The OECD’s Pillar Two project aims to ensure that Multinational Enterprises (MNE) groups meeting the EUR 750 million consolidated revenue threshold are always subject to a minimum corporate taxation of 15%. Much progress has been made in the past years: 

  • On 20 December 2021, the OECD released its model rules for the income inclusion rule (IIR) and undertaxed profits rule (UTPR), also referred to together as the GloBE Rules (for more information, see our Tax Flash). 
  • On 15 December 2022, the EU member states formally approved the EU directive setting out a harmonised implementation of the Pillar Two model rules in the EU (for more information, check our Tax Flash ).
  • On 20 December 2022, the OECD released amongst others its “Guidance on Safe Harbours and Penalty Relief”, which includes a transitional “CbCR Safe Harbour” for the initial three years (in most cases). Read our Tax Flash for more details.
  • On 1 February 2023, the OECD approved its first Administrative Guidance for the Pillar Two model rules.
  • On 17 July 2023, the OECD released additional reports regarding the Subject-to-Tax Rule (STTR) (see our Tax Flash), further Administrative Guidance (see our Tax Flash), and additional details concerning the GloBE Information Return (GIR) (see our Tax Flash). 

Key considerations draft bill

In line with the Directive, the draft bill contains an Income Inclusion Rule (IIR) and Qualified Domestic Minimum Top-up Tax (QDMTT) for fiscal years starting on or after 31 December 2023, and an Undertaxed Profits Rule (UTPR) for fiscal years starting on or after 31 December 2024.

The draft bill largely follows the Directive to ensure a consistent implementation among Member States. Below we highlight some key considerations in respect of the Belgian draft bill. 

General considerations 

  • Belgium chooses to implement Pillar Two in a separate Pillar Two Act instead of an implementation within its existing Income Tax Code.
  • The draft bill confirms that the OECD Commentary and Administrative Guidance is relevant for the interpretation of the draft bill. The Administrative Guidance issued on 1 February 2023 is considered in some instances, but no explicit reference is made to the Administrative Guidance issued on 17 July 2023.
  • The Belgian Ruling Commission will not be competent to issue rulings on Pillar Two. To ensure a consistent interpretation of the rules, advance questions can informally be submitted to a central service within the tax administration. The draft bill mentions that this service will, also considering future additional (international) guidelines, provide further clarifications on possible issues regarding the application of the Pillar Two rules.
  • The draft bill includes the transitional CbCR Safe Harbour. 

QDMTT, IIR and UTPR     

  • Belgium introduces a QDMTT which is in principle calculated in line with the GloBE Rules.
  • MNEs are encouraged to prepay the QDMTT and the IIR by imposing surcharges in case of insufficient prepayments (similar to what is the case for the Belgian corporate income tax).
  • Belgium chooses to levy the UTPR by means of an additional levy instead of a deduction limitation.
  • A joint and several liability is imposed for the payment of the QDMTT and the UTPR on all Belgian Constituent Entities.
  • A non-exhaustive list of jurisdictions that have a qualified QDMTT, a qualified IIR and a qualified UTPR can be drawn up by Royal Decree.


  • A ten-year statute of limitation period applies to the GloBE information return and QDMTT return.
  • The QDMTT return must be filed within 11 months following the relevant fiscal year. The GloBE information return must be filed within 15 months following the relevant fiscal year (18 months after the first year the group becomes subject to the GloBE Rules).
  • Failure to comply with the rules can result in a penalty up to EUR 250.000. 

Related amendments to the Income Tax Code 

  • The QDMTT, IIR and UTPR are not tax deductible for corporate income tax purposes.
  • The current tax credit for research & development (“R&D”) will be amended to qualify as a Qualified Refundable Tax Credit under the Pillar Two rules by reducing the repayment period from five years to four years. Within this four-year period, the taxpayer will also have the choice to either use the tax credit or to transfer the tax credit to a subsequent year. This measure would apply as of assessment year 2025.

Impact on Belgian minimum tax rule

The implementation of Pillar Two is linked to the Belgian minimum tax rule. According to this minimum tax rule, companies can carry forward tax losses indefinitely, but their use per taxable period is capped at a certain ceiling. Prior to 2023, these losses could be deducted up to EUR 1 million + 70% of the taxable result exceeding EUR 1 million. As a result, 30% of the taxable income exceeding EUR 1 million remained taxable, resulting in a minimum tax to be paid, irrespective of existing carried forward items. This minimum tax rule was used last year as Pillar Two placeholder. As of 2023, the ceiling is reduced to 40%, implying that 60% of the taxable income exceeding EUR 1 million becomes taxable at a rate of 25% resulting in a minimum tax of 15% (60% x 25%). Assuming that the draft bill is approved and published in the Belgian Gazette before year end, the ceiling will increase again from 40% to 70% as of 2024. 

How can we support you?

Our Pillar Two team is available to support you in analysing and modelling the impact of the draft bill on your group, setting up compliance processes and exploring ways to mitigate increased taxation and complexity. Especially considering that the Pillar Two rules practically have retroactive effect due to transition rules that apply as from 1 December 2021 (which is in line with the EU Directive as well as the OECD Model Rules), we advise in-scope groups to continuously assess these rules in particular.

Should you have any questions in the meantime, please contact a member of our Pillar Two team or your regular trusted contact at Loyens & Loeff.

Luxembourg Pillar Two