Pillar Two: Impact Side-by-Side Package On US Inbound Structures – New York Office Snippet

This Snippet provides an overview of the impact of the Side-by-Side Safe Package for Pillar Two on US inbound structures, i.e. non‑US parented multinational groups with operations in the US.

Side-by-Side Safe Harbour

The Side-by-Side Safe Harbour (SbS SH) switches off the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) for MNEs whose ultimate parent entity is located in a jurisdiction with a “Qualified SbS Regime” – currently only the US. As a result, the SbS SH is currently available to US‑parented MNEs only.

For non‑US MNEs active in the US, this means that US low‑taxed profits can still trigger a Top‑up Tax (TuT) exposure under the IIR or UTPR.

In addition, where a non‑US MNE holds non‑US subsidiaries through a US (holding) company subject to net amount of income earned by non‑US controlled foreign corporations, NCTI) (formerly known as GILTI), the group may be subject to both NCTI and IIR or UTPR on the profits of those non‑US subsidiaries. Until the end of