Pillar II: (Potential) reporting obligation by December 31, 2024 upon appointment of Austrian Pillar II Taxpayer

The global minimum tax (Pillar II) entails not only complex calculations but also various compliance obligations. Although the filing of the GloBE Information Return and the Austrian Pillar II advance notification is not due until 2026, one compliance issue may already require action by December 31, 2024.

The Pillar II rules are applicable from January 1, 2024 to all companies and permanent establishments of a group with consolidated group revenue exceeding EUR 750 million. Even if a group has multiple Austrian constituent entities, only one Austrian constituent entity is regarded as Pillar II Taxpayer, being obliged to pay any top-up tax that is due in Austria (domestic top-up tax, income inclusion rule, undertaxed profits rule). This constituent entity will then also be responsible for filing the Pillar II advance notification in Austria (details on the advance notification will be determined in a separate ordinance).

The Pillar II taxpayer is the Austrian constituent entity that:

• is appointed by the ultimate parent company; or
• if no appointment is made by the ultimate parent company, the top Austrian constituent entity (in the group structure); or
• if there is no top Austrian constituent entity (e.g., sister companies in Austria), the economically most significant Austrian constituent entity. For assessing which entity is the economically most significant Austrian constituent entity, in particular the following should be considered in an overall view: business activity, the amount of turnover, information from the Austrian commercial register, the GloBE Information Return, and the Country-by-Country Report.

Depending on the specific group structure and set-up, in many cases it will be advisable for the ultimate parent company to appoint a specific Austrian constituent entity as Pillar II Taxpayer. If such appointment is made, the Austrian Pillar II Taxpayer must notify the Austrian tax office, enclosing proof of appointment. This notification can be submitted via the Austrian FinanzOnline platform and is due by 31 December 2024 for fiscal years with a balance sheet date of December 31, and by December 31, 2025 for fiscal years that deviate from the calendar year.

If no appointment is made by the ultimate parent company, the top Austrian constituent entity or the economically most significant Austrian constituent entity will automatically become the Pillar II Taxpayer. In this case, no notification to the Austrian tax administration is required.

Whether the appointment of an Austrian constituent entity as Pillar II Taxpayer is advisable depends on the specific facts and circumstances; such appointment may have further tax and legal implications (such as the requirement of a Pillar II tax allocation agreement). Our Pillar II team is happy to assist and provide advice on the evaluation and next steps.