Partner
Certified Tax Advisor, Graduate in Business Administration
Pillar 2: OECD Side-by-Side Package Brings New Relief
- US companies largely exempted from Pillar 2 through Safe Harbours
- Additional relief for all corporate groups through Safe Harbours
- Full calculation can be avoided long-term in many cases
The OECD package published on January 5, 2026, implements the Side-by-Side approach agreed by the G7. This largely exempts US companies from Pillar 2. The package also includes relief for all corporate groups.
Relief for All Corporate Groups
In the short term, the extension of the CbCR Safe Harbour by one year provides particular relief. This allows synergies with CbCR to be utilized longer and significantly reduces compliance effort and costs.
Even after the CbCR Safe Harbour expires, many corporate groups can benefit from Permanent Safe Harbours. The foundation for this has already been laid in the German Minimum Tax Act. However, the specific OECD calculation guidelines for the three tests (Effective Tax Rate Test, Routine Profit Test, De Minimis Test) were previously missing.
The OECD package contains the calculation guidelines for the Effective Tax Rate Safe Harbour. They are not based on CbCR data, but on financial reporting packages. Adjustments are necessary, but less extensive than for the full calculation. The “once-out-always-out” rule fortunately does not apply here.
In 2027, the CbCR Safe Harbour and Effective Tax Rate Safe Harbour will run in parallel. If the CbCR threshold is met (2027: 17% vs. 15% for the Effective Tax Rate Safe Harbour), the former is preferable due to lower effort.
Relief for US Corporate Groups
From 2027, corporate groups with a US ultimate parent entity will be fully exempted from IIR and UTPR through the Side-by-Side Safe Harbour. QDMTTs remain applicable. The obligation to file GloBE Information Returns (GIRs) also continues.
All Changes at a Glance
Safe Harbour |
Previous regulation in the Minimum Tax Act |
Changes through OECD Side-by-Side Package |
| Temporary CbCR Safe Harbour | Application for fiscal years that
|
Application for fiscal years that
|
| Permanent Effective Tax Tate Safe Harbour | Missing calculation guidelines |
|
| Substance-based Tax Incentives Safe Harbour | – | Application from fiscal year 2026 |
| Side-by-Side Safe Harbour | – |
|
| UPE Safe Harbour | Temporary UTPR Safe Harbour Safe Harbour for fiscal years that
|
|
Overview of existing Safe Harbours in the Minimum Tax Act
Applicability
The new regulations must still be implemented into national law – in Germany as well as in most other jurisdictions. No amendment to the directive is required in the EU. The member states have already agreed to the implementation of the new Safe Harbours via the opening clause. In Germany, the extension of the temporary CbCR Safe Harbour as well as the introduction of the Side-by-Side Safe Harbour and the UPE Safe Harbour are planned as part of the Annual Tax Act 2026 (draft bill dated May 19, 2026).