Status of implementation of Pillar 2

Implementation of the Organisation for Economic Co-operation and Development (OECD)’s Pillar 2 – a global minimum taxation framework, requiring large multinational companies to pay at least a 15% effective tax rate, has been decided in principle in most European Union (EU) countries and many other jurisdictions, and is in full swing in 2025.

In Germany, the Minimum Tax Act has been in force since 01 January 2024, but there are still considerable uncertainties in business practice and international coordination.

Current status in Europe 

EU member states, the UK, Switzerland, Turkey, Canada, and others have adopted Pillar 2 rulesincluding the Income Inclusion Rule (IIR), the Undertaxed Profits Rule (UTPR); and, in many countries, a Qualified Domestic Minimum Top-up Tax (QDMTT). These have been fully applicable in Germany since the beginning of 2024.

Most of the national legislative processes have either been completed or are nearing completion, such as the planned German Minimum Tax Adjustment Act, although the final version has been delayed in Germany until fall 2025.

Companies with consolidated revenues of at least EUR 750 million must calculate effective tax rates for each jurisdiction, and pay a “top-up” tax if they fall below 15%. Those affected must specifically review and implement the necessary adjustments and compliance measures.

By 2025, the UTPR is coming into effect across the EU and the UK, adding a new layer of complexity and cross-border compliance challenges, especially as national rules differ and some are still being finalised.

International challenges and US context

The US has not implemented Pillar 2 at the federal level and remains resistant to certain rules, especially the UTPR mechanism. Debate is ongoing to try to resolve cross-jurisdictional treatment and prevent tax disputes for US-based groups.

A major point of discussion is the US response to countries implementing Pillar 2, with potential “revenge taxes” or countermeasures against countries that apply their minimum tax on US corporations. The debate also includes the challenge of aligning Pillar 2 rules with the US domestic tax system, particularly regarding the treatment of US domestic income and the UTPR.

Many countries outside the EU are in various stages of implementation. Comprehensive country-by-country trackers are available and regularly updated, reflecting new legislation and effective dates globally. 

There are ongoing discussions about the fairness and impact of Pillar 2 on developing countries, with questions about whether the rules are truly inclusive for their participation in the global tax reform process. 

Challenges and open questions

In practice, uncertainties remain, for example, regarding the interpretation of safe harbour regulations and data point analysis for compliance by German companies.

The exchange of minimum tax reports (GIR) between EU member states was only finally anchored politically in March 2025, which has led to additional effort and uncertainty.

Companies must keep an eye on the constantly updated regulations worldwide. 

Despite political agreement and the adoption of guidelines, Pillar 2 remains a dynamic field in the short term, with further clarifications and adjustments expected in both tax and technology. Companies should continuously analyse these dynamic developments and respond flexibly to new requirements.

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Bernhard Schwechel is a Managing Partner of FACT GmbH and is experienced in the field of International Taxation. His areas of expertise include tax and business advice for large multinational corporations and mid-size companies, as well as for internationally-oriented individual clients. He supports his clients in inbound and outbound M&A projects.