Pillar II – Extended P2-Notification deadline

In the framework of the 15% minimum taxation rules for large international and domestic groups, also known as Pillar II, Belgian group entities were required to file a P2-Notification by July 13, 2024. This deadline is now postponed to September 16, 2024 for Belgian group entities that do not plan to make Pillar II prepayments in 2024.

Pillar II rules were implemented in Belgian tax law at the end of 2023. These rules aim to introduce a 15% minimum tax rate for large international and domestic groups that realize a minimum annual consolidated revenue of 750 million euros. For a detailed discussion of this measure, please refer to our previously published article: Belgium approves minimum taxation of 15% for large groups (Pillar 2).

The Pillar II concept and rules originated within the OECD/G20 initiatives on Base Erosion and Profit Shifting ("BEPS") and were streamlined by the EU to ensure the same approach on this minimum tax within the EU member states.

The 15% minimum taxation entails that for each country where a corporate group operates, it must be analyzed if the combined tax burden of all group entities operating in that country (companies but also permanent establishments) equals at least 15%. If this is not the case, an additional top-up tax will be imposed. This top-up tax will be levied in the first place by the country where the 15% minimum tax rate is not met. However, if this country neglects to levy the top-up tax, the country where the ultimate parent entity of the group is located can still apply the top-up tax.

Determining the result of the group as well as the effective tax rate per country, requires a complex and technical calculation according to the so-called 'GloBE rules'. In addition, some temporary 'safe harbor' rules were also introduced, which are gradually being phased-out. These ensure that for a given country no calculation or a significantly simplified calculation can be made in the first years.

The Pillar II rules are applicable in Belgium for reporting periods starting as of December 31, 2023. Belgian entities of groups subject to the Pillar II rules will therefore have to file a first Pillar II tax return (out of three tax returns) at the earliest by November 30, 2025.

In anticipation of the above return(s) and in order to identify which groups and Belgian group entities in Belgium are subject to Pillar II regulation, the Belgian government published a Royal Decree on May 29, 2024, introducing a P2-Notification requirement.

This Notification requirement implies that one Belgian group entity, on behalf of all other Belgian group entities (if applicable) notifies the Belgian authorities, in view of obtaining a separate Pillar II enterprise number for the group from the CBE. Moreover, in the P2-Notification all ultimate / intermediate / partially-owned parent entities should be identified, as well as additional information on consolidated figures must be provided.

The initial deadline for making the P2 Notification was set at July 13, 2024, or within 30 days of the start of the first targeted reporting period if this deadline was later.

However, on July 2, 2024, the Belgian authorities published on their website that – albeit per tolerance – the filing deadline has been extended to September 16, 2024, to the extent that Belgian group entities do not intend to make Pillar II prepayments in 2024.

This extension is very welcome as there are still some practical and substantive unclarities regarding how the P2-Notification should be completed in some cases. It allows the Belgian entities to compile the necessary information and obtain the required clarifications.