Ireland launches second Feedback Statement on EU Minimum Tax Directive and proposed legislative approach

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EY Global

28 Jul 2023
Subject Tax Alert
Categories BEPS 2.0 Corporate Tax
Jurisdictions Ireland
  • The Irish Department of Finance has released a second Feedback Statement (FBS) on the transposition of the European Union (EU) Minimum Tax Directive (the Directive) launching the next phase of Ireland's consultation process on the implementation of the Pillar Two framework under BEPS 2.0.
  • This FBS includes discussion draft law on the proposed approach to the Transitional CbCR1 Safe Harbour, the Transitional UTPR 2 Safe Harbour, QDTT 3/QDMTT 4 and Safe Harbour status, Pillar Two elections, references to the OECD Model Rules and related Commentary and Administrative Guidance in Irish law and various Administration matters including the Globe Information Return.
  • Stakeholders are invited submit comments on how the Directive will be implemented into Irish tax legislation.
  • The consultation period runs to the close of business on Monday, 21 August 2023.


On 27 July 2023, the Irish Department of Finance released a second FBS5 on the transposition of the EU Minimum Tax Directive.6

This FBS builds on the first FBS issued in March 2023, as well as on the initial public consultation that closed in May 2022 and launches the next phase of Ireland's consultation process on the implementation of the Organisation for Economic Co-operation and Development's (OECD's) Pillar Two framework under BEPS 2.0. The FBS takes account of the July 2023 Administrative Guidance issued by the OECD on 17 July 2023.7

The FBS includes draft legislative approaches to a number of elements of the Directive and Global anti-base Erosion (GloBE) rules that were not included in the March 2023 FBS.

The FBS is intended to allow draft legislative approaches to be tested by stakeholders and to identify any potential uncertainties or unintended consequences. Another key objective of this consultation process is to ensure that Ireland's legislation for transposing the Directive will be "clearly understood and operable in practice while also meeting the international standards required." Stakeholder input has been requested in respect of the draft legislative approaches.

Specifically, stakeholders are invited to:

  • Give their views on the specific questions set out in the FBS
  • Provide numerical examples for illustrative purposes where relevant
  • Provide details of alternative approaches that might be beneficial (including
  • minor suggestions)
  • Where appropriate, estimate any Exchequer cost/yield of preferred options
  • Provide details of relevant issues not covered in the FBS

Detailed discussion

The FBS contains draft law in relation to:

  • Transitional CbCR Safe Harbour
  • Transitional UTPR Safe Harbour
  • QDTT/QDMTT and Safe Harbour status
  • Pillar Two Elections
  • OECD Model Rules, Commentary, Administrative Guidance

It also seeks further feedback on matters relating to Administration and Globe Information Return (GIR) following recent OECD developments.

Transitional CbCR Safe Harbour

A Transitional CbCR Safe Harbour was included as part of OECD Administrative Guidance8 released in December 2022 as a temporary measure that eases the burden on in-scope groups in meeting their Pillar Two compliance obligations in the initial years that the new rules are in effect. It does this by effectively excluding the group's operations in certain lower-risk jurisdictions from the scope of GloBE in the transitional period, which is for fiscal years beginning on or before 31 December 2026 and ending no later than 30 June 2028.

The FBS contains draft law implementing the Transitional CbCR Safe Harbour in line with the OECD's December 2022 Guidance as well as the EU Minimum Tax Directive.9

Transitional UTPR Safe Harbour

The July 2023 Administrative Guidance, among other items, provided for a Transitional UTPR Safe Harbour. Briefly, under the Transitional UTPR Safe Harbour, the UTPR Top-up Tax Amount calculated for the Ultimate Parent Entity (UPE) jurisdiction would be deemed to be zero if the UPE jurisdiction has a corporate income tax with a rate of at least 20%. The Transitional UTPR Safe Harbour applies for fiscal years that run no longer than 12 months beginning on or before 31 December 2025 and ending before 31 December 2026.

The FBS confirms that Ireland will introduce a Transitional UTPR Safe Harbour in line with the July 2023 Administrative Guidance and includes a draft legislative approach in this regard.

QDTT/QDMTT Safe Harbour

The FBS confirms that Ireland will introduce a QDTT and contains draft law to that effect.

The FBS notes that it is intended that Ireland's QDTT should achieve safe harbour status under the requirements of both the Directive and the July 2023 Administrative Guidance.

Briefly, where a jurisdiction's QDTT/QDMTT meets those requirements (and the MNE Group in question is not subject to the Switch-Off Rule10) with respect to its QDTT/QDMTT, that jurisdiction can be ignored for the purposes of calculating the top-up tax in a different jurisdiction under an Income Inclusion Rule or a UTPR thereby significantly reducing the compliance burden for in-scope groups.

