Short answer
The EU minimum-tax regime generally covers constituent entities in a Member State where their multinational enterprise (MNE) group—or large-scale domestic group—reports consolidated annual revenue of at least EUR 750 million in at least two of the four fiscal years before the tested year. Governmental bodies, international and non-profit organisations, pension funds, and certain ultimate-parent investment funds and real-estate vehicles are among the excluded entities, but their revenue still counts when testing the group threshold.
For each jurisdiction, the group calculates a GloBE effective tax rate. If it is below 15%, a top-up percentage is applied to excess profit after the substance-based income exclusion. A qualified domestic top-up tax (QDMTT) normally takes priority, the income inclusion rule (IIR) charges remaining tax to parent entities, and the undertaxed profits rule (UTPR) is the backstop.
Safe harbours can deem the top-up tax for a tested jurisdiction and year to be zero or permit simplified calculations. They do not generally remove the group from scope or eliminate its GloBE Information Return. Since 1 January 2026, DAC9 requires Member States to use a common return and exchange relevant sections between tax authorities, while local tax returns, payment obligations and penalties remain governed by national law.
The EUR 750 million test is a group test
implements the OECD/G20 Pillar Two approach in EU law through Member State legislation. It deliberately covers both cross-border MNE groups and large-scale groups whose constituent entities are all in one Member State.
“This Directive applies to constituent entities located in a Member State that are members of an MNE group or of a large-scale domestic group which has an annual revenue of EUR 750 000 000 or more” —
The threshold must be met in at least two of the four immediately preceding fiscal years. A non-12-month year is adjusted proportionally, and special merger and demerger rules can change the look-back test.
A “constituent entity” includes consolidated entities and permanent establishments. Specified public, non-profit and pension bodies, and ultimate-parent investment funds or real-estate vehicles, are excluded. Some 95%- or 85%-owned entities qualify on conditions; excluded-entity revenue still counts toward EUR 750 million.
Top-up tax is calculated jurisdiction by jurisdiction
The regime does not simply compare the group's tax charge with 15%. It computes, for each jurisdiction, an effective tax rate (ETR) by dividing the adjusted covered taxes of relevant constituent entities by their net qualifying income. Special rules allocate income and tax for permanent establishments, flow-through entities, controlled foreign company regimes, investment entities, joint ventures and minority-owned subgroups.
Where the ETR is below 15%, the difference applies to excess profit after the substance-based exclusion for eligible payroll and assets. Later adjustments are added, domestic top-up tax is deducted, and the result is allocated among entities with qualifying income.
Article 30 contains a separate de minimis exclusion. On an annual election, jurisdictional top-up tax is zero where average qualifying revenue is below EUR 10 million and average qualifying income is below EUR 1 million or is a loss. Those averages normally cover the current and two preceding years. This full-rule exclusion should not be confused with the similarly sized transitional Country-by-Country Reporting (CbCR) safe-harbour test, which uses different data.
QDMTT, IIR and UTPR form a collection order
Member States may enact a QDMTT for low-taxed constituent entities in their territory. A qualifying domestic tax is credited against the jurisdictional top-up tax, up to zero. This gives the jurisdiction where the low-taxed profit arises the first opportunity to collect.
The IIR then generally requires an ultimate, intermediate or partially owned parent entity to pay its allocable share of remaining top-up tax for low-taxed entities. A top-down offset prevents the same amount being collected again where a lower parent has already applied a qualified IIR.
The UTPR is the backstop where a qualified IIR has not charged the tax, including specified third-country-parent cases. Jurisdictions allocate the residual using employees and tangible assets and may collect additional tax or deny deductions. EU UTPR measures generally apply for fiscal years beginning from 31 December 2024.
A tax described domestically as a “minimum tax” is not automatically qualified. Qualification, accounting consistency, administration and the current OECD central record matter. A QDMTT safe harbour can simplify the result further: where its conditions are satisfied, IIR and UTPR top-up tax for the tested jurisdiction is deemed zero rather than recomputed elsewhere.
