Global minimum taxation (Pillar II)

An overview of regulatory complexity, operational challenges, and technological solutions

The implementation of global minimum taxation (Pillar II) is one of the most ambitious tax policy projects of recent decades. What began as a conceptual template in the OECD Model Rules has now developed into a complex, country-specific set of rules – with serious implications for multinational corporate groups.

From a global framework to national diversity

More than two years have passed since the introduction of the OECD Model Rules. In the meantime, numerous countries—including Germany—have transposed the global guidelines into national law. However, even within the EU, the implementation approaches differ significantly in some cases. While countries such as Austria and the Netherlands have adopted pragmatic transitional arrangements, other countries—such as Poland—are still lagging far behind.

Added to this is an often underestimated complexity factor: national supplementary taxes, known as (Qualified) Domestic Minimum Top-up Taxes (Q[D]MTTs), which require separate assessment and calculation within the Pillar II framework. For corporations, this means that compliance with the requirements requires detailed knowledge across countries – not only of OECD regulations, but also of country-specific tax systems and accounting standards.

Safe harbor only for qualified supplementary taxes

One critical issue is the application of safe harbor rules. Only if a national supplementary tax is classified as “qualified” within the meaning of the OECD can companies use simplified procedures. This makes it necessary to examine and document every national regulation in detail – a task that often requires specialized IT systems or additional resources

Reporting: Data, data, data

The introduction of Pillar II is not just a regulatory issue – it is above all a data-driven challenge. In order to calculate the effective tax burden correctly, data sources must be harmonized, accounting systems adapted, and processes redesigned across the entire group. The following are particularly critical:

• Separation and qualification of dividend income
• Investment histories with temporal and quantitative breakdowns
• Cross-language and cross-system posting logic for ERP systems
• Currency conversions for central (top-side) postings
• Allocation and revaluation of deferred tax items

All of this requires not only technical expertise, but also clear processes between the local tax function, Group Tax, Accounting, and, if necessary, external advisors.

New requirements under BEG IV

With the Bureaucracy Relief Act IV (BEG IV), the German legislature introduced additional requirements in 2024. Transfer pricing documentation now mandatorily includes a transaction matrix. This must be submitted within 30 days of notification of the audit order—without separate request. Failure to submit it may result in surcharges of up to €5,000. The remaining records (e.g., local files) may be requested at a later date, but must also be delivered within 30 days.

No compliance without technology

The increasing complexity can hardly be managed without technological support. Tools such as the EY GloBE Engine help companies monitor globally applicable rules, perform automated calculations, and meet reporting obligations on time. Particularly noteworthy are:

• Flexible data integration (API, upload, questionnaires)
• Automated verification mechanisms to ensure data quality
• Rule-based localization for all country-specific requirements
• Visualization & dashboards for result analysis and compliance management

The GloBE Engine exemplifies how modern technology helps not only to implement regulatory requirements, but also to control them – including provision calculations and simulations.

Conclusion: Think globally, implement locally – with structure and system

Implementing global minimum taxation requires much more than just tax expertise. It requires effective interaction between governance, processes, and technology—across country and system boundaries. Investing early on in this area not only helps avoid risks, but also enables efficient use of resources and demonstrates operational excellence.