Luxembourg amends Pillar 2 Law to implement automatic exchange of GloBE Information Returns and OECD guidance

On 24 July 2025, the Luxembourg government submitted Draft Law No. 8591 to parliament. The bill transposes Directive (EU) 2025/872 and implements the OECD/G20 Inclusive Framework’s multilateral agreement on the automatic exchange of GloBE Information Returns. It also amends the existing Pillar 2 Law of 22 December 2023 to align with recent OECD administrative guidance.

Automatic exchange of GloBE Information Returns

The Draft Law introduces a structured legal basis for the automatic exchange of GloBE Information Returns (GIRs) filed in Luxembourg. This exchange mechanism is designed to align with the OECD’s global minimum tax framework and the EU DAC 9 and ensures that Luxembourg complies with international transparency standards.

Under this framework, GIRs filed in Luxembourg will only be exchanged with jurisdictions that have a valid competent authority agreement in place with Luxembourg and that are explicitly listed in a Grand Ducal regulation (still to be released).

The content of the exchange follows the OECD model, which divides the GIR into two main components:

• A general section that includes information regarding the multinational group, such as its structure, financials and overall tax position;
• A jurisdictional section that provides detailed data on the effective tax rate and top-up tax calculations for each jurisdiction in which the group operates.

Importantly, the jurisdictional section will only be shared with countries that have taxing rights over the relevant entities and have implemented Pillar 2 rules in a manner consistent with the Pillar 2 Law. This conditional sharing ensures that sensitive tax information is only disclosed to jurisdictions with a legitimate interest and with the appropriate legal safeguards in place. When filing a GIR, the filing entity is expected to indicate the jurisdictions that need to receive the specific sections of the GIR, i.e., based on an assessment of which jurisdictions should receive the full GIR or specific jurisdictional sections.

Filing deadlines and transmission

As a reminder, as per the Pillar 2 Law, Luxembourg entities that form part of a group with a financial year that follows the calendar year and that are in scope of the Pillar 2 rules as from 1 January 2024 would need to have a GIR filed at the latest by 30 June 2026. The GIR is in principle due by every Luxembourg constituent entity or joint venture entity. However, Luxembourg entities could appoint one Luxembourg entity to file the GIR for all Luxembourg entities. Alternatively, Luxembourg entities could designate the ultimate parent entity of the Pillar 2 group or a designated filing entity to file the GIR in another jurisdiction, provided that such jurisdiction has Pillar 2 rules and applies automatic exchange of information for the GIR. In practice, this would mean either an EU member state that has Pillar 2 rules in effect and having implemented the provisions of DAC 9, or another jurisdiction that has Pillar 2 rules and that has signed the OECD Multilateral Competent Authority Agreement (MCCA) on the exchange of the GIR. Luxembourg signed the MCCA on 26 June 2025.

The Draft Law sets out clear timelines for the transmission of GIRs by the Luxembourg authorities with foreign authorities. Under standard conditions, GIRs must be transmitted by the Luxembourg authorities to foreign authorities within three months following the filing deadline.

However, for the first year of implementation — covering fiscal years beginning on or after 31 December 2023 — a transitional period allows for a six-month transmission window. In practice, this means that the automatic exchange of the GIR, with respect to the fiscal years starting on 1 January 2024, will in principle take place by 31 December 2026.

It results from the new provision that the earliest possible date for the first transmission of GIRs to foreign authorities is 1 December 2026.

In cases of late filings of the GIR by taxpayers, the return must be transmitted to foreign jurisdictions within three months of submission of the GIR with the Luxembourg tax authorities.

All filings to be made by Luxembourg must adhere to the EU-standardised format adopted by the European Commission.

Corrective and local filing measures

The new provisions in article 50 introduce two key mechanisms:

• The new paragraph 10 allows the Luxembourg competent authority to require the filing of a corrected GIR if a foreign authority identifies manifest errors in the original filing and informs Luxembourg of such errors. The entity may contest the correction request, but failure to respond can trigger enforcement.

• The new paragraph 11 establishes a local filing obligation for the GIR in Luxembourg if the expected automatic exchange of the return fails, to ensure that the Luxembourg authorities can still access the relevant data (this obligation being extended to joint ventures and affiliates when no other group entity is based in Luxembourg).

Penalties and compliance

To ensure compliance, the law introduces under article 50 of the Pillar 2 Law a penalty of up to EUR 300,000 in cases where a GIR is not obtained through automatic exchange and no proof of filing is provided to the Luxembourg tax authorities. Such penalty stands separate from the penalty of up to EUR 250,000 in case no GIR or an incorrect or incomplete GIR is filed with the Luxembourg authorities.

Simplified jurisdictional reporting

Article 56 (3) introduces a framework that would allow for a simplified jurisdictional reporting for the fiscal years 2024 and 2030. Both for Luxembourg and foreign jurisdictions this would allow for certain Pillar 2 data to be disclosed in the GIR on a jurisdictional basis, rather than on an entity-by-entity basis. The details and conditions for such simplified reporting would be elaborated in a Grand -Ducal regulation (still to be released).

