Pillar 2: Your experts for global minimum taxation

With the adoption of the EU directive on the introduction of global minimum taxation, all EU member states must transpose the Pillar 2 regulations into national law by the end of 2023. The sometimes very complex regulations require in-depth analysis in order to apply them correctly, determine the necessary data and calculate the applicable tax - the so-called “top-up tax”.

Our interdisciplinary Pillar 2 team, consisting of tax, accounting, data, process and IT experts, will be happy to support you in understanding the Pillar 2 regulations in detail and analyzing the impact on your company. We will work with you to develop a customized approach to ensure your company's Pillar 2 compliance in the future.Pillar 2: Your experts for global minimum taxation

How does the Pillar Two rulebook work?

The top-up tax can be levied either at the level of the ultimate parent entity (UPE), i.e. the parent company of the group, or in the country of the companies that are effectively taxed at a low rate (so-called domestic top-up tax).

In five application steps and through a country-by-country approach, the aim is to ensure that an effective minimum taxation of 15% is achieved in each jurisdiction in which one or more group companies and/or permanent establishments are located.

The digital implementation of Pillar Two

We support you in the selection, customization and implementation of a Pillar Two IT solution that ensures the implementation of all Pillar Two requirements in an efficient and flexible manner. Automated data delivery using interfaces to relevant upstream systems and the relevant Pillar Two calculations based on this can also be automated: from the calculation of GloBE income, covered taxes and substance-based income exclusion to the calculation of the effective tax rate and top-up tax - all in accordance with the Pillar Two regulations.

It is also possible to fulfill all compliance requirements and declaration obligations (submission of the Top-up Tax Information Return for each affected unit). We help you find and implement the right solution for you. The IT solutions currently available on the market include:

• SAP PaPM or BW (Fiori)
• AMANA GTC
• CCH Tagetik Global Minimum Tax
• DefTax

Pillar Two Managed Service as an alternative to an in-house solution

The WTS Pillar Two Managed Service can be used as an alternative to a Pillar Two in-house solution. The biggest advantage for companies is the low commitment of employee resources and the low need for internal training. In addition, no IT budget is required for the implementation of Pillar Two software and the managed service model can be implemented at short notice.

A preliminary project is usually required to prepare the ongoing Pillar Two service. This clarifies which companies are to be included in the calculation and from which upstream systems the data required for the calculation can be obtained.

The classic managed service process can be described as follows:

The required calculation input is provided by the company on the basis of a data collection template via a web interface. We take over the calculation and evaluation and make the results available again via the same web interface. After approval by the client, the tax return is sent to the tax authorities.

The scope of the results and analyses provided can be defined individually and can include, for example, management evaluations such as Pillar-Two reconciliations per country.

Safe Harbours - Simplifications through temporary and permanent simplification

On December 20, 2022, the OECD published three important papers on global minimum taxation. The OECD's Transitional Safe Harbours are of outstanding importance for German corporate practice. They provide relief, particularly in the introductory phase of Pillar Two, and are also incorporated into German law via a dynamic reference in the EU's Pillar Two Directive to the OECD Safe Harbours.

We have developed our own calculation tool for the efficient calculation of the Transitional CbCR Safe Harbour - the WTS Transitional CbCR Safe Harbour Tool and Dashboard. For an initial analysis, all we need is the latest available CbCR in Excel with a little additional information from the financial statements.

In cooperation with WTS Global, we manage Pillar Two worldwide

Thanks to our worldwide WTS Global network, which is managed from Germany, we are able to coordinate the Pillar Two guidelines smoothly with our partner firms in over 100 countries in consultation with the local entities. All WTS Global member firms deliberately refrain from carrying out annual audits. This rules out any conflicts with the Financial Market Integrity Act (FISG). The member firms of WTS Global focus exclusively on tax advisory services. With regard to the implementation of the very complex Pillar Two regulations, which are far-reaching for the companies concerned, it is not least the long-term client relationship that provides a certain degree of security.