Pillar 2 compliance: publication of GIR-related documents

A. Updated GIR template and release of MCAA

Updated GIR template

• The template of the GIR was first published by the OECD in July 2023 and updated now in January 2025.
• The published version incorporates changes taking into account feedback received on the initial draft during the public consultation process, certain refinements regarding the included definitions as well as updates in view of the development of new documents (such as the XML Schema mentioned below).
• The updated GIR document now also contains two new appendices, namely:
  • Annex B: setting out the so-called GIR notification template. With that template a particular jurisdiction A can get notified that the GIR was filed in the UPE / Designated Filing Entity jurisdiction B, i.e. essentially informing jurisdiction A that it will receive the GIR-information based on the MCAA from jurisdiction B. The OECD declares the use of the GIR notification template as best practice, but not as a must. It thus remains to be seen which jurisdictions will be asking for respective (annual) filings of this template;
  • Annex C: setting out the Transitional Penalty Relief.

Release of MCAA

• With 25 pages in length, the extent of the MCAA document released by the OECD is manageable, containing the actual wording of the MCAA (having nine sections) plus a respective commentary.
• The overall goal of the OECD is to enable a central filing of the GIR to reduce the compliance burden for groups that are subject to Pillar 2. The central filing approach foresees to file the GIR with one tax administration (i.e., in one jurisdiction only), which would then exchange the relevant information with the other countries. This holds true as long as the Ultimate Parent Entity or a Designated Filing Entity being located in a jurisdiction that has a Qualifying Competent Authority Agreement files the GIR accordingly and by the filing deadline.
• The MCAA shall serve as the legal basis to enable an automatic GIR exchange between relevant jurisdictions. Such exchange needs to occur within 6 months after the filing deadline of the GIR in the first year and within 3 months in following years.
• It is to be noted that an automatic GIR exchange will only take place between jurisdictions that have signed up to the MCAA. It is expected that Switzerland will be such a jurisdiction, following the Swiss ratification process of the MCAA.
• The MCAA picks up the Dissemination Approach as is mentioned in the GIR template and includes this term as a fixed definition in the agreement. Summarized, the Dissemination Approach foresees that the General Section of the GIR will be provided to the UPE jurisdiction and all other jurisdictions where a particular group has Constituent Entities. In contrast, the Jurisdictional Sections of the GIR will be confined to the jurisdictions that have a tax right either under the GloBE Rules or under a QDMTT with respect to that particular jurisdiction.

B. GIR XML Schema user guide: main aspects and observations

Overview

• The user guide on the GIR XML schema is a comprehensive document (stretching over 170 pages) designed to facilitate the automatic exchange of information related to Pillar 2 among tax administrations and for domestic filings.
•  The schema was approved by the Inclusive Framework in October 2024 and provides detailed instructions on the structure and use of the GIR XML schema.

Structure of the schema and user guide

• The GIR XML Schema is divided into several sections, each addressing specific data elements and attributes. The main sections include:

1.  Message Header: contains information about the sender, recipient, message type, and reporting fiscal year.
2.  ID and TIN Types: provides identifying and Tax Identification Number (“TIN”) information for Constituent Entities, Ultimate Parent Entities etc.
3.  GloBE Body: comprises five sub-sections:
   • Filing Info: identifies the Filing CE and MNE Group.
   • General Section: contains information on the corporate structure of the MNE Group.
   • Summary: provides a high-level summary of GloBE information.
   • Jurisdiction Section: includes information on safe harbors, exclusions, ETR computations, and Top-up Tax computations.
   • UTPR Attribution: Details the attribution of Top-Up Tax among relevant jurisdictions if the UTPR is applicable.

• The GIR XML Schema shall be used for the exchange of information reported under the GIR between competent authorities of two jurisdictions that have activated exchange relationships under the MCAA or a similarly qualifying agreement.
• Where appropriate, jurisdictions could also consider using the schema domestically for the purpose of gathering the required information from their respective Filing CEs.

Observations

• This user guide needs to be read in conjunction with the updated GIR template.
• In view of the extent of the user guide, its appendix might prove helpful by providing a diagrammatic representation of the GIR XML Schema with all its elements, offering a visual guide to the structure and components of the schema.
• It will remain to be seen which jurisdictions will apply the schema for domestic purposes as well. From a practical perspective, such an adoption would be desirable.

