When are the UK Pillar Two deadlines?

Pillar Two is no longer a future problem. For in-scope businesses with a 31 December year end, the key filing deadline falls on 30 June 2026, and the work required to meet this deadline should already be underway.

Which businesses are in scope of the Pillar Two rules?

The Pillar Two rules apply to businesses with consolidated revenue greater than €750m in two out of the previous four periods, and with operations in jurisdictions that have enacted the rules. The regime applies to accounting periods beginning on or after 31 December 2023.

Although the test seems simple, complex corporate structures mean it’s not always obvious which entities form part of the ‘group’. Specific rules apply to mergers and demergers, which can also impact whether the revenue threshold is breached. Early assessment of the Pillar Two group entities, the relevant accounting periods and any breach of the revenue threshold is critical to avoiding last minute surprises.

Acquisitions and disposals of entities can also be challenging for Pillar Two compliance. The acquirer and the vendor must therefore understand and agree on their Pillar Two responsibilities for such entities.

Pillar Two filing obligations and what they mean

In-scope businesses with entities located in the UK must do the following to comply with their UK filing obligations:

• Submit a UK Pillar Two self-assessment return, setting out any top-up tax due in the UK. A return must be filed even if no top-up tax is due.
• Submit a global anti-base erosion (GloBE) information return (GIR) setting out the Pillar Two calculations for the business. If the GIR has been submitted in another jurisdiction with a relevant information sharing agreement with HMRC, then HMRC must be notified of where it has been submitted.

The deadline for complying for the first accounting period to which the rules apply is generally 18 months after the end of the period, and 15 months after the end of the period thereafter. For businesses with a 31 December 2024 year end, the UK filing deadline is therefore 30 June 2026.

The filing requirements and deadlines differ across jurisdictions and can often change. This means businesses should confirm local filing requirements early and keep up to date with any developments.

Although US-parented businesses are exempt from significant parts of the Pillar Two rules for periods beginning on or after 1 January 2026, they are still subject to the standard Pillar Two compliance obligations for periods before this exemption kicks in.

What is a transitional safe harbour and what makes a business eligible?

The transitional Country by Country Reporting (CbCR) safe harbour is a temporary simplification available for accounting periods beginning on or before 31 December 2027, and ending no later than 30 June 2029.

To qualify for the safe harbour in a particular jurisdiction, a business must meet at least one of the following tests based on the data within a qualifying CbC report:

• De minimis test – revenue below €10m and profit before tax below €1m in the relevant jurisdiction for the period.
• Simplified effective tax rate test – a jurisdictional effective tax rate of at least 15% for periods of account beginning before 1 January 2025. This rate increases to 16% for accounting periods beginning in 2025, and 17% thereafter.
• Routine profits test – profit does not exceed the stipulated routine return on substance, this is broadly based on payroll costs and book value of tangible assets.

Where a business passes at least one of these tests, the rules treat it as having no top‑up tax liability for that jurisdiction. As a result, there is no requirement to prepare a detailed GloBE calculation, although a return will still need to be submitted.

If a business fails to qualify for the transitional safe harbour in a jurisdiction for a particular period, it will not be able to elect into this safe harbour for that jurisdiction for any future period.

Given the meaningful difference in compliance burden, many businesses will be intending to rely on the safe harbour. To do so, they must ensure their CbC report meets the required conditions to qualify for Pillar Two purposes. This should be considered well in advance of the filing deadline, so businesses understand their position.

What happens if the transitional safe harbour is not available?

If a business does not qualify for the CbCR safe harbour in a particular jurisdiction, either because one of the tests noted above is not passed or because its CbC report is not qualifying, then a full GloBE calculation must be prepared.

This process is more onerous than the calculations required for the CbCR safe harbour. It requires businesses to collate a significant number of data points. Given the volume of data required and the complexity of the calculation, data collection should begin well ahead of the filing deadline.

Key Pillar Two actions and business priorities

As the 30 June filing deadline for those preparing accounts to 31 December 2024 gets closer, the following key actions are required to meet Pillar Two compliance obligations:

• Confirm whether the group is in scope - resolve any ambiguity around which entities are part of the Pillar Two group, what the relevant accounting periods are, and whether the business breaches the revenue threshold.
• Map the compliance footprint of the business - for each jurisdiction where there is a presence, confirm the local compliance requirements and determine how these will be met.
• Assess safe harbour eligibility - check whether the business qualifies for the CbCR safe harbour for all the jurisdictions it operates in. If it does not, consider what data points are required for the GloBE calculation.

If you need help meeting Pillar Two compliance obligations, please contact Sarah Hall or your usual RSM contact.

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