Belgian Constitutional Court keeps landmark Pillar Two UTPR case alive

• On 24 September 2026, the Belgian Constitutional Court (the Court) (Dutch / French) held that the OECD/G20 Inclusive Framework side-by-side package and the European Commission notice recognizing it, do not remove the applicant’s interest in challenging the Belgian undertaxed profits rule (UTPR), allowing a pending referral in Case C-519/25 to proceed before the Court of Justice of the European Union (CJEU).

• The Court based that conclusion on two findings: Belgium has not yet transposed the side-by-side measures into domestic law, and certain Belgian constituent entities of United States-parented groups may fall outside both the new safe harbors and the transitional UTPR safe harbor.

• The decision is procedural and does not address whether the UTPR is compatible with EU law; the CJEU will determine whether the UTPR provisions in the EU Pillar Two Directive comply with the Charter of Fundamental Rights of the European Union (the Charter), the fundamental freedoms and general principles of EU law, with potential implications for every EU Member State that has implemented the Directive’s UTPR provisions.

• For multinational enterprise groups with Belgian constituent entities, compliance requirements continue unchanged while the litigation proceeds.

• Groups should identify any remaining UTPR exposure, confirm eligibility for available safe harbors and monitor Belgium’s implementation of the January 2026 side-by-side package, as the timing and scope of implementation may affect potential exposure under the current rules and the availability of relief.

We have summarized some of the most important elements of this recent case law below. For more information we refer to our global alert.
 

Belgian Constitutional Court case

The case concerns the Belgian UTPR, the backstop of the OECD Pillar Two framework. The UTPR allows Belgium to collect top-up tax on the low-taxed profits of foreign group entities when no qualified domestic minimum top-up tax (QDMTT) or income inclusion rule (IIR) applies. A Belgian constituent entity could therefore become liable for top-up tax with respect to profits realized by entities in its MNE group that it does not own or control, and the amount allocated to the Belgian constituent entity is not limited by its own profits or taxable income.

On 27 June 2024, the American Free Enterprise Chamber of Commerce asked the constitutional Court to annul the UTPR provisions in the Law of 19 December 2023. It argued that taxing a Belgian entity based on the profits of foreign group entities, regardless of its own ability to pay, breaches key EU legal principles and rights. Because the contested provisions implement a mandatory EU rule, the Court (Dutch / French) asked the CJEU (Case C-519/25) whether Articles 12 to 14 of the Pillar Two Directive breach the Charter, the EU fundamental freedoms, legal certainty and fiscal territoriality by imposing UTPR top-up tax regardless of an entity's financial capacity.

In the meantime, the OECD Inclusive Framework agreed on a side-by-side package in January 2026, including a simplified effective tax rate (ETR) safe harbor, an extended transitional country-by-country reporting safe harbor, a substance-based tax incentive safe harbor, and a side-by-side system consisting of a side-by-side safe harbor and an ultimate parent entity (UPE) safe harbor (see EY Global tax alert).The European Commission confirmed that this package qualifies under Article 32 of the Pillar Two Directive. This allows Member States to treat the top-up tax for a jurisdiction as zero when the conditions of a qualifying international safe harbor are met.

The CJEU then asked the Belgian Constitutional Court whether these developments meant that the Belgian case C-519/25 was no longer relevant.
 

What the Constitutional Court’ decision decides

In the judgment of 24 September 2026, the Court concluded that the interest has not lapsed and that the case before the CJEU should continue, based on the following two grounds:

1. The side-by-side measures agreed upon in January 2026 have not yet been transposed into Belgian law, so the UTPR as enacted in Sections 35 and 36 of the Belgian Pillar Two law continues to apply in its unmodified form.
2. Even taking the January agreement into account, certain Belgian subsidiaries of US-MNE groups may fail to qualify for a safe harbor with respect to the UTPR, whether under the side-by-side safe harbor or, subject to its conditions, under the transitional UTPR safe harbor.

The Court also declined to ask the CJEU to prioritize the case. The case will follow the normal procedures.
 

What the Constitutional Court’s decision does not decide

The Court’s decision does not address whether the UTPR is valid under EU law. The Court confirmed that only the CJEU can decide whether the Pillar Two Directive complies with the Charter, the fundamental freedoms, legal certainty and fiscal territoriality. The decision also does not change the Belgian Pillar Two rules: the QDMTT, IIR and UTPR remain in force, as do the related registration, notification, filing and advance payment obligations.
 

Why Constitutional Court’s decision matters for your business

For MNE groups with Belgian constituent entities, three practical consequences follow:

1. Compliance requirements continue unchanged, as the requirements for Pillar Two registrations, the Global Anti-Base Erosion (GloBE) Information Return, the QDMTT, IIR and UTPR returns and the associated advance payments are unaffected by the Court’s decision.
2. MNE groups with a UPE that is not located in a jurisdiction with a qualified side-by-side or UPE regime should map residual UTPR exposure.
3. MNE groups relying on the transitional UTPR safe harbor should verify that its conditions are met for relevant fiscal years.

Until the side-by-side and UPE safe harbors are implemented in Belgian law, the current UTPR rules remain fully applicable. MNE groups planning to use these safe harbors beginning with fiscal year 2026 should therefore closely monitor the Belgian legislative process, as the timing and scope of implementation will determine when relief becomes available.

The CJEU must still decide whether the UTPR is a breach of the Charter, the EU fundamental freedoms, legal certainty and fiscal territoriality, and what the consequences would be if it is found to be a breach. MNE groups paying top-up tax under the Belgian UTPR while the case is pending should consider, together with their advisers, what protective action may be needed. They should also review their provisions, effective tax rate forecasts and disclosures, as a ruling in the CJEU is not expected in the near term.