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Services breadcrumb-icon Tax advisory breadcrumb-icon Dorovnávací daň (Pilíř 2)

Top-up Tax (Pillar 2)

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Pillar 2: The global minimum tax is reshaping the rules. Are you ready?

The Czech Republic brought Pillar 2 legislation into force on 31 December 2023. These new rules implement the OECD/G20 top-up tax framework based on GloBE (Global Anti-Base Erosion Rules). The bottom line: multinational companies with consolidated revenue above EUR 750 million must now pay at least 15% effective tax in every jurisdiction where they operate. 

Why the OECD is rolling out a global minimum tax

This initiative tackles a persistent problem: tax avoidance and aggressive tax planning. The new rules put the brakes on profit-shifting to low-tax jurisdictions and tax havens. They're part of the broader BEPS 2.0 (Base Erosion and Profit Shifting) initiative, which has brought together more than 140 countries, including all EU member states.

Pillar 2 creates a level playing field with uniform rules that boost transparency. Here's how it works: if a jurisdiction's effective tax rate drops below 15%, another country, typically the country, where the parent company is based, can collect the shortfall through a top-up tax.

How the Czech Republic has implemented Pillar 2

The Czech Republic enacted Pillar 2 through its Top-up Tax Act, which implements Council Directive (EU) 2022/2523. The legislation has three core elements:
  • ​domestic top-up tax (QDMTT) for Czech entities
  • Income Inclusion Rule (IIR) applied at the parent company level
  • Undertaxed Profits Rule (UTPR) when IIR doesn't apply
The Act also creates new administrative duties, including the duty to:
  • ​Prepare the GloBE Information Return (GIR) 
  • File a top-up tax return 
To ease the administrative burden, transitional rules provide simplified calculations through safe harbours. 

 Who needs to comply

Pillar 2 covers all corporate groups that hit EUR 750 million or more in annual consolidated revenue during at least two of the past four accounting periods. This net catches not just large multinationals but also groups with holding structures or substantial operations across multiple countries, including the Czech Republic.

What matters isn't how you're represented in a country, whether through a registered office or branch, but whether you have real economic activity there.

What companies need to do

Rolling out Pillar 2 compliance demands coordination across your tax, accounting, and IT teams. Companies should:
  • ​gather and analyse accounting and tax data using GloBE standards
  • revamp internal calculation and reporting systems
  • ensure compliance across all relevant jurisdictions
  • evaluate how the rules affect your effective tax rate and whether you'll owe top-up tax

The most frequent practical challenges

  • ​accounting and tax rules don't always align (particularly with deferred tax) 
  • accessing consolidated group-wide data can be complex 
  • implementing GloBE calculation algorithms requires significant effort 
  • finding qualified experts and suitable technology is tough
  • tight filing deadlines and steep penalties for non-compliance make potential shortcomings more consequential

How Rödl & Partner can help

Our multidisciplinary team brings together deep knowledge of international tax, accounting, and IT systems. We help clients:
  • ​determine whether Pillar 2 applies to their group
  • calculate effective tax rates (ETR)
  • build robust processes, reporting systems, and internal documentation
  • train staff and coordinate with headquarters
  • maintain tax compliance and handle dealings with tax authorities

Our recommendations

If your group's consolidated revenue exceeds EUR 750 million, here's what we suggest:
  • ​don't wait for your first reporting deadline – start analysing the impact now 
  • conduct a thorough data audit and spot potential risks
  • get your systems and teams ready for new calculations and reporting requirements

Kontakt

Contact Person Picture

Ing. Milan Mareš

Tax Advisor (Czechia)

Associate Partner

+420 530 300 500

Send inquiry
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