Pillar Two
Also: Global Minimum Tax, GloBE Rules, OECD Pillar Two, Global Anti-Base Erosion Rules, Imposition minimale mondiale, Globale Mindeststeuer, 15% minimum tax
OECD-backed rules imposing a 15% minimum effective tax rate on large multinational groups, jurisdiction by jurisdiction.
What It Is
Pillar Two is the global minimum tax framework developed by the OECD and agreed by a broad coalition of countries. It sets a 15% minimum effective tax rate on the profits of large multinational groups, calculated separately for each jurisdiction where the group operates. The rules apply to groups above a consolidated revenue threshold (the widely cited figure is EUR 750 million, the same threshold used for country-by-country reporting). If a subsidiary's profits are taxed below 15% in a given country, a top-up tax brings the total burden up to that floor.
Why it matters
Pillar Two removes much of the tax advantage of routing profits through low-tax jurisdictions. A CFO can no longer treat a subsidiary in a low-tax location as a reliable way to lift after-tax margin, because a top-up tax may claw back the difference. For senior leaders this reshapes decisions on where to book intellectual property, where to place holding companies, and how to model returns on cross-border investment. It also creates a heavy compliance and data burden: groups must gather granular financial and tax data per entity and per country, on tighter deadlines than before. A CDO or CFO who cannot produce clean, reconciled jurisdictional data will struggle to file accurately, which raises audit and penalty risk.
How it works
The rules calculate an effective tax rate for each jurisdiction by dividing covered taxes by GloBE income. Where that rate falls below 15%, a top-up tax is charged. The charge is collected through a set of interlocking mechanisms: a qualified domestic minimum top-up tax in the country itself, an income inclusion rule at the parent level, and a backstop rule if the first two do not apply. In practice, a group with operations in twenty countries runs the 15% test twenty times, then determines which entity pays any shortfall. Example: a technology group with a profitable arm in a low-tax jurisdiction runs the calculation, finds an effective rate of 9%, and owes a top-up equal to the gap up to 15%. Finance and data teams typically build a dedicated Pillar Two data pipeline drawing on the group's consolidation and ERP systems.