New guidance from Luxembourg’s tax authority outlines registration, reporting and transitional requirements under the Pillar Two Law, including obligations for constituent entities, filing tolerances and tax assessment procedures.
Luxembourg’s Administration of Direct Contributions (ACD), on 17 June 2026, published a Frequently Asked Questions (FAQ) document providing further guidance on the implementation of the Pillar Two Law of 22 December 2023 on minimum effective taxation.
The guidance clarifies tax assessment procedures, registration and reporting obligations, and transitional provisions applicable to multinational enterprise (MNE) groups and other entities within the scope of the regime.
Tax assessments and payment
The ACD said it intends to issue tax assessment notices within three years after the end of the relevant fiscal year, provided tax returns have been submitted on time. Taxes paid under these assessments generally should not be taken into account for tax reductions under Article 21, paragraph 3, letter e) of the Law.
Registration obligations
Under Article 49, all Constituent Entities, Joint Ventures (JVs) and JV Affiliates located in Luxembourg must register for Pillar Two purposes, regardless of whether they qualify for a safe harbour or are subject to other reporting requirements.
The obligation also extends to Investment Entities that meet the criteria set out in the Law.
For multi-compartment legal entities, each compartment must register separately using a dedicated Luxembourg tax identification number (NIF) reserved exclusively for Pillar Two compliance. Stateless Entities are excluded from the registration requirement because they are not considered to be located in Luxembourg.
The FAQ also clarifies that entities created and liquidated within the same fiscal year remain subject to registration and de-registration requirements. Administrative tolerances are available for de-registration during the Transition Year. When an entity transfers from one MNE group to another, it must first de-register from its original group before registering with the new one.
GIR notification requirements
The guidance explains the notification requirements linked to the GloBE Information Return (GIR) under Article 50. When a Luxembourg entity is exempt from filing a GIR locally because the return is filed in another jurisdiction, it must inform the ACD of the identity and jurisdiction of the filing entity during registration.
The ACD also introduced a temporary administrative tolerance for GIRs filed in Barbados, Switzerland and Turkey. Because information exchange arrangements may not be effective by 30 June 2026, Luxembourg entities relying on filings in those jurisdictions will not be required to submit a local GIR before 31 December 2026.
Filing obligations for Pillar Two taxes
The FAQ includes practical examples covering reporting obligations under the Income Inclusion Rule (RIR/IIR), the Undertaxed Profits Rule (RBII/UTPR) and the Qualified Domestic Minimum Top-up Tax (Impôt National Complémentaire).
For the RIR/IIR, filing obligations generally apply to Parent Entities. Returns must still be submitted even where the resulting top-up tax is reduced to zero through substance-based income exclusions. However, entities benefiting from a safe harbour are not required to file.
For the RBII/UTPR, filing is required for entities to which UTPR amounts are allocated. Where a Designated Filing Constituent Entity has been appointed in Luxembourg, a single filing may be made on behalf of all Luxembourg group entities.
A similar approach applies to the Impôt National Complémentaire. Low-taxed Luxembourg entities are generally required to report, although a designated filing entity may submit returns on behalf of multiple entities. The FAQ also outlines specific rules for Joint Venture groups.
Transitional provisions
The guidance further explains the application of transitional rules under Article 53.
To benefit from the transitional measures, entities may rely either on their own annual financial statements or on the consolidated financial statements of the Ultimate Parent Entity, provided the relevant information can be reliably traced.
The ACD confirmed that transitional deferred tax provisions apply from the Transition Year onwards. It also clarified the distinction between the terms “reflected” (constatés) and “disclosed” in financial reporting. According to the guidance, items reflected in financial statements refer to amounts recorded on the balance sheet, while disclosed items refer to information included in the notes to the accounts.
Importantly, the ACD confirmed that deferred taxes disclosed solely in the notes to the financial statements are sufficient to meet the transitional requirements under the Pillar Two framework.
Earlier, Luxembourg’s updated Pillar Two FAQs clarify the treatment of adjusted covered taxes, expand registration obligations for in-scope entities and set out notification requirements for GloBE Information Return filings, while also providing further guidance on transitional measures.
