Transfer Pricing: UK Pillar 2 registration overview

What are the Pillar 2 Requirements?

The OECD’s Pillar 2 framework is designed to ensure that multinational enterprises (MNEs) pay a minimum level of tax on their profits (an effective tax rate of at least 15%) in each jurisdiction that they operate within. Compliance with these regulations is essential to avoid penalties and ensure smooth operations.

Applicability of Pillar 2 Rules

Groups fall into the Pillar 2 rules if they meet certain criteria, including having a group consolidated turnover of EUR 750 million or more in two of the previous four year. It’s important to assess whether your group meets this threshold to determine your obligations under the Pillar 2 framework.

Reporting Requirements

As with most transfer pricing related topics, Pillar 2 needs to be spearheaded by the group’s head office who will be in a better position to assess worldwide obligations and reporting requirements.

For example, if the ultimate parent entity (UPE) is based in Germany, we anticipate that for main Pillar 2 worldwide calculations/assessments and the Global Anti-Base Erosion (GloBE) Information Return (GIR) will be submitted annually in Germany.

UK reporting requirements

Pillar 2 Registration: There’s a one-time requirement for the ultimate parent entity (UPE) or a nominated filing member (e.g. a UK limited company) to register with HMRC within six months of coming into scope of the rules. For example, groups with a 31 December 2024 year end who already meet the turnover requirement must have already registered by 30 June 2025.

Annual returns: For groups that have submitted the GIR in the head office’s jurisdiction and they have an information sharing agreement with HMRC (e.g. Germany) then there are two further annual returns required in the UK

Overseas Return Notification (ORN): Informing HMRC about your overseas GIR filing status and providing any relevant details about your operations.

It needs to be submitted to HMRC within 15 months after the end of the accounting period (extended to 18 months for a group’s first return, i.e. 30 June 2026 if first return is for the year ended 31 December 2024)

UK Pillar 2 Self-Assessment Return: Completing and submitting an annual domestic information return to confirm entities’ UK top-up tax liabilities (including a nil liability).

It needs to be submitted to HMRC within 15 months after the end of the accounting period (extended to 18 months for a group’s first return, i.e. 30 June 2026 if first return is for the year ended 31 December 2024).

Payment of the UK top-up tax liability in a single instalment due 15 months after the end of the accounting period (18 months for a group’s first return, i.e. 30 June 2026 if first return is for the year ended 31 December 2024).

Importance of Compliance

Failure to comply with the UK Pillar 2 requirements can result in significant penalties and legal complications. It’s essential to ensure that all necessary documentation is submitted accurately and on time.

Need Assistance?

If you have any questions or need assistance with the UK Pillar 2 requirements/registrations, or UK transfer pricing in general (e.g. local files documentation), please don’t hesitate to contact us.

Our team is here to support you and ensure that you remain compliant with all regulatory obligations. Contact your local TC Group office today.

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