Pillar 2 – Global minimum level of Corporation Tax

The registration requirements for large groups

The UK Government has adopted the OECD’s Model Rules for Pillar Two, which were agreed upon internationally in October 2021. The primary objective of these rules is to ensure that large ‘Multinational Enterprises’ (MNEs) pay a minimum level of corporation tax of 15% globally across the group, regardless of where they operate.

Groups with consolidated annual revenues exceeding €750 million in at least two of the past four accounting periods, will have a requirement to register with HMRC if they have a UK resident entity or UK permanent establishment. Registration also applies to UK-only groups or standalone UK companies if they meet the size criteria.

The first parts of the UK implementation of the rules (the Multinational Top-up Tax (MTT) and Domestic Top-up Tax (DTT), apply for accounting periods commencing on, or after 1 January 2024, meaning that (except in cases of short periods) the earliest years in scope will be those to 31 December 2024.

Affected groups/companies will need to register with HMRC within six months of the end of the first period within scope, therefore those with 31 December 2024 year ends will need to complete the registration process by 30 June 2024. The registration requirement normally falls on the ultimate parent company, but in many cases, they will nominate a UK group member to complete the registration (and returns) instead.

Registered groups must complete a Global Information Return, and a self-assessment return, within 15 months of the period end, but this is extended to 18 months for the first period. As such, returns with a 31 December 2024 year end will be due by 30 June 2026. In some cases, the filings could result in additional taxes being due in the UK, either on domestic profits or overseas group profits in order to reach the 15% minimum.

The third part of the UK implementation, the Under Taxed Profits Rule (UTPR) will be introduced for accounting periods commencing on or after 1 January 2025.

In larger groups, it will not always be obvious who will take responsibility for registration and returns, and the first step is therefore likely to be to establish this within the group, so that the deadlines above can be met.

A member of the Ensors Corporate Tax team will be happy to assist.

The information contained within this publication is given by way of general guidance. Specialist advice should always be sought in relation to your particular circumstances. No liability is accepted by Ensors for any actions taken without seeking appropriate professional advice.