Pillar 2 Compliance: Key steps for in-scope companies

Determine group status and designate a local entity

It is necessary to first define the status of the group, including which company is the Ultimate Parent Entity (UPE). For groups with more than one Irish entity, now is the time to review their position in the group and decide which one will be the Designated Local Entity. This entity will be required to register with Revenue on behalf of the group and will represent all of the Irish entities in the group under Pillar 2 compliance.

Assess transitional CbCR safe harbour measures

Groups must evaluate the application of transitional Country-by-Country Reporting (CbCR) safe harbour measures in each jurisdiction in which it is established. This includes calculating key metrics such as: the tax base, the covered taxes and the Effective Tax Rate (ETR) in each jurisdiction. These calculations will help quantify Pillar 2’s impact and inform the preparation of disclosure notes for Irish entities’ financial statements.

Review CbCR documentation standards

To leverage safe harbour measures, groups must ensure their CbCR documentation meets the required qualitative standards for a Qualified CbC Report. A thorough review of the content and quality of existing CbCR documentation is recommended to address potential gaps before assessing safe harbour eligibility.

Enhance financial statement disclosures

Irish entities within the scope of Pillar 2 will face more detailed financial statement disclosure requirements for accounting periods starting on or after 31 December 2023. These disclosures must quantify the financial impact of Pillar 2 in each jurisdiction.

We recommend contacting your auditor to:

• Clarify additional disclosure requirements
• Address the impact on financial reporting and accounting practices

Taking these steps now will help ensure a smooth transition to Pillar 2 compliance

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of our corporate tax team.