Pillar Two: Ordering Rules For Pillar Two Taxing Rights – New York Office Snippet

Loyens & Loeff New York regularly posts 'Snippets' on a range of EU tax and legal topics. This is our latest Snippet from our Pillar Two series, on the ordering rules for Pillar Two ('P2') taxing rights.

P2 contains several mechanisms to levy top-up tax ('TT') on the profits of a low-taxed constituent entity ('LTCE'). Besides the Income Inclusion Rule ('IIR') and the Undertaxed Profits Rule ('UTPR'), countries have the option to introduce a Qualified Domestic Minimum Top-up Tax ('QDMTT'). The QDMTT is a domestic TT that is aligned with P2 principles. It enables countries to tax the low-taxed profits arising in their country before another country can tax such profits under the IIR or UTPR.