Top-up tax 2026

 

Why the first filing for the top-up tax is becoming one of the biggest tax challenges of 2026 

How OECD Pillar 2 is changing the role of CFOs and connecting tax, accounting, data and IT 

What practical problems companies encounter when preparing top-up tax reporting and where the greatest risks arise 

The end of June 2026 will mean much more for many CFOs and their tax and accounting teams than the next regulatory deadline. For the first time, large multinational and national groups must submit an informationsheet on top-up tax under OECD Pillar 2 rules for the tax period from 1 January to 31 December 2024.  

This period corresponds to the extended regime for the first reporting period, i.e. 18 months from the end of the tax period. This is immediately followed by the obligation to file a top-up tax return by 31 October 2026 (22 months from the end of the tax period).  

The content of the data in the tax return must be identical to the data in the information sheet, which is a detailed overview of the evaluation of the top-up tax of a large group. The tax return is then a tool for paying any top-up tax to the Czech tax administrator. 

At first glance, it may seem that this is a technical tax obligation. In reality, however, the top-up tax opens up a whole new discipline that combines accounting, consolidation, transfer pricing, tax strategy, reporting and IT infrastructure. And that is why management should not perceive it as just another form for the finance department. 
 

Fifteen percent that change the rules of the game 

The basic principle of OECD Pillar 2 is relatively simple: large groups are to achieve a minimum effective tax rate of 15% in each jurisdiction. If a country does not meet this threshold, there is an obligation to make up the difference so that there is no untaxed excess profit, i.e. a part of the profit that exceeds the profit corresponding to the economic essence. This "profit on economic substance" simply represents the return corresponding to the real economic presence in a given jurisdiction, determined as a percentage of labor costs and the book value of tangible assets.  

The OECD Pillar 2 therefore primarily targets low-taxed or untaxed profits that are not supported by real economic activity. The purpose is to limit the shifting of profits to low-tax jurisdictions and ensure a fairer distribution of tax revenues between states, thereby enhancing the transparency and stability of the international tax system. 

The logic is simple. However, behind it is a relatively complex system of calculations and processes. 

This is because it is not a statutory tax rate. The effective rate according to special OECD rules is decisive. And this is where surprises begin to appear. Although the Czech Republic has a corporate tax rate of 21%, some Czech companies may still fall below the 15% threshold. Typically, due to tax losses, R&D deductions, investment incentives, deferred tax, valuation differences, or specific consolidation adjustments. 

This is where it turns out that the top-up tax is not just a purely tax issue. For management, it represents a new type of regulatory risk that affects the functioning of the entire company. 

 

Local responsibility has not disappeared 

Many large groups originally expected that everything would be solved by the headquarters and local entities would only passively take over the finished data. However, the practice is significantly more complicated.  

Indeed, the ultimate parent company is responsible for the evaluation of the top-up tax and the preparation of the factsheet for the entire large group, for individual jurisdictions, and the central submission to the tax administrator, as the OECD Pillar 2 is designed with the aim of maximum efficiency and elimination of duplicate reporting and is built on a centralized approach. 

However, local management in the Czech Republic remains responsible for the correctness of the reported data, compliance with local accounting and the defensibility of the data in the event of a tax audit.  

The tax administrator will thus rely on data prepared centrally in a possible audit, but the Czech company and its statutory bodies must be able to defend them. 

They must therefore understand the data reported for the Czech jurisdiction, verify their accuracy and consistency with local accounting and tax data, respond to the instructions of the headquarters and meet local obligations (filing a notification of compliance with the exemption from the obligation to file an information statement, filing an information sheet and subsequent tax returns). 

 

Where can complications arise in practice? 

A significant problem is a situation where the highest parent company is located in a jurisdiction that has not yet implemented the OECD Pillar 2 – typically, for example, the USA or China. In such a case, there is no standard mechanism for the centralized submission of the information sheet through the highest parent company, and the Czech company must therefore operatively resolve which other entity will take over the responsibility for submitting the information sheet on a centralized basis. 

Another complication that we actually encounter in the Czech environment is the fact that some Czech companies remain outside of any centralized reporting framework, i.e. they are not fully included in consolidation, CbCR reporting or internal group processes.  

The experience of the first months has also shown that the problem does not have to be in the data itself, but arises when this data begins to be used in a new way. The top-up tax connects areas that have so far been dealt with separately. A typical example is transfer pricing. 

For example, if a Czech production or development entity has a low margin set for a long time and at the same time uses deductions for research and development, it can very quickly fall below the effective taxation threshold of 15%. A model that has been considered standard from the point of view of transfer pricing for years may thus newly create an obligation to pay a top-up tax. 

It is here that companies are beginning to find out that Pillar 2 is not just tax regulation, but an intervention in the entire economy of the group. 

 

Safe harbour: relief that may not work automatically 

A big topic is the so-called safe havens. The OECD introduced them in order to alleviate the administrative burden on companies in the first years. If the group meets the set conditions and has qualified CbCR reporting, it can avoid the full OECD calculation for a transitional period. 

Many companies today rely on safe harbor. But even here the situation is not as simple as it originally seemed. In practice, it turns out that some groups work incorrectly with deferred tax, neglect valuation differences or incorrectly set decisions in the factsheet. And it is the details that can decide whether a company will use safe harbour or fall into full calculation mode. 
 

CFO as the coordinator of the entire change 

The OECD Pillar 2 rules mean a fundamental change in the role of the CFO. Today, the CFO is not only a guarantor of accounting results, but increasingly a coordinator of data, processes and communication between the headquarters, tax specialists, controllers and IT. 

Therefore, new questions are beginning to arise in companies: 

• Who actually submits the factsheet?  
• Who checks the accuracy of Czech data?  
• Does the local team have access to group calculations?  
• Are accounting data ready for the OECD methodology?  
• And who will be responsible if the headquarters makes a mistake? 

It is the last question that is often the most sensitive. 

 

The tax agenda is becoming a complex (technological) project 

Another big change is the technological side of the whole issue. The factsheets are presented in XML format according to a uniform OECD schema and their preparation is practically impossible without specialized tools. Therefore, IT consultants, data specialists and reporting solution providers enter the process. 

The OECD Pillar 2 is thus gradually changing from a purely tax project to a large-scale data and technology project. 

Companies that underestimate the procedural side of the entire agenda today may encounter not only administrative complications in the future, but also reputational risks or complex discussions with tax administrators. 

 

Sanctions are not the biggest risk 

The Czech sanctions regime allows fines of up to CZK 1.5 million to be imposed for failure to comply with procedural obligations. In reality, however, the biggest problem will often not be the sanction itself. A situation where management is not able to explain how it arrived at the reported data, why it used a particular methodology or who was responsible for each part of the calculation can be much more sensitive. 
 

How are some companies already preparing today and why? 

The experience from the first projects shows several common denominators of companies that approach the issue actively. The best ones are already communicating with the headquarters, verifying the correctness of local data, reviewing transfer pricing models and analysing the impacts of deferred tax. They do not see OECD Pillar 2 as a pure compliance obligation, but as a new type of topic for governance. 

The top-up tax is not just another regulation. It is a test of how well the company understands its own data, how cooperation between local and central teams works, and whether management can manage regulatory changes across the entire organization. 

Companies that perceive Pillar 2 only as a technical tax obligation may be unpleasantly surprised. Those who understand it as a strategic topic linking finance, data, processes and governance will gain significantly better control over future regulatory risks.