Pillar Two And The Real Estate Sector

Does Pillar Two really matter for the real estate sector? The scope of application is broad, the real estate related exclusions are not straight-forward and the calculation of the effective tax rate deviates from the local tax calculations, meaning that being active in a country with a statutory rate higher than 15% does not mean being released from any Top-up Tax. In addition to their own tax position, real estate investors should consider the tax position in their counterparty in transactions, be it asset deals, share deals and, even more importantly, the entering into joint ventures. In absence of grandfathering clause, parties should also reconsider their position in existing joint ventures as Pillar Two applies to these joint ventures.