New safe haven for multinational groups with the highest parent company in the US – Pillar Two
New safe haven for multinational groups with the highest parent company in the US – Pillar Two
The deadline is approaching when Czech companies belonging to a multinational group of companies with a turnover exceeding CZK 750 million. They are obliged to submit a global information statement (GIR), in which they will state what rules they have decided to apply for the calculation of their tax liabilities and what exemptions from the obligation to pay top-up tax they have decided to apply.
Although the obligation to file a GIR should be fulfilled centrally at the level of the ultimate parent company, there will be a number of situations where this will not happen, or where such a filing will not meet the requirements of the local tax administrations in the jurisdictions in which the member entities of the group are established and it will be necessary to file the GIR locally as well.
For this purpose, the Ministry of Finance has prepared a draft decree in which the mandatory data structure of such a local GIR submission for the Czech Republic is specified in Annex No. 2. It is important to note that the submission must be made in xml format.
In January 2026, the OECD issued a document labeled "Side-by-Side Package". The aim of this document is to be implemented in local tax regulations related to the matching tax (QDMTT), the rules for taxing entities belonging to a group where the ultimate parent company is domiciled in the U.S. or in another jurisdiction that has not adopted the Pillar Two Rules and instead applies its own minimum income tax rules.
The US does not have a law in force that would allow the collection of a top-up tax (QDMTT). The US also does not have legislation in force that would directly implement the IIR (Income Inclusion Rule) according to the OECD Pillar Two model, where the obligation to pay a top-up tax for low-taxed entities in the group would be fulfilled by the parent company in the US. Instead, the US applies the GILTI (Global Intangible Low-Taxed Income) regime and now also the CAMT (Corporate Alternative Minimum Tax), which, however, are not recognized as a full-fledged replacement for the IIR under OECD rules.
Under the current global rules, companies belonging to a group controlled by a U.S.-based parent company would be required to pay the attributable top-up tax in their state of residence if low-taxed entities are identified in the group for which no top-up tax is paid in their country of residence. This would mean that Czech companies would be obliged to calculate the additional top-up tax in addition to the Czech top-up tax in their tax return. The calculation of such a tax would be administratively demanding without cooperation with the highest parent company.
The new safe haven "Side by Side" according to the rules described in the "Side-by-Side Package" material allows for an exemption from the obligations of Czech companies to apply the UTPR rule and to pay the matching tax assigned in the Czech Republic for low-taxed entities belonging to a group controlled by a parent company based in the USA.
A company filing a GIR can choose a secure Side by Side for the Czech jurisdiction for tax periods beginning on or after January 1, 2026.
Although the obligation to file a GIR should be fulfilled centrally at the level of the ultimate parent company, there will be a number of situations where this will not happen, or where such a filing will not meet the requirements of the local tax administrations in the jurisdictions in which the member entities of the group are established and it will be necessary to file the GIR locally as well.
For this purpose, the Ministry of Finance has prepared a draft decree in which the mandatory data structure of such a local GIR submission for the Czech Republic is specified in Annex No. 2. It is important to note that the submission must be made in xml format.
In January 2026, the OECD issued a document labeled "Side-by-Side Package". The aim of this document is to be implemented in local tax regulations related to the matching tax (QDMTT), the rules for taxing entities belonging to a group where the ultimate parent company is domiciled in the U.S. or in another jurisdiction that has not adopted the Pillar Two Rules and instead applies its own minimum income tax rules.
The US does not have a law in force that would allow the collection of a top-up tax (QDMTT). The US also does not have legislation in force that would directly implement the IIR (Income Inclusion Rule) according to the OECD Pillar Two model, where the obligation to pay a top-up tax for low-taxed entities in the group would be fulfilled by the parent company in the US. Instead, the US applies the GILTI (Global Intangible Low-Taxed Income) regime and now also the CAMT (Corporate Alternative Minimum Tax), which, however, are not recognized as a full-fledged replacement for the IIR under OECD rules.
Under the current global rules, companies belonging to a group controlled by a U.S.-based parent company would be required to pay the attributable top-up tax in their state of residence if low-taxed entities are identified in the group for which no top-up tax is paid in their country of residence. This would mean that Czech companies would be obliged to calculate the additional top-up tax in addition to the Czech top-up tax in their tax return. The calculation of such a tax would be administratively demanding without cooperation with the highest parent company.
The new safe haven "Side by Side" according to the rules described in the "Side-by-Side Package" material allows for an exemption from the obligations of Czech companies to apply the UTPR rule and to pay the matching tax assigned in the Czech Republic for low-taxed entities belonging to a group controlled by a parent company based in the USA.
A company filing a GIR can choose a secure Side by Side for the Czech jurisdiction for tax periods beginning on or after January 1, 2026.