Pillar 2: What is it and what are the UK filing obligations?

What is Pillar 2? UK filing requirements explained

Pillar 2 forms part of the OECD’s Base Erosion and Profit Shifting (BEPS 2.0) project and is designed to address profit shifting to low-tax jurisdictions by large multinational groups.

It introduces a global minimum tax regime requiring multinational groups to pay a minimum effective tax rate of 15% in each jurisdiction in which they operate. The effective tax rate is calculated on a jurisdictional basis, and where it falls below 15%, a top-up tax may arise. This top-up tax is typically charged either in the parent company’s jurisdiction or in other jurisdictions where the group operates.

Although Pillar 2 is a global initiative, it is implemented through domestic legislation in each country.

UK implementation

The UK has introduced:

a Multinational Top-up Tax (MTT), which broadly aligns with the OECD’s Income Inclusion Rule (IIR), and
a Domestic Top-up Tax (DTT), which applies to UK profits taxed below the minimum rate.

A group falls within the scope of the UK rules where:

it has a UK presence (e.g. a UK company or UK branch), and
it has consolidated annual revenues of €750 million or more in at least two of the previous four accounting periods.

The UK rules apply to accounting periods beginning on or after 31 December 2023.

UK filing requirements

Multinational groups within scope must comply with UK-specific filing obligations, even where Pillar 2 reporting is undertaken elsewhere in the group.

The UK requires:

a Global Information Return (GIR), or an Overseas Return Notification, and
a UK self-assessment return for top-up taxes.

The Overseas Return Notification allows HMRC to rely on a GIR filed in another jurisdiction, provided appropriate information exchange arrangements are in place.

All UK Pillar 2 returns must be submitted using HMRC-approved third-party software; they cannot be filed directly through HMRC’s online services.

Filing deadlines

For the first year of application, returns must be filed within 18 months of the end of the accounting period.

For example, a group with a year ending 31 December 2024 must file its UK Pillar 2 returns by 30 June 2026. For subsequent periods, the deadline reduces to 15 months after the period end.