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Council Directive (EU) 2022/2523 of 15 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union (Pillar Two Directive)RecitalsChapter I General Provisions (arts. 1-4)Article 1 Subject-matterArticle 2 ScopeArticle 3 DefinitionsArticle 4 Location of a constituent entityChapter II IIR and UTPR (arts. 5-14)Article 5 Ultimate parent entity in the UnionArticle 6 Intermediate parent entity in the UnionArticle 7 Intermediate parent entity located in the Union and held by an excluded ultimate parent entityArticle 8 Partially-owned parent entity in the UnionArticle 9 Allocation of the top-up tax under the IIRArticle 10 IIR offset mechanismArticle 11 Election to apply a qualified domestic top-up taxArticle 12 Application of a UTPR across the MNE groupArticle 13 Application of the UTPR in the jurisdiction of an ultimate parent entityArticle 14 Computation and allocation of the UTPR top-up tax amountChapter III Computation of the qualifying income or loss (arts. 15-19)Article 15 Determination of the qualifying income or lossArticle 16 Adjustments to determine the qualifying income or lossArticle 17 International shipping income exclusionArticle 18 Allocation of the qualifying income or loss between a main entity and a permanent establishmentArticle 19 Allocation of the qualifying income or loss of a flow-through entityChapter IV Computation of adjusted covered taxes  (arts. 20-25)Article 20 Covered taxesArticle 21 Adjusted covered taxesArticle 22 Total deferred tax adjustment amountArticle 23 Qualifying loss electionArticle 24 Specific allocation of covered taxes incurred by certain types of constituent entitiesArticle 25 Post-filing adjustments and tax rate changesChapter V Computation of the effective tax rate and the top-up tax (arts. 26-32)Article 26 Determination of the effective tax rateArticle 27 Computation of the top-up taxArticle 28 Substance-based income exclusionArticle 29 Additional top-up taxArticle 30 De minimis exclusionArticle 31 Minority-owned constituent entitiesArticle 32 Safe harboursChapter VI Special Rules for Corporate Restructuring and Holding Structures (arts. 33-37)Article 33 Application of the consolidated revenue threshold to group mergers and demergersArticle 34 Constituent entities joining and leaving an MNE group or a large-scale domestic groupArticle 35 Transfer of assets and liabilitiesArticle 36 Joint venturesArticle 37 Multi-parented MNE groupsChapter VII Tax Neutrality and Distribution Regimes (arts. 38-43)Article 38 Ultimate parent entity that is a flow-through entityArticle 39 Ultimate parent entity subject to a deductible dividend regimeArticle 40 Eligible distribution tax systemsArticle 41 Determination of the effective tax rate and top-up tax of an investment entityArticle 42 Election to treat an investment entity as a tax transparent entityArticle 43 Election to apply a taxable distribution methodChapter VIII Administrative Provisions (arts. 44-46)Article 44 Filing obligationsArticle 45 ElectionsArticle 46 PenaltiesChapter IX Transition Rules (arts. 47-51)Article 47 Tax treatment of deferred tax assets, deferred tax liabilities and transferred assets upon transitionArticle 48 Transitional relief for the substance-based income exclusionArticle 49 Initial phase of exclusion from the IIR and UTPR of MNE groups and large-scale domestic groupsArticle 50 Election for a delayed application of the IIR and UTPRArticle 51 Transitional relief for filing obligationsChapter X Final Provisions (arts. 52-59)Article 52 Assessment of equivalenceArticle 53 Exercise of the delegationArticle 54 Informing the European ParliamentArticle 55 Bilateral agreement on simplified reporting obligationsArticle 56 TranspositionArticle 57 Review by the Commission of the implementation of Pillar OneArticle 58 Entry into forceArticle 59 AddresseesDone at
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AI Summary of Recitals

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Version status: | Document consolidation status: Updated to reflect all known changes
Version date: 22 December 2022 - onwards

Recitals

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 115 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Parliament [OJ C 290, 29.7.2022, p. 52.],

Having regard to the opinion of the European Economic and Social Committee [Opinion of 19 May 2022 (not yet published in the Official Journal).],

Acting in accordance with a special legislative procedure,

Whereas:

(1) In recent years, the Union has adopted landmark measures to reinforce the fight against aggressive tax planning within the internal market. The anti-tax avoidance directives have laid down rules against the erosion of tax bases in the internal market and the shifting of profits out of the internal market. Those rules converted into Union law the recommendations made by the Organisation for Economic Cooperation and Development (OECD) in the context of the initiative against base erosion and profit shifting (BEPS) to ensure that profits of multinational enterprises (MNEs) are taxed where the economic activities generating those profits are performed and where value is created.

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