OECD Pillar Two is in force. Since 1 January 2024, multinational groups with consolidated revenue of €750 million or more have been subject to a minimum effective tax rate of 15% in every jurisdiction where they operate. The European Union transposed these rules via Directive (EU) 2022/2523 of 14 December 2022, and individual member states have since enacted local implementing legislation accordingly.
For CFOs and tax directors, the question is no longer theoretical: the first GloBE Information Return (GIR), the Pillar Two declaration form, must be filed by 30 June 2026 for groups with a 31 December year-end. And virtually all the data required for that form has to be extracted from the ERP.
This guide explains what Pillar Two concretely changes for your tax IT system, which ERP modules are affected, what vendors are offering, and how to structure a realistic action plan.
OECD Pillar Two in 3 Minutes: What CIOs and CFOs Must Know
The Principle: A 15% Minimum Effective Tax Rate Per Jurisdiction
The mechanism is simple in intent, complex in execution. The GloBE rules (Global Anti-Base Erosion) require that every jurisdiction in which a group operates shows an effective tax rate (ETR) of at least 15%. If the GloBE-calculated ETR falls below that threshold, a top-up tax is due.
The critical point: the GloBE ETR does not correspond to the nominal tax rate of the country. It is calculated from the consolidated accounting result, restated according to specific rules (deferred tax adjustments, substance-based exclusions). This computational complexity is precisely what makes adapting the tax IT system essential.
Who Is In Scope?
Pillar Two targets groups whose consolidated revenue reaches or exceeds €750 million for at least two of the four preceding fiscal years. This includes:
- Mid-market multinationals acting as ultimate parent entities with subsidiaries across multiple jurisdictions
- Local subsidiaries of foreign groups, where the parent group exceeds the threshold — the local entity is in scope even if its own revenue is modest
- Large domestic-only groups covered by the EU directive, even without international presence
In practice, thousands of entities across the EU and globally are directly or indirectly in scope.
The Timeline: EU Directive Transposed, First Fiscal Years 2024–2025, Returns Due 2026
The EU Directive 2022/2523 of 14 December 2022 set the framework. According to Tax Foundation’s tracker, 22 of the 27 EU member states have transposed the IIR (Income Inclusion Rule) and QDMTT (Qualified Domestic Minimum Top-up Tax) rules for 2025. Globally, more than 60 jurisdictions have adopted all or part of the GloBE rules according to PwC’s Pillar Two Country Tracker.
The concrete timeline for a mid-market multinational:
| Deadline | Obligation |
|---|---|
| 1 January 2024 | IIR and QDMTT enter into force across the EU |
| 1 January 2025 | UTPR (Undertaxed Profits Rule) enters into force |
| 30 June 2026 | First GIR filing (fiscal year 2024, 18-month window for year one) |
| 30 March 2027 | GIR for fiscal year 2025 (standard 15-month deadline) |
The Data Your ERP Must Now Produce
Effective Tax Rate by Jurisdiction
The core of Pillar Two is calculating the ETR per jurisdiction under GloBE rules — not local tax rules. The ERP must be able to:
- Isolate the accounting result by jurisdiction: every group entity must be attributed to a tax jurisdiction, and its GloBE result computed from its IFRS/local GAAP accounting result after specific adjustments
- Calculate covered taxes by jurisdiction: current tax, eligible deferred taxes, withholding taxes — all allocated according to GloBE rules, which differ from standard accounting norms
- Produce the jurisdictional ETR: ratio of adjusted covered taxes to net GloBE income
A group operating across 15 jurisdictions must produce 15 separate ETR calculations, each with its own set of restatements.
GloBE Adjustments, Deferred Taxes, and Substance-Based Income Exclusion
Two adjustment mechanisms significantly complicate data extraction:
GloBE deferred taxes: the rules for recognising deferred taxes in the GloBE ETR calculation differ from IAS 12. The ERP must be able to isolate and restate these items according to GloBE criteria (capped at 15%, specific exclusions).
The SBIE (Substance-Based Income Exclusion): this mechanism reduces the GloBE income base by excluding a fraction of payroll costs (5%) and the net book value of tangible assets (5%) per jurisdiction. The ERP must therefore be able to extract HR and fixed-asset data at jurisdictional granularity — a cross between the payroll module, the fixed-assets module, and the jurisdiction analytics axis.