Observations

Luxembourg has chosen for Pillar 2 filings concerning Luxembourg entities to be included in the GIR, without requiring for separate QDMTT returns. This is a welcome simplification and guarantees that Luxembourg QDMTT information could be included in the GIR. The details of the GIR are addressed in a draft Grand -Ducal regulation, whose content is closely aligned to the form that is attached to the EU Pillar 2 Directive, which is based on the OECD form of the GIR.

As a reminder, Luxembourg entities that form part of a Pillar 2 group would need to register for Pillar 2 purposes in Luxembourg. The deadline for such registration would be 30 June 2026 for groups that have a calendar year and that were in the scope of the rules as from 1 January 2024. The registration process is not yet opened, but a few important elections are expected to be made as part of those registrations, including whether a designated filing entity would be appointed for the GIR.

To maximise tax compliance efficiencies, groups are recommended to consider different items when designating a group filing entity, including whether the jurisdiction effectively has Pillar 2 rules in effect, whether the jurisdiction has implemented an automatic exchange of information (e.g., DAC 9 and MCAA) and the expected legal framework around the limited dissemination of information. The implementation by Luxembourg of DAC 9 (allowing for GIR exchange with other EU member states) and the MCCA (allowing for GIR exchange with other jurisdictions), as well as the fact that Luxembourg would not require a separate QDMTT form are a welcome step towards simplification for groups having a Pillar 2 presence in Luxembourg.

Other amendments to the Pillar 2 Law

Several articles of the existing Pillar 2 Law have been amended to clarify and refine the application of the rules. The key amendments relate to the following:

• OECD guidance released in January 2025 and related to article 9.1 transition rules under the OECD Model rules have been introduced under articles 44 (3), 53 and 59 of the Pillar 2 law. These relate to how deferred tax assets (DTAs) should be treated when groups first become subject to the global minimum tax. In principle, DTAs can be included in the effective tax rate (ETR) calculations only if they are either recorded or disclosed in the group or statutory financial statements, they are measured for Pillar 2 purposes at the lower of 15% or the domestic tax rate and they meet the conditions of the transition period. With respect to the transition period, the OECD guidance of January 2025 included additional restrictions with respect to DTAs generated in relation to certain governmental arrangements. The specific arrangements that are envisaged are:
  • A DTA that is attributable to a governmental arrangement concluded or amended after 30 November 2021 where such governmental arrangement provides the taxpayer with a specific entitlement to a tax credit or other tax relief (including, for example, a tax basis step-up or tax credit) that does not arise independently of the arrangement.  On the contrary, a standard application of the law that is available to any taxpayer would not be targeted;
  • A DTA that is attributable to an election or choice exercised or changed by a constituent entity after 30 November 2021 and that retroactively changes the treatment of a transaction in determining its taxable income in a tax year for which an assessment by the tax authority was already made or a tax return was already filed;
  • A DTA or a deferred tax liability arising from a difference in the tax basis or value and accounting carrying value of an asset or liability if the tax basis or value was established pursuant to a corporate income tax that was enacted by a jurisdiction that did not have a pre-existing corporate income tax and that was enacted after 30 November 2021 and before the transition year (i.e., the first year of application of the full Pillar 2 rules for a given jurisdiction).

• The new provisions restrict the recognition for Pillar 2 purposes of DTAs in relation to the above arrangements for the purpose of the IIR, UTPR and QDMTT rules. This would be both for the full Pillar 2 computations and the transitional country-by-country reporting (CbCR) safe harbour rules. A grace period allows limited use of these DTAs (capped at 20% of the original amount) over two or three years, depending on the benefit type. After this period — and in any case for arrangements after 18 November 2024 — these DTAs are excluded from ETR calculations. However, such grace period would not apply for the purpose of the Luxembourg QDMTT computations (either under the full Pillar 2 rules or the transitional CbCR safe harbour computations). In practice, Luxembourg companies are generally not expected to be subject to the arrangements included in those rules so that the exclusion of the grace period may have limited practical impact for most taxpayers.

• Article 14 (3) of the Pillar 2 Law now specifies as well that jurisdictions that do not exclude such DTAs from the full Pillar 2 computations and the CbCR safe harbour computations may also disqualify those jurisdictions for Luxembourg to apply the QDMTT safe harbour. This means that Luxembourg would in such cases still apply its IIR and UTPR provisions for those jurisdictions.

• Interestingly, the Draft Law foresees that the new rules on DTAs related to governmental arrangements would have effect for fiscal years starting on or after 31 December 2023. This would mean that those rules would have retroactive effect considering that the relevant OECD guidance was released in January 2025.

Key takeaways

Draft Law No. 8591 introduces a framework for the automatic exchange of GloBE Information Returns with EU and other jurisdictions and aligns Luxembourg’s Pillar 2 implementation with the latest OECD and EU standards.

Taxpayers should assess the relevant provisions with respect to local and group reporting requirements to optimise their tax compliance strategy. Groups could designate a group filing entity for the GIR. In Luxembourg, such election is expected to be made through the Pillar 2 registration (or subsequent notifications) which are required for all Luxembourg entities that are subject to the Pillar 2 Law.

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