Are you ready for Pillar II?
It is an OECD initiative involving more than 140 countries to respond to the changing business environment, globalisation, and digitisation of the economy.
The main objective of this reform is to introduce a global minimum effective tax rate (ETR) of 15%. The new rules will apply in particular to large multinational and national groups whose consolidated annual revenues exceed EUR 750 million. For many businesses, this means the emergence of new responsibilities and the need for thorough preparation.
What is the objective of Pillar II?
The intention is to limit the shifting of profits to low- or zero-tax countries and to ensure that large companies pay their fair share of taxes in countries where they actually do business and create value. At the same time, the reform is to promote a fairer competitive environment among companies in the global market.
Who will be affected by the new rules?
Pillar II mainly concerns larger groups of enterprises that meet the set turnover limit. Although the rules may seem relevant only to multinational corporations at first glance, they can also have a significant impact on Slovak companies belonging to international groups. OECD estimates suggest that the global minimum tax regime will affect thousands of large multinational groups around the world, with the exact number of affected entities not officially limited.
What obligations does Pillar II entail?
The introduction of the new rules will require:
- collection and processing of extensive financial data,
- new calculations of the effective tax rate,
- regular reporting,
- modification of internal processes,
- cooperation between finance, accounting, and tax departments.
For many companies, it will not only be a tax issue, but also a technological and procedural challenge.
When did Pillar II come into force?
The implementation of Pillar II rules varies by country and jurisdiction. Within the European Union, the relevant directive was approved in December 2022, with Member States being obliged to transpose it into their legislation by 31st December 2023.
In several countries, the rules started to apply on 1st January 2024, with additional mechanisms and supplementary rules entering into force gradually from 2025. For this reason, it is important to continuously monitor legislative developments in all countries in which the Group operates.
Important date
In Slovakia, a top-up tax was introduced under Pillar II, which ensures a minimum effective tax rate of 15%. This means that this year, for the first time, a tax return will be submitted with the new rules, the deadline is 30th June 2026.
