Pillar Two for mid-sized groups in the Netherlands, Luxembourg and Belgium

A 15% floor for every country where a large group operates

Pillar Two is the global minimum tax agreed by more than 135 countries in the OECD Inclusive Framework. A group with consolidated revenue of EUR 750 million or more must pay at least 15% tax on its profit in every country where it operates. If the effective rate in a country is lower, a top-up tax brings it to 15%. The EU made the rules binding through Council Directive (EU) 2022/2523, and the Netherlands, Luxembourg and Belgium have applied them since fiscal years starting on or after 31 December 2023.

The top-up tax can be collected in three places. The country of the low-taxed company can collect it itself through a qualified domestic minimum top-up tax (QDMTT). If it does not, the country of the parent company collects it under the income inclusion rule (IIR). As a backstop, other countries where the group operates collect it under the undertaxed profits rule (UTPR). The Netherlands, Luxembourg and Belgium apply all three.

For mid-sized groups with EUR 750 million to EUR 3 billion of revenue, 2026 made Pillar Two real: the first returns were due on 30 June 2026, the OECD agreed a package for US-parented groups in January, and buyers and banks now ask about it in every deal.

Who is in, who is out

The test is applied every year. A group is in scope for a fiscal year if its consolidated revenue was EUR 750 million or more in at least two of the four fiscal years immediately before it. Revenue means the total revenue in the consolidated financial statements of the ultimate parent entity, including financial income and gains, not only turnover. A group that crosses EUR 750 million in 2025 and stays above it in 2026 is in scope from 2027.

Mergers and demergers have their own rules: when two groups merge, the revenues of both are added up for the years before the merger; when a group is split, each part is tested on its own revenue. An acquisition of a company by a group already in scope brings that company into the group's calculation from the date of acquisition, whatever its own size.

The effective rate is not the statutory rate. It is the adjusted covered taxes divided by the GloBE income of all group entities in a country, both taken from the accounts with a long list of adjustments. A Dutch company paying 25.8% on its taxable profit can still have a low effective rate if it uses the innovation box, large tax credits, accelerated depreciation without deferred tax, or if accounting profit and taxable profit differ for other reasons. Before any top-up, profit equal to a percentage of payroll and tangible assets in the country is excluded: the substance-based income exclusion, which falls gradually to 5% of each by 2033.

Law and practice: Council Directive (EU) 2022/2523 of 14 December 2022 (Pillar Two Directive), Articles 2, 3, 30 and 32; OECD GloBE Model Rules, Articles 1.1 to 1.5 and 5.3; OECD Administrative Guidance.

Netherlands, Luxembourg and Belgium: one directive, three laws

All three countries apply the same three rules from the same dates. They differ in registration, return formats and deadlines.

In practice a group with a Dutch, Luxembourg or Belgian subsidiary in a country with a QDMTT pays any top-up tax to that country. Because all three Benelux countries have a QDMTT, a low-taxed Dutch, Luxembourg or Belgian company pays its top-up tax at home, not to the parent's country. The IIR matters for Benelux parent companies with low-taxed subsidiaries in countries without a QDMTT. The UTPR matters for groups with a parent outside the EU in a country that does not apply the IIR.

Law and practice: Wet minimumbelasting 2024; Luxembourg law of 22 December 2023 and grand-ducal regulations of 22 December 2023 and 19 December 2025; Belgian law of 19 December 2023 introducing a minimum tax for multinational groups and large domestic groups. Guidance on belastingdienst.nl, guichet.lu and fin.belgium.be.

Ways to file less and pay nothing

Safe harbours let a group treat the top-up tax in a country as zero if simpler tests are met. For mid-sized groups they decide the size of the compliance project.

The transitional CbCR safe harbour uses the data of the country-by-country report the group already files. A country passes if one of three tests is met: revenue below EUR 10 million and profit below EUR 1 million in the country (de minimis); a simplified effective rate at or above the transition rate; or profit no higher than the substance-based income exclusion (routine profits). The transition rate is 15% for 2023 and 2024, 16% for 2025 and 17% for 2026 and 2027. A country that fails once cannot use the safe harbour in later years.

On 5 January 2026 the OECD Inclusive Framework agreed the side-by-side package. Its central element is the side-by-side safe harbour: for groups whose ultimate parent is in a country with a qualifying domestic and worldwide minimum tax system, the IIR and UTPR top-up tax is deemed zero in every country. So far only the United States is listed. The safe harbour does not touch QDMTTs, so a low-taxed Dutch or Luxembourg subsidiary of a US group still pays the Dutch or Luxembourg domestic top-up tax. It also does not cover a non-US group with a US intermediate parent.

The European Commission published a notice on 12 January 2026 confirming that EU member states can apply the package under Article 32 of the directive without amending it. National laws still need changes. The Dutch bill on safe harbours was submitted on 15 September 2026 with the Tax Plan 2027 and applies the side-by-side, UPE and incentive safe harbours from 1 January 2026. Luxembourg's bill no. 8795, submitted on 17 July 2026, has the same effect. Both are still proposals.

