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Pillar One

Pillar One seeks to create a new taxing right for market jurisdictions on “Amount A”. This new taxing right is independent of physical presence and will be determined based on a formulaic approach. It will only apply to MNE groups with both a global turnover in excess of EUR 20 billion and a pre-tax profit margin above 10%. The scope may be broadened in the future by decreasing the turnover threshold to EUR 10 billion. Pillar One also entails simplifications to the transfer pricing approach to “baseline” marketing and distribution functions, as well as mandatory and binding dispute prevention and resolution mechanisms to mitigate the risk of multiple taxation.

Pillar Two

Pillar Two seeks to enforce a global minimum corporate income tax at an effective rate of 15%, calculated on a jurisdiction-per-jurisdiction basis. It will apply to MNEs that meet the EUR 750 million threshold as determined under Country-by-Country rules, but a lower threshold may be applied at the discretion of implementing countries. Pillar Two consists in a mix of measures giving taxing rights to the jurisdiction of the group’s ultimate parent and to the jurisdictions of entities making intragroup payments to low-taxed group companies or jurisdictions.

How we can help

Our team can support you in modelling the impact of the new rules and identifying red flags, adapting your tax compliance process, assessing the opportunities for restructuringand going through dispute prevention and resolution procedures to prevent double taxation

We offer integrated services, in collaboration with both our attorneys-at-law and civil-law notaries.
Loyens & Loeff helps simplify the process by offering you a one-stop shop for all your M&A needs, including those which relate to tax.
Today, transfer pricing is one of the main tax issues faced by groups. Whether your business is a high-growth start-up or an established multinational, you need to comply with transfer pricing rules.