The GloBE Information Return (GIR): The New Declaration Form
The GIR is the OECD-standardised form for Pillar Two declarations. It contains dozens of fields covering:
- Group identification and each constituent entity
- GloBE income and covered taxes by jurisdiction
- ETR and top-up tax calculation per jurisdiction
- SBIE exclusions applied
- Top-up tax allocation across entities
In practice, completing the GIR requires cross-referencing data from accounting, consolidation, payroll, fixed assets, and transfer pricing. Without automated extraction from the ERP, the workload is immense — and errors are likely.
Impact on ERP Modules
Accounting Module: Enriched Chart of Accounts to Isolate Taxes by Jurisdiction
The chart of accounts must allow isolation, for each jurisdiction, of:
- Pre-tax current profit
- Current corporate income tax
- Deferred taxes (assets and liabilities), with sufficient detail for GloBE restatements
- GloBE-specific adjustments (excluded dividends, non-recurring FX gains and losses, etc.)
In practice, this often means adding dedicated analytics dimensions or additional accounting segments. A group consolidating 30 entities across 12 countries with a unified chart of accounts but no jurisdiction axis will need to restructure its postings.
Consolidation Module: Entity-by-Entity Reconciliation of Tax Bases
Pillar Two requires a bottom-up calculation: starting from each constituent entity, aggregating by jurisdiction, then calculating the ETR. This is not a classic top-down consolidated calculation.
The consolidation module must:
- Manage intercompany restatements with traceability by jurisdiction
- Allow eliminations that preserve jurisdictional granularity
- Produce intermediate statements by jurisdiction prior to full consolidation
For groups using a separate consolidation tool (Tagetik, OneStream, HFM), the challenge lies in the interface with the ERP: source data must flow up with the required granularity.
Reporting Module: Automated GIR Data Extraction
The GIR contains dozens of structured fields. The ERP reporting module must be able to:
- Produce an automatic mapping between ERP accounts and GIR lines
- Manage manual adjustments with an audit trail
- Export in the format expected by the tax authority (XML/JSON depending on jurisdiction)
Groups that handle tax reporting in Excel will hit a wall: the data volume, number of jurisdictions, and complexity of restatements make a spreadsheet approach fragile and non-auditable.
Intercompany Module: Transfer Pricing and Its Impact on ETR
Transfer prices determine how profit is distributed between jurisdictions. A miscalibrated transfer price can push a jurisdiction below the 15% threshold, triggering a top-up tax.
The ERP must allow:
- Tracing intercompany transactions with their source and destination jurisdiction
- Simulating the impact of a transfer price adjustment on the ETR per jurisdiction
- Documenting consistency between transfer pricing policy and the declared GloBE result
What ERP Vendors Are Offering
SAP S/4HANA: Tax Compliance Engine and Big 4 Partnerships
SAP does not offer a native Pillar Two module integrated into S/4HANA. The SAP approach relies on the ecosystem: the Tax Compliance Engine facilitates tax data extraction from S/4HANA, while the actual GloBE calculation is delegated to partner solutions — principally the Big 4 (Deloitte Pillar Two Engine, KPMG Clara Tax, EY Tax Platform) or specialist vendors such as Thomson Reuters ONESOURCE.
The SAP advantage: the depth of the accounting data model and native analytical granularity. A group already on S/4HANA with a chart of accounts structured by segment and jurisdiction will have less adaptation work.
The limitation: the integration still needs to be built. You must connect S/4HANA to the GloBE calculation tool and then to the GIR reporting module.
Oracle Cloud EPM: Pillar Two Tax Reporting
Oracle is the most advanced vendor with a dedicated module. Oracle Cloud EPM Tax Reporting includes native Pillar Two capability covering:
- Automated data collection from the ERP, sub-ledgers, financial consolidation, and CbCR
- Top-up tax calculation under GloBE rules (QDMTT, IIR, UTPR)
- Jurisdictional ETR reconciliation
- GIR production
The Oracle advantage: it is an end-to-end solution, from source data collection to the declaration form. The module uses standard EPM connectors to aggregate data from multiple source systems.
The limitation: Oracle Cloud EPM is a significant investment, and integration with non-Oracle ERPs requires connector work.
