Pillar 2: Multinational Top-up Tax and Domestic Top-up Tax Registration requirements

Companies with 31st December 2024 year-ends falling within the scope of Pillar 2 must complete HMRC registration by 30th June 2025. With less than two weeks remaining, immediate action is essential to avoid penalties.

The regulatory landscape

Following the October 2021 OECD agreement establishing a 15% global minimum tax rate, the UK has implemented the Multinational Top-up Tax (MTT) and Domestic Top-up Tax (DTT) for accounting periods beginning on or after 31st December 2023.

The MTT applies where UK parent entities have interests in non-UK jurisdictions with effective tax rates below 15%. The DTT targets UK operations within multinational or domestic groups where UK profits face sub-15% taxation.

Scope determination

Your group falls within Pillar 2 if it meets both criteria:

• At least one UK entity
• Consolidated annual revenues of €750 million or more in at least two of the previous four accounting periods

This threshold applies equally to single-entity groups meeting the revenue test.

HMRC compliance approach

HMRC has already identified in-scope entities and issued targeted correspondence. If you’ve received notification, please get in touch so that we may confirm whether Pillar 2 applies and what your next steps are.

Registration obligations

Registration is mandatory for all in-scope groups, regardless of actual top-up tax liability. The deadline is six months following the end of your first relevant accounting period (beginning on or after 31st December 2023).

Critical deadlines:

• 31st December 2024 year-end: registration by 30th June 2025
• 31st March 2025 year-end: registration by 30th September 2025

Non-compliance triggers statutory penalties, making timely registration a priority governance matter.

Post-registration compliance framework

Registration initiates ongoing filing obligations under either, or possibly both, of the MTT and DTT regimes. The compliance requirements involve complex effective tax rate calculations, jurisdictional allocations, and detailed reporting schedules that require careful planning and technical expertise.

Strategic considerations

The Pillar 2 framework represents a fundamental shift in international tax architecture. Early engagement with the rules, proper system implementation, and robust compliance processes will be critical for managing both immediate obligations and ongoing tax efficiency strategies.

For groups approaching the €750 million threshold or with complex international structures, the implications extend beyond simple compliance to strategic tax planning and transfer pricing considerations.

Next steps

If your group falls within scope or you require clarification on the technical requirements, professional guidance on registration and ongoing compliance obligations is advisable.

Contact Nikhil Oza to discuss your specific circumstances.