Below we outline the main items of these new sets of Jan 2025 AG, being the fifth release of guidance complementing the OECD (Consolidated) Commentary to the GloBE Rules after the guidance released in February 2023, July 2023, December 2023 and June 2024. Additionally, we highlight the main items of the Q&A to the Transitional Qualified Status, the GIR and the GIR MCAA.

Although jurisdictions generally have two years to implement new administrative guidance, jurisdictions that have implemented the Jan 2025 AG early seem to be able to apply the new guidance to apply the so-called Switch-Off Rule under the QDMTT Safe Harbour to Constituent Entities in jurisdictions that have not yet implemented the new guidance.

Background

On 20 December 2021, the OECD/IF released GloBE Rules for the IIR and the UTPR (see our earlier tax flashes). Subsequently, the European Union approved the Pillar 2 Directive (EU Directive) closely following the GloBE Rules. In the years following the release of the GloBE Rules, the OECD/IF introduced “Commentary” and “Guidance” to “clarify” the GloBE Rules. Regularly, however, the additional commentary and guidance conflict with the GloBE Rules and the EU Directive.

Limitation on use of DTAs

Central Record of Transitional Qualified Status Jurisdictions

Updated GIR and GIR Guidance

GIR Multilateral Competent Authority Agreement

How can we support you?

The GloBE Rules have been introduced in the EU and other jurisdictions around the world for years starting on or after 31 December 2023 at the earliest. The Jan 2025 AG contains technical details that can impact the calculation of the GloBE ETR or the Simplified ETR for Transitional CbCR Safe Harbour purposes in various scenarios.

Our Pillar Two team is available to support you in analysing and modelling the impact of this new guidance and the GloBE Rules in general on your group, assisting you in setting up compliance processes and exploring ways to mitigate increased administration, taxation and complexity.

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