Luxembourg voted the law implementing automatic exchange of GloBE Information Returns and amendments to the Pillar 2 Law

On 17 December 2025, Luxembourg parliament voted in Bill n°8591 (the Bill) transposing Directive (EU) 2025/872 and introducing automatic exchange of GloBE Information Returns and related procedures. Amendments to the existing Pillar 2 rules have also been enacted in the Pillar 2 Law of 22 December 2023 (the Pillar 2 Law) to align with recent OECD administrative guidance.

Automatic exchange of GloBE Information Returns

The Bill 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 OECD’s global minimum tax framework and EU DAC 9 and ensures that Luxembourg complies with international transparency standards.

The main provisions of the Bill introducing these rules were detailed in our previous PwC Flash newsletters and remain unchanged (aside from legalistic adjustments).

Observations

Luxembourg has streamlined Pillar 2 compliance by consolidating local reporting—QDMTT data—into the GloBE Information Return (GIR), removing the need for a separate QDMTT filing. This approach, set out in a Grand Ducal draft regulation aligned with the EU Directive and OECD model, reduces administrative burden and enhances consistency.

All Luxembourg entities within scope must register for Pillar 2 by 30 June 2026 (for calendar-year groups in scope as of 1 January 2024). The forthcoming registration process will require groups to make important elections, such as designating a filing entity.

When selecting a group filing entity, it is essential to consider whether the chosen jurisdiction has implemented Pillar 2 rules, participates in automatic information exchange (e.g., under DAC 9 or the OECD Multilateