Pillar 2: OECD eases administrative burden ahead of approving GIR filing deadline

Threat of Duplicate Filings Averted

In recent months, groups faced a realistic scenario where the non-functionality of international agreements on the automatic exchange of information would force subsidiaries to file local (simplified) information returns directly with local tax authorities in every country of operation.

However, the current consensus among states that implemented qualified minimum taxes represents a major breakthrough. A total of 37 jurisdictions have agreed to temporarily waive penalties and requirements for the local filing of these simplified returns.

This international relief is, however, conditional upon taxpayers completing two crucial steps:

1. Central Filing: The multinational group must file a full, comprehensive GIR containing data for the entire group centrally in one of the 33 jurisdictions that confirmed they will have a fully functional system for receiving these filings by May 31, 2026 (the Czech Republic is included among these countries).
2. Local Notification: The local constituent entity (e.g., a Czech subsidiary) must submit a notification to its locally competent tax authority no later than June 30, 2026, stating that the central GIR filing has occurred (or will occur).

If these conditions are met, jurisdictions gain time to exchange data from the central GIR among themselves based on multilateral agreements, with a deadline of December 31, 2026. Only if this interstate information exchange fails to occur by the end of the year due to technical reasons may local tax authorities begin enforcing the supplementary filing of a local return.

Beware of Exceptions: Who Has Not Joined the Agreement?

From a tax planning and risk mitigation perspective, it is critical to note that this OECD Joint Understanding is not universal. Certain significant jurisdictions have not yet joined the agreement—specifically the Slovak Republic, Vietnam, the Bahamas, and North Macedonia. If your group operates in these countries, local legislation and compliance obligations must be analyzed separately, as the risk of mandatory local filing (and potential penalties) remains.

A specific, more restrictive approach has also been adopted by Poland and Greece. These countries are joining the relief only selectively, exclusively in relation to EU Member States that possess a functional central filing system.

Impact on the Czech Market and the Uncertain Stance of the Tax Administration

For Czech companies that are part of corporate groups headquartered outside the European Union (e.g., in the United Kingdom, Switzerland, Japan, Canada, or South Korea), this is very positive news. If the ultimate parent entity files the GIR in one of these recognized third countries, the Czech entity will only need to file a simple notification of the central filing, bypassing complex local reporting. Process-wise, this aligns the situation with filings within the EU.

However, a degree of caution is warranted. Although this represents a consensus at the OECD level, the final word in application practice lies with the Czech Ministry of Finance and the General Financial Directorate. The official guidance from the Czech Tax Administration regarding this Joint Understanding has not yet been published, a situation we recommend monitoring closely.

Pillar 2 rules continue to evolve rapidly, and managing tax risks demands precise coordination at both global and local levels. If you are uncertain how these new rules and exceptions impact your corporate structure, our international tax specialists are available to provide a detailed assessment and assist you in meeting the upcoming notification obligations.