Law and practice: OECD/G20 Inclusive Framework, Side-by-Side Package of 5 January 2026; OECD Safe Harbours and Penalty Relief (December 2022) and later guidance; Commission notice in the Official Journal of 12 January 2026; Dutch bill Safe Harbour Rules Minimum Tax Act 2024 (Tax Plan 2027 package); Luxembourg bill of law no. 8795.

What was due in 2026 and what comes next

For a group with a calendar fiscal year, 2024 was the first year in scope and 30 June 2026 the first deadline. By that date each group had to file the GloBE information return (GIR) or, if another group entity filed it centrally, a notification naming the filing entity. In the Netherlands the minimum tax return and payment for 2024 followed on 31 August 2026. The Belastingdienst announced that it would not impose late-filing or late-payment penalties until 31 October 2026 where delays were caused by international implementation or system problems.

GIRs are exchanged between tax authorities. In the EU, Council Directive (EU) 2025/872, known as DAC9, lets a group file one GIR centrally for all member states. Luxembourg implemented it by the law of 19 December 2025. The practical effect for a mid-sized group is that one central filing serves the Netherlands, Luxembourg and Belgium, but each local entity still has its own registration and domestic top-up tax return.

Law and practice: Belastingdienst, Minimumbelasting: aangifte doen en betalen; Belastingdienst penalty decree of 30 July 2026; guichet.lu, Pillar Two: minimum effective taxation; Belgian extension of the first QDMTT and IIR deadlines announced on 3 April 2026; Council Directive (EU) 2025/872 (DAC9).

What changes for Luxembourg holdings and Dutch IP companies

Luxembourg holding companies, or SOPARFIs, are less affected than many owners fear. Dividends from shareholdings of 10% or more and gains on such shareholdings are excluded from GloBE income, just as they are exempt under the participation exemption. A holding that receives only exempt dividends has little or no GloBE income and no top-up tax. Investment funds and real estate investment vehicles at the top of a structure are excluded entities.

The weak points are elsewhere. Interest income on intra-group loans is GloBE income; it is taxed at 23.87% in Luxembourg City, which is fine, unless losses carried forward, tax credits or a ruling on a narrow margin push the effective rate down. Luxembourg IP companies using the 80% exemption under Article 50ter LIR often have an effective rate well below 15%. A Luxembourg parent of a low-taxed subsidiary in a country without a QDMTT must apply the IIR.

In the Netherlands the innovation box is the main source of top-up tax for mid-sized groups. Profit from qualifying R&D is taxed at 9% instead of 25.8%. Because the box is an income-based regime, it does not fit the substance-based tax incentive safe harbour, which covers incentives based on expenditure or production. Groups in scope should calculate the effective rate in the Netherlands with and without the box, including the substance-based income exclusion for their Dutch payroll and assets. In many cases the box still produces a saving, smaller than before, because the top-up only brings the Dutch rate to 15%.

• Map the effective rate per country. Use CbCR data to see which countries pass the transitional safe harbour for 2025 and 2026.
• Review incentives. Innovation box, IP regimes, tax credits and investment allowances: what is left after the top-up?
• Check holding income. Excluded dividends versus taxable interest, royalties and service fees in Luxembourg and Dutch holdings.
• Fix the data flow. GIR data comes from the consolidated accounts; local teams and auditors need a common file.
• Contracts and SPAs. Allocation of top-up tax between buyers, sellers and joint venture partners.

Law and practice: OECD GloBE Model Rules, Article 3.2.1 (excluded dividends and equity gains) and Article 1.5 (excluded entities); LIR, Articles 50ter and 166; Wet Vpb, Article 12b (innovation box).

Why Pillar Two still matters for smaller groups

A group with EUR 200 million or EUR 500 million of revenue files no GIR and pays no top-up tax. Pillar Two still reaches it in three ways. The first is a sale. A buyer that is in scope includes the target in its own calculation from the acquisition date. A Dutch innovation box company or a Luxembourg IP company that looks attractive at 9% may be worth less to such a buyer. Sellers should be ready to show the effective rate per country and the likely top-up.

The second is growth. Two years above EUR 750 million are enough, so a group that makes a large acquisition or grows quickly can be in scope within a short time, and the merger rules count the revenue of both groups.

The third is finance. Banks, private equity funds and auditors increasingly ask about Pillar Two in due diligence and in covenants. A private equity fund is usually an excluded entity itself, but its portfolio companies are tested separately, and a large portfolio company can be in scope on its own.

Law and practice: OECD GloBE Model Rules, Article 6 (mergers, acquisitions and joint ventures); Administrative Guidance on the revenue threshold for mergers and demergers.

Is your group in scope of Pillar Two?

Simplified: calendar fiscal year, consolidated revenue as in the parent's accounts, no merger or demerger. The result is a starting point, not a GloBE calculation.

Pillar Two for mid-sized groups: frequent questions