Sage Intacct / X3: Approach via Third-Party Tax Connectors
Sage does not offer a native Pillar Two module in either Intacct or X3. The Sage approach relies on connectors to third-party tax solutions:
- Thomson Reuters ONESOURCE: the Orbitax Global Minimum Tax solution, integrated into ONESOURCE Tax Provision, automates Pillar Two calculations for more than 190 jurisdictions, covering QDMTT, IIR, UTPR, and STTR
- Vertex: also offers a GloBE calculation module integrable with Sage X3 via API
The advantage: companies on Sage retain their ERP and add a specialist tax layer. The cost is the connector plus the third-party tool licence.
The limitation: two systems to maintain, an integration to monitor, and a dependency on a third-party vendor for a critical regulatory obligation.
Mid-Market ERPs (Odoo, SAP Business One, Dynamics 365 BC): Still Limited Coverage
Mid-market ERP vendors have been slow to build native Pillar Two tooling. Most platforms communicate about awareness of the requirement, but without an integrated GloBE calculation module.
For mid-market groups in scope (subsidiaries of larger groups, for example), the options are:
- Excel: workable for a simple group (2–3 jurisdictions, minimal intercompany), risky beyond that
- Specialist tools: KPMG Pillar Two Tool, Deloitte Pillar Two Engine, or dedicated solutions such as Orbitax
- In-house development: extracting ERP data into a proprietary calculation model — feasible but expensive to maintain against regulatory change
The mid-market reality: Pillar Two creates a gap between Tier 1 ERPs (SAP, Oracle) that address the topic through their ecosystem, and Tier 2–3 ERPs that leave the burden to the company or its advisors.
Five-Step Action Plan for Mid-Market Multinationals
Step 1: Audit Current Tax Data Flows in the ERP
Start by mapping what your ERP currently produces in terms of tax data per jurisdiction:
- Does the chart of accounts distinguish taxes by entity and by country?
- Are deferred taxes broken down by type and by jurisdiction?
- Can payroll and fixed-asset data be extracted by jurisdiction (required for the SBIE)?
- Are intercompany transactions traced with both jurisdictions (source and destination)?
This audit reveals the gaps: missing data, insufficient granularity, absent analytics dimensions.
Step 2: Identify At-Risk Jurisdictions (ETR < 15%)
Before configuring everything, run a simplified ETR calculation per jurisdiction for the prior fiscal year. At-risk jurisdictions are those where:
- The nominal rate is low (Ireland at 15%, Hungary at 9%, certain special regimes)
- Tax incentives reduce the effective tax (oversized R&D credits, free zones)
- Profits are low but tangible assets are significant (the SBIE may then cover the ETR shortfall)
This diagnostic allows prioritisation: if only 2 jurisdictions out of 12 are at risk, the configuration effort is targeted.
Step 3: Configure Jurisdictional Analytics Dimensions
This is the main ERP workstream. You need to create or enrich analytics dimensions so that every accounting entry carries the jurisdictional information needed for GloBE calculation:
- Tax jurisdiction axis (which may differ from the legal entity in some cases)
- Sub-axes for covered taxes (current, deferred, withholding)
- Markers for GloBE adjustments (excluded dividends, FX gains, etc.)
This configuration is the most time-consuming but also the most structurally important. It determines the quality of all future extractions.
Step 4: Test the Top-Up Tax Calculation on the Prior Fiscal Year
Before the first official filing, run a dry run on the prior fiscal year:
- Extract ERP data according to the new dimensions
- Calculate the GloBE ETR per jurisdiction (manually or with a dedicated tool)
- Compare with the nominal rate and identify discrepancies
- Calculate the theoretical top-up tax
- Verify consistency with Country-by-Country Reporting (CbCR) data already produced
This full-scale test reveals data inconsistencies and configuration errors before the stakes are real.
Step 5: Prepare the GIR for the First Filing Deadline
The first GIR covering fiscal year 2024 must be filed by 30 June 2026 for calendar-year groups. Preparation includes:
- Validating the mapping between ERP accounts and GIR fields
- Ensuring the calculation tool (whether integrated into the ERP, third-party, or Excel) produces data in the expected format
- Identifying the filing entity (generally the ultimate parent entity, unless a delegation agreement applies)
- Planning for information exchange between jurisdictions (the GIR is automatically shared between tax authorities)
For groups that have not yet started, the timeline is tight but not impossible — provided they prioritise at-risk jurisdictions and accept a simplified calculation approach for year one, relying on the OECD’s transitional safe harbours.
To go further on regulatory compliance and its impact on your ERP, see our guide on mandatory e-invoicing in Europe, our article on GDPR compliance and ERP, and our deep dive into multi-entity consolidation and intercompany management.
