The statement issued by these 130 countries marks a significant acceleration of the timeline for entry into force of these radical tax reforms. In-scope multinational groups should step up their preparation for increased and more complex taxation. Our team can assist you with modelling the impact of the current proposals and exploring subsequent courses of action.

Pillar One


The main changes compared to the OECD’s October 2020 Blueprint concern the scope:

  • Pillar One will initially apply only to multinational enterprises (MNEs) with a global turnover of more than EUR 20 billion (instead of EUR 750 million previously contemplated) and having a pre-tax profit margin above 10%. The EUR 20 billion threshold may decrease after 7 years to EUR 10 billion if the Pillar One implementation is successful and achieves sufficient tax certainty.
  • All profits of an in-scope MNE would be subject to these new tax rules: there is no longer a specific focus on certain activities / sectors. However, the extractive and regulated financial services sectors are fully out of scope.
Amount A

As anticipated in the G7 agreement in June 2021, the new taxing right would apply to 20%-30% of the profit exceeding 10% of revenue (Amount A). Amount A would be apportioned pursuant to a revenue-based allocation key between jurisdictions where the MNE realises at least EUR 1 million of revenue (for jurisdictions with a GDP below EUR 40 billion, a lower threshold of EUR 250,000 would apply). To reduce the compliance complexity, a single group entity would make the tax filings.

Amount B

Work on Amount B (standardised arm’s length return for baseline marketing and distribution activities) should be completed by the end of 2022.

Solving double taxation

Mandatory and binding dispute prevention and resolution mechanisms should mitigate the risk of double taxation, as anticipated in the Blueprint (for more details, see our publication of 13 October 2020). Both the exemption and credit method may be used to relieve double taxation further to the taxation of Amount A in market/user jurisdictions. Only group entities realising residual profit (i.e. a >10% pre-tax profit margin) would bear the Amount A tax liability.


Amount A will be implemented through a multilateral instrument scheduled to be signed as of 2022 with entry into force in 2023. Unilateral measures, including digital services taxes, shall be removed.

Pillar Two


The EUR 750 million global turnover threshold and the exclusions (notably for investment and pension funds and governmental entities) foreseen in the October 2020 Blueprint are maintained. However, countries may optionally apply the Income Inclusion Rule (IIR) to MNEs headquartered in their jurisdiction even if they do not reach the EUR 750 million turnover threshold. International shipping income will be excluded.


The mix of top-up taxation rules is confirmed (for further details, see our publication dated 13 October 2020). Further technical work will refine the computation of the Effective Tax Rate (ETR). As per the G7 agreement, the minimum ETR will be at least 15%. To account for the specificity of distribution-based tax systems, there will be no top-up tax if the income is distributed (and sufficiently taxed) within 3-4 years. Furthermore, additional details are given on the Subject-to-Tax Rule (STTR): it will apply to interest, royalties and certain other listed payments that are subject to tax below a nominal rate of 7.5%-9% at the level of the related party recipient. The signatory countries commit to implementing the STTR in bilateral tax treaties with developing countries part of the Inclusive Framework upon request.


The Blueprint’s substance-based carve-out is maintained: the 130 countries propose excluding from the ETR computation an amount of income equal to at least 5% of the carrying value of tangible assets and payroll (at least 7.5% in the first five years). There will be safe-harbors and a de minimis exclusion – the details are still debated. The interaction with GILTI also remains subject to clarifications.


The ambition is to implement Pillar Two into law in 2022 for an entry into force in 2023. To that end, the Inclusive Framework will draw up an implementation plan that will provide for model legislation, a multilateral instrument to implement the STTR and the possibility to defer the entry into force of the Undertaxed Payment Rule (UTPR), which is the backstop to the IIR. The 130 signatories also stress that if Inclusive Framework members decide to implement the IIR and the UTPR, they commit to doing so in line with the abovementioned guidance and models. Moreover, regardless of whether they do or do not implement these rules, Inclusive Framework members should accept the application of these rules by other jurisdictions.

Impact & Next steps

We will further analyse the elements arising from this statement signed by 130 jurisdictions. The scope of Pillar One appears narrowed down due to the high turnover threshold in line with the wishes from the United States, although there is no longer a focus on certain sectors or business models. The Pillar Two developments are quite in line with the October 2020 Blueprint, subject to agreeing on the details; they also clearly show the different interests at play. Also, four EU member states – Ireland, Estonia, Hungary and Cyprus (which is not part of the Inclusive Framework) – have not signed the statement.

After the expected G20 endorsement at the July meeting, the next significant development should be the release of the detailed compromise in October. Given the ambitious target for entry into force in 2023, in-scope MNEs will need to swiftly project the impact of the two pillars’ rules and explore possibilities to mitigate the additional tax compliance burden.