Background 

The implementation of the OECD’s Pillar Two global minimum taxation model rules (GloBE Rules) has been to a large extent harmonised in the EU through Council Directive (EU) 2022/2523 of 14 December 2022 (Pillar Two Directive). Article 44 of the Pillar Two Directive sets out the filing requirements that constituent entities of in-scope groups must comply with. By default, each constituent entity must file a TTIR in the EU Member State where it is located. 

However, there is a derogation to that filing obligation to the extent that the in-scope group’s ultimate parent entity (UPE) or a designated filing entity files the TTIR on behalf of the entire group. This central filing is allowed as long as two conditions are fulfilled: (1) a qualifying agreement to exchange information is in effect between the jurisdiction of the UPE or the entity designated to file the TTIR on behalf of the group and the jurisdiction of the relevant constituent entity, and (2) the UPE or the designated filing entity has actually made the filing. DAC9 would enable meeting condition (1) within the EU. For further details on the content of DAC9 proposal, please see our prior webpost.

In addition to DAC9, another exchange mechanism has been proposed by the OECD: a Multilateral Competent Authority Agreement (MCAA) on the Exchange of GloBE information. Similar to DAC9, the purpose of the MCAA is to facilitate the exchange of information contained in the standardised information return (so-called “GloBE Information return, GIR) and discharge a constituent entity from the requirement to file a GIR with the tax administration of the jurisdiction where it is located under circumstances set out above and therefore facilitating central filing. For more information regarding the MCAA, we refer to our webpost.

As to the content of the TTIR and the information exchanged, the DAC9 proposal is essentially aligned with the OECD’s GIR.

MCAA vs. DAC9

When it comes to the information included in the GIR/TTIR to be exchanged and the jurisdictions receiving such information, DAC9 and the MCAA are to a very large extent aligned.

The General Section is to be exchanged with EU Member States (under DAC9), respectively designated MCAA signatory countries (under the MCAA), that implemented a qualifying IIR or UTPR if a constituent entity is located in such jurisdictions. This also applies to exchange with the jurisdiction of the (EU) UPE. Jurisdictions only implementing a qualified domestic minimum top-up tax (QDMTT) would also be provided with the General Section (both under DAC9 and the MCAA), except for the high-level summary.

The Jurisdictional Sections would be provided to those jurisdictions having taxing rights under a qualified IIR or UTPR with respect to the income of low-taxed constituent entities located in the applicable jurisdictions under the Pillar Two Directive (DAC9) or the GloBE Rules (MCAA). The Jurisdictional Sections are also provided to the QDMTT jurisdictions. Specific rules are foreseen for UTPR jurisdictions that effectively do not get any UTPR allocated. The jurisdiction of the UPE (if it has implemented a qualifying IIR or UTPR) would be provided with all Jurisdictional Sections.

The timeframe during which the automatic exchange of the above information must take place is generally within three months after the filing deadline for the information return under both DAC9 and the MCAA. For the first year, this is extended to six months. However, any automatic exchange of information under DAC9 will not take place before 1 December 2026 whereas any information shared under the MCAA may be exchanged before 1 December 2026.

Removal of a delegation of power to the European Commission

The DAC9 proposal initially included a provision empowering the European Commission to adopt delegated acts in respect to any future amendments to be introduced to the standard form of the TTIR. However, EU Member States did not agree. As a result, the standard form of the TTIR would have to be amended through an EU Council Directive (adopted at the unanimity of the EU Member States, as per article 113 of the treaty on the functioning of the EU under the special legislative procedure). Changes to the TTIR would thus require unanimity of EU Member States. This ensures EU Member States retain control, albeit it may slow down the procedure to adapt the standard form of the TTIR when the OECD releases adjustments to the template form of the GIR and/or additional guidance requiring additional elections or data points. The question also arises whether it reflects a desire of the EU Member States to keep control over whether new OECD administrative guidance on the GloBE Rules can directly take effect or should require amendments to the Pillar Two Directive.

Next steps

Once formally adopted by the EU Council and published in the Official Journal of the EU, EU Member States will have until 31 December 2025 to implement the national laws, regulations, and administrative provisions necessary to comply with DAC9. EU Member States that have elected to delay implementing the Pillar Two Directive shall also have to implement DAC9 by 31 December 2025.

In-scope groups are expected to file their first GIR/TTIR by 30 June 2026, as required under the Pillar Two Directive. The relevant tax authorities would have to exchange appropriate information from the GIR/TTIR with each other by 31 December 2026, at the latest.

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.