The safe harbour status of Ireland's QDTT, as with all countries seeking to avail of that status, will be subject to an OECD peer review process.

In addition to inviting comments on the draft law, the FBS explicitly requests comments on the jurisdictional choice of accounting standards to be required for the QDTT/QDMTT.

The FBS notes that further legislation will be required to allow taxpayers in Ireland to respect the QDTT/QDMTT Safe Harbour status of other jurisdictions. Those provisions are being worked on and have not been included in the draft law presented in the FBS.

Pillar Two elections

The Directive and GloBE rules include a number of elections (e.g., safe harbour elections, substance-based income exclusion). The FBS contains draft law to provide for these elections.

OECD Model Rules, Commentary, Administrative Guidance

The FBS notes that, to aid interpretation, the Irish legislation implementing the Pillar Two framework will incorporate references to OECD Model Rules, Commentary, and Administrative Guidance. It states that the authorities are still considering various approaches (including secondary legislation) to ensure that, as updates are made to the OECD texts, the text and interpretation of Irish legislation remain aligned. Stakeholders are invited to provide comments on possible legislative approaches in this regard.

Administration and Globe Information Return (GIR)

The March 2023 FBS requested stakeholder input on a range of questions relating to the administration of the GloBE rules, including:

  • Registration and deregistration requirements
  • GIR filings and notifications
  • Domestic return filing requirements
  • Payments
  • Record-keeping obligations
  • Group filings/payments.

The FBS notes that, although the responses received in relation to the administrative process generally favored a "group-based approach,"11 a number of complexities associated with this approach were identified, including the potential impact on the creditability in other jurisdictions of top-up taxes paid by Irish taxpayers. Accordingly, the FBS suggests that obligations relating to registration, GloBE top-up tax filings and payments would need to be satisfied at a constituent-entity (CE) level rather than on a group basis. The FBS notes that the intention is for this process to be as efficient as possible.

The FBS also specifically requests stakeholder input in relation to other administrative items, including:

  • The general approach with respect to penalties for noncompliance with the GloBE rules (including possible adaptations to Ireland's domestic tax penalty regime, and transitional measures)
  • The potential need for provisions to ensure the collection of top-up tax due within the permitted timeframe (noting that QDTT/QDMTT not collected within four years ceases to be due and becomes top-up tax to be collected under an Income Inclusion Rule or UTPR)
  • The approach to allocating top-up tax on a CE-by-CE basis in light of the transitional simplified jurisdictional reporting framework as set out in the July 2023 Administrative Guidance
Other relevant items

The Finance Act 2022 introduced amendments to Ireland's Knowledge Development Box (KDB) regime to align it with the provisions of the Subject to Tax Rule (STTR) under the Pillar Two framework. Briefly, the STTR is a treaty-based rule that applies to specified intragroup payments from source jurisdictions that are subject to a tax rate below 9% in the jurisdiction of the payee. The Finance Act 2022 amendments were subject to a Ministerial commencement order and the provisions would be commenced once a clear timeline for implementation of the STTR was agreed.

Earlier this month, the Inclusive Framework completed its work on the development and implementation of the STTR framework and a questionnaire process to identify jurisdictions with the scope of STTR is now underway. In light of these developments, the FBS notes that work is in progress to give effect to the KDB amendments.

Next steps

EY will continue our extensive engagement with the Department of Finance on Pillar Two implementation, including seeking maximum flexibility for taxpayers to avoid unintended consequences and to simplify administration and compliance.

EY is available to assist businesses in evaluating their perspectives and responses to the FBS ahead of the 21 August deadline.


For additional information with respect to this Alert, please contact the following:

Ernst & Young (Ireland), Dublin
  • Joe Bollard
  • Dan McSwiney
  • Rory MacIver
  • Brian Kelly
  • Aoife Murray
  • Cian O'Donovan
Ernst & Young (Ireland), Financial Services, Dublin
  • Aidan Walsh
  • Petrina Smyth
  • Sandra Dawson
  • Sinead Colreavy
Ernst & Young (Ireland), Cork
  • Aileen Daly
Ernst & Young (Ireland), Limerick
  • Billy McMahon
Ernst & Young (Ireland), Waterford
  • Paul Fleming
Ernst & Young (Ireland), Galway
  • Paraic Waters
Ernst & Young LLP (United States), Irish Tax Desk, New York
  • Robert Dunne
  • Simone Craven
Ernst & Young LLP (United States), Irish Tax Desk, San Jose
  • Karl Doyle

Published by NTD's Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.