C. Guidance on Art. 8.1.4 and Art. 8.1.5 MR

Overview

• Art. 8.1.4 MR sets out that the GIR shall be filed in a standard template that is developed by the OECD and defines what information concerning the MNE Group needs to be included. Art. 8.1.5 MR adds that the GIR shall apply the definitions and instructions contained in that standard template.
• The Commentary regarding these two articles was not yet updated when the OECD released its Consolidated Commentary to the GloBE Rules in 2023. Following the publication of the updated GIR template and the above-mentioned GIR XML Schema, however, the language of the Commentary needed to be updated.

Content of the guidance

• While the changes to the Commentary regarding Art. 8.1.4 MR mainly concern the existence of an updated GIR template, the amendments to the Commentary on Art. 8.1.5 MR are of more relevance. Namely, it is mentioned that MNE Groups should use a single basis to complete the data points in the GIR.
• Implementing jurisdictions are expected to align their domestic legislation with the GloBE Model Rules to ensure consistency. However, the OECD acknowledges that differences in domestic legislation may arise, especially during the early stages of implementation. In the long run, the peer review mechanism should address inconsistencies and ensure that differences become less frequent over time. In the shorter term, however, inconsistencies between the GIR and the domestic legislation could occur. Therefore, the OECD has released additional guidance on Art. 8.1.5 MR to define how MNE Groups should complete the GIR in such circumstances: 
  • MNE Groups are generally required to complete the GIR based on the GloBE Model Rules (and respective Commentary). This is considered the relevant single basis / single source of information, ensuring consistency and reducing compliance costs;
  • A limited exception to this general rule is provided for jurisdictions eligible for the QDMTT Safe Harbour and for jurisdictions with exclusive taxing rights under the GloBE Rules. In such cases, the detailed computations are to be completed based on the domestic legislation of the QDMTT safe harbour jurisdiction. The usage of another single source to complete the GIR might result in differences, the impact of which on certain key indicators in the GIR would need to be reported by a specific MNE Group. Should tax authorities require additional information regarding such differences, the idea is to send an information request to the MNE Group rather than demanding an additional local return, unless there are legal constraints in a jurisdiction to accept data that does not correspond directly to the local legislation.

D. Swiss Pillar 2 compliance considerations (OMTax)

• In Switzerland, in-scope groups are subject to the QDMTT and IIR from 1 January 2024 and 1 January 2025 respectively, while Switzerland has not introduced a UTPR for the time being. More information on these topics can be found in our previous blog post.
• The deadline for filing the first Swiss QDMTT Return is 30 June 2026 for a lot of groups. Switzerland has introduced a web-based platform called OMTax, which will need to be used for the respective (electronic) filings.
• Unlike other jurisdictions, Switzerland does not have any Pillar 2 registration requirements ahead of the above-mentioned filing deadline but the registration will be needed by 30 June 2026 the latest. Nonetheless, it is worthwhile noting that the registration process involves a few steps, not all of which are electronic (e.g., sharing of a passkey via a physical activation letter) and different parties. As such, companies are well advised to look into this matter ahead of the actual filing deadline to ensure they will be ready for the filings on time.
• Considering the above, we recommend companies to start the registration process already now (the QDMTT-module of the OMTax platform is available since beginning of January 2025) and to familiarize themselves with the various functionalities.
• What steps of the process are covered through OMTax? The platform covers the procedural steps for identifying the Swiss Constituent Entity liable for the Swiss Pillar 2 filings along with its registration. Furthermore, the declaration and assessment of the Top-up Tax charge will be covered. A Swiss-specific aspect to note is that typically only one particular Swiss company shall be the designated filing entity. Its determination needs to follow the rules laid out in the Swiss Pillar 2 ordinance.
• In contrast, the issuance of Pillar 2 tax assessments and their actual settlement and various other aspects do not form part of OMTax but are rather dealt with by the cantons through their existing systems. It is to be noted that the platform is still being developed further, namely to ensure an efficient upload of data and to leverage data collected for the GIR for the purpose of the QDMTT return. More information on the OMTax platform can be found in the OMTax information leaflet section. 
• How can PwC help? We have been involved in the testing of OMTax and could therefore already make first experiences with the platform. A sneak-peek into the look of the registration and the platform itself can be found here. The registration process can also be handled by a tax representative. It goes without saying that the overall Pillar 2 compliance process will be a demanding exercise for most in-scope groups. We are happy to support along the journey to ensure compliance with the applicable regulations.