Pillar Two: Exchange of information on information returns within EU (DAC 9)

The information return (GloBE Information Return or GIR under OECD model rules) is the principal filing instrument for top-up tax. It contains information on an entire group, its constituent entities, and its tax obligations in the countries where the group operates.

Article 44 of the EU Minimum Tax Directive requires each constituent entity to file its information return with its local administrator. An exception is possible if the ultimate parent entity (UPE) or another authorised entity files the top-up tax information return for the entire group and if the state where the information return is filed has an agreement on the exchange of information on top-up tax information returns with the constituent entity’s member state.

Exchange of information within the EU

An amendment to the Directive on Administrative Cooperation in the Field of Taxation (DAC 9) proposes the introduction of a mechanism for the exchange of information on top-up tax information returns filed within the EU. The existence of such a mandatory exchange of information will allow multinational groups to file their information returns centrally within the EU: the ultimate parent entity or another authorised entity will be able to submit the entire group’s information return in one single member state. However, the Minimum Tax Directive still requires each entity to notify its member state tax administration about which entity is filing the group’s information return and in which member state.

It should be added that the proposed regulation can only be applied in relation to constituent entities within the EU. The filing of an information return in a non-EU state can only be relied upon if an agreement on the exchange of information on top-up tax information returns is concluded. Also, the proposed regulation does not apply to other filings beyond the scope of the information return that may be required by individual member states.

Uniform format for the information return

The proposed amendment to the directive (DAC 9) also includes a new appendix with rules regarding the filing and the standard format for the top-up tax information return. Its format has been aligned with the OECD model (GIR) but includes minor adjustments for the purposes of the EU Minimum Tax Directive.

 
Next steps

The European Commission's proposal has yet to pass through the prescribed legislative process. Under the current wording, member states would then have to implement the rules by 31 December 2025. As it is a procedural regulation, it could already affect the first-time processing and filing of information returns for the allocated top-up tax.

Information on this topic can also be found in the KPMG EU Tax Centre report.