How does the Pillar 2 top-up taxes registration affect large businesses?
You may be aware that the UK’s BEPS
Pillar 2 top-up tax rules come into force for accounting periods beginning on or after 31 December 2023. Pillar 2 aims to ensure that large businesses pay a minimum effective tax rate of 15% within each jurisdiction they operate by imposing ‘Top-Up Taxes’, where that is not the case. These rules apply to multinational enterprises and groups of companies with annual consolidated revenues of €750 million in at least two out of the previous four accounting periods.
Who Needs to Register for Pillar 2 top-up taxes?
You need to register for Pillar 2 top-up taxes if both of the following situations applies to your group:
- Your group has at least 1 entity tax resident in the UK; and
- Your group has consolidated group annual revenue of €750 million or more in at least 2 out of the prior 4 accounting periods.
If this applies to your business, you will need to register with HMRC using their online service regardless of whether any topup taxes are due.
What are your responsibilities and deadlines for Pillar 2 Registrations?
A designated filing member must register for
Pillar 2 top-up taxes through HMRC’s online services within 6 months of the end of the first accounting period to which the rules apply. For example, a Group caught by these rules with a 31 December 2024 year-end must register by 30 June 2025. By default, this responsibility falls to the Group’s Ultimate parent entity (UPE). The UPE doesn’t need to be based in the UK to register for this. However, If the filling member is based outside the UK HMRC will not have the ability to automatically exchange certain Information.
What information do you need to register for Pillar 2 top-up taxes?
To register for Pillar 2 top-up taxes as a filing member for an entity you will require the following information.
- the name and registered address for the UPE
- the name and registered address for the filing member, if it is not the UPE
- if either of these are a UK limited company or limited liability partnership, you must also provide the company registration number (CRN) and Unique Taxpayer Reference (UTR)
- whether the group you are registering only has entities located in the UK, or in the UK and other jurisdictions
- the start and end date of the group’s accounting period
- contact details and preferences, for one or 2 individuals or teams in the group
- a contact postal address for the group
When will I need to start reporting and paying Pillar 2 top-up taxes?
Once the group has registered the first return would be submitted and any tax paid no later than:
- 30 June 2026 if the first accounting period ended on or before 31 December 2024; or
- 18 months after the last day of the group’s accounting period, if the first accounting period you reported for Pillar 2 top-up taxes ended after 31 December 2024
- The later of 30 June 2026 and 15 months after the last day of the group’s accounting periods for all other periods
Interest will be payable for any amounts not paid by the deadline