Article 32 is the EU gateway for agreed safe harbours
“the top-up tax due by a group in a jurisdiction shall be deemed to be zero for a fiscal year if the effective level of taxation of the constituent entities located in that jurisdiction fulfils the conditions of a qualifying international agreement on safe harbours.” —
Article 32 defines such an agreement as international rules and conditions to which all Member States have consented. OECD/G20 Inclusive Framework materials therefore do not operate as free-standing EU legislation. Their EU effect depends on Article 32, the required Member State consent and applicable national implementation. Groups must also check whether a jurisdiction and rule are recognised as qualified in the current central record.
The incorporates agreed guidance through May 2026. Its principal safe-harbour routes include:
- Transitional CbCR safe harbour. Qualified CbC data must satisfy the de minimis, simplified ETR or routine-profits test. The extended period covers years beginning by 31 December 2027 and ending by 30 June 2029; ETR thresholds are 15% for 2023–2024, 16% for 2025 and 17% for 2026–2027. “Once out, always out” and data-integrity adjustments matter.
- QDMTT safe harbour. A domestic minimum tax must meet the accounting, consistency and administration standards; its label alone is insufficient.
- Permanent simplified calculations. These include routes for non-material constituent entities and the new Simplified ETR Safe Harbour, generally for years commencing on or after 31 December 2026, with a conditional optional earlier route.
- Other agreed relief. The 2026 package includes a substance-based tax-incentive safe harbour and side-by-side safe harbours for groups headquartered in a jurisdiction with an eligible regime. Side-by-side relief does not displace QDMTTs. The transitional UTPR safe harbour has its own narrow timing and 20% nominal-rate conditions.
These elections are jurisdiction- and year-specific. A safe harbour reduces computation or deems tax zero; it is not evidence that every constituent entity pays 15% under ordinary domestic tax rules.
The first Court appeal did not decide the tax merits
In Fugro v Council, C-146/24 P, the Court of Justice dismissed an appeal against the General Court's refusal to hear an annulment action concerning Directive 2022/2523. The judgment addressed whether the company was individually concerned and belonged to a closed class; it did not interpret the Directive's operative top-up-tax, safe-harbour or reporting rules. The current framework therefore remains primarily text- and implementation-driven.
Safe harbour does not usually mean no return
Article 44 ordinarily requires an EU constituent entity to file a top-up tax information return. Local filing is relieved where the ultimate parent or designated filing entity files in a jurisdiction with an effective qualifying competent-authority agreement, but the local entity must notify its authority who filed and where.
The ordinary deadline is 15 months after the reporting fiscal year. For the transition year it is 18 months. A calendar-year group whose transition year began on 1 January 2024 therefore reached the first standard transition deadline on 30 June 2026. Safe-harbour users still report the data and elections needed to support their claim; a transitional CbCR election, for example, requires qualified CbC and financial-statement information.
adds the central EU exchange system. Member States were required to apply it from 1 January 2026.
“Each Member State shall take the necessary measures to require the filing constituent entity of an MNE group to use the standard template set out in Section IV of Annex VII” —
The receiving authority disseminates the general and jurisdictional sections to Member States according to their taxing rights; the Commission does not receive the detailed return. First-year exchanges must not occur before 1 December 2026 and have a six-month exchange window after the filing deadline; the ordinary later window is three months.
The GloBE Information Return is not necessarily the local QDMTT, IIR or UTPR tax return, and it does not itself pay the tax. National law determines local returns, payment dates, record retention and effective, proportionate and dissuasive penalties. A group therefore needs a filing map, not just one global deadline.
Check transitional relief separately
Articles 49–50 provide separate transitional relief for narrowly defined initial-phase groups and qualifying small Member States. These are not Article 32 safe harbours, and other states' UTPR or reporting may continue.
Conclusion
Test the EUR 750 million threshold and exclusions; compute the jurisdictional ETR and excess profit; recognise any QDMTT; then apply IIR and UTPR. Test each safe harbour against current agreed conditions and national implementation, and file both the common information return and separate national returns.
Safe harbours simplify calculation or set top-up tax to zero for a jurisdiction and year. They rarely remove the group from scope, erase reporting, or determine where a separate national payment must be made.
Sources
This article provides general legal information, not advice for a specific matter. Laws, facts and procedural deadlines may change the result. Follow the linked primary sources and obtain local advice before acting.