On March 11, the Council reached a political agreement on a further amendment of Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC9). As part of the European Union’s (EU) ongoing efforts to ensure a global minimum level of taxation of 15% (Pillar 2) for large multinational enterprises (MNEs), the EU introduced DAC9 to standardize reporting requirements and enable the automatic exchange of Pillar 2-related information among EU Member States.

As a general rule, every constituent entity (CE), including resident entities and permanent establishments, must file its Pillar 2 information return in the country where it is located. This could lead to extensive reporting obligations for multinational enterprises (MNEs). However, the adoption of DAC9 within the EU represents a significant opportunity to streamline compliance by allowing MNEs to designate one particular entity to file the Pillar 2 information return on behalf of the entire group.

This article provides a general overview of DAC9 reporting obligations and outlines the actions that MNEs can take at this stage. To support companies in the Pillar 2 reporting process, RSM has developed a structured approach that facilitates effective planning and ensures compliance with Pillar 2 reporting obligations.

This article is written by Juan Dosal ([email protected]) and Kseniia Shakhnazarova ([email protected]). Juan and Kseniia are part of RSM Netherlands Belastingadviseurs, with a focus on International Tax and Pillar 2.

Implementation of DAC9 as a Consequence of Pillar 2 Reporting

As a general principle under the Pillar 2 Income Inclusion Rules (IIR), the top-up tax, if any, should be assessed in the country where the Ultimate Parent Entity (UPE) is resident. Therefore, in most cases, the UPE would be responsible for filing the Pillar 2 information return in its residence state, except when the UPE is resident in a state that has not implemented Pillar 2 legislation (e.g., the United States or China). In such situations, the IIR would be assessed by the first entity in the corporate structure (Intermediate Parent Entity (IPE)) that is located in a jurisdiction that has implemented Pillar 2 legislation.

The OECD has developed a standardized template to assist countries in reporting and exchanging consistent Pillar 2-related information. This template outlines the specific data points to be considered for assessing the impact of Pillar 2 legislation and includes explanatory guidance on its use. It aims to strike a balance between providing tax administrations with the necessary information for effective compliance checks and minimizing compliance costs for MNEs.

The EU Council's proposal to amend DAC9 incorporates the OECD's Global Information Reporting (GIR) framework into EU law. Specifically, it designates the GIR as the Top-up Tax Information Return referenced in Article 44 of the Pillar 2 Directive.

Additionally, the proposal establishes a framework to streamline the exchange of Top-up Tax Information Returns between EU Member States and allows MNEs to transition from local filing to central filing. Central filing enables the Ultimate Parent Entity (UPE) or a designated filing entity to submit the return on behalf of all constituent entities, rather than requiring each entity to file separately. The framework incorporates a "dissemination approach" to ensure that all relevant jurisdictions receive the information they need, based on their role within the MNE structure, in alignment with the OECD framework.

For the exchange of information with jurisdictions outside the EU, Member States are required to enter into appropriate international agreements with those third countries. To ensure the smooth operation of information exchange and reduce administrative burdens, the proposed rules for intra-EU exchanges are fully consistent with the rules governing exchanges with third-country jurisdictions.

As a next step, EU Member States must transpose DAC9 into national law no later than December 31, 2025, with the first exchange of information set for 2026, covering the fiscal year 2024.

As the regulatory environment surrounding Pillar 2 continues to develop, particularly with regard to local Pillar 2 notification or registration requirements that must be complied with well before the filing of the top-up tax information return, MNEs must remain vigilant in their compliance efforts. By leveraging the opportunities provided by DAC9 and monitoring jurisdiction-specific Pillar 2 notification or registration requirements, MNEs can navigate the complexities of global tax compliance with greater efficiency and strategic foresight.

Applicability of DAC9 in the Netherlands

As a member of the EU, the Netherlands is required to implement DAC9 into its domestic legislation by December 31, 2025. The Dutch Minimum Tax Act (2024) is already broadly aligned with DAC9, as it already allows the central filing of top-up tax information returns, provided that an agreement for the automatic exchange of Pillar 2 information is in place.

Relevance

The European Commission has estimated that approximately 2,000–3,000 MNEs across the EU will be subject to Pillar 2 rules. Given the Netherlands' role as a hub for MNE groups, many of these MNE groups have an Ultimate Parent Entity (UPE) in a country that has not implemented Pillar 2 rules but have an Intermediate Parent Entity (IPE) resident in the Netherlands. This is particular relevant for a large number of MNE groups having a UPE resident in the US, as DAC9 could enable these groups to define their Pillar 2 reporting strategy effectively.

Forward Thinking

While DAC9 streamlines Pillar 2 compliance efforts by allowing for a single jurisdictional filing of the top-up tax information return, it requires a thorough understanding and verification of the information included in the filing. As jurisdictions may introduce additional data that may need to be included in the top-up tax information return, MNEs should proactively create a Pillar 2 strategy for identifying and collecting data required for Pillar 2 reporting purposes, mitigating the risk of over-collection, duplication, or missing data.

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