the rule, the next intermediate holding company in the ownership chain takes on that role, according to Deloitte.
The undertaxed profits rule is a backstop for low-taxed profits that the income inclusion rule does not reach. Deloitte says the tax is allocated among adopting countries using a 50/50 formula based on employees and tangible assets, and implemented through denial of a deduction for payments or an equivalent adjustment. Deloitte also says the undertaxed profits rule was to be deferred by one year to 2024.
Countries may also impose their own minimum tax, called the qualified domestic minimum top-up tax. It is optional. Any amount paid under it that is calculated in an equivalent manner to the model rules reduces the top-up tax payable in respect of that low-taxed country, as long as the country does not provide 'any related benefits'. Deloitte says the income inclusion rule was expected to take effect from 2023.
“A group taxed below 15% in one country can owe the difference, and the ultimate parent usually calculates and pays it.”
What the January 2026 side-by-side package changes
The OECD released the side-by-side package on 5 January 2026. Skadden reports that it now forms part of the Inclusive Framework's commentary on the GloBE rules. Under it, a group whose ultimate parent sits in a jurisdiction with a qualifying regime can elect to have its top-up tax treated as zero for the income inclusion and undertaxed profits rules. The election covers all constituent entities, joint ventures and subsidiaries in the group.
As of 5 January 2026, the United States was the only jurisdiction identified as qualifying. To qualify, a country needs a corporate income tax rate of at least 20%, a qualified minimum tax at a nominal rate of at least 15%, no material risk of an effective rate below 15%, comprehensive taxation of foreign income, and substantial base-erosion mitigation. A qualifying regime must also allow foreign tax credits for QDMTTs, on the same terms as any other foreign creditable tax, according to Skadden.
The package does not switch off domestic minimum taxes. Qualified domestic minimum top-up taxes continue to apply to the foreign operations of groups in the side-by-side system, and those groups still file GloBE Information Returns. Skadden says the format and deadlines for the election in those returns are not yet confirmed, and the OECD has not published a revised return.
Skadden says implementation is intended to be retrospective from 1 January 2026, and that each jurisdiction that already adopted the model rules must also legislate the package in its own law. The OECD plans to conclude a stocktake by 2029, which may lead to changes. Skadden also reports that the UK plans to apply the package to accounting periods starting on or after 1 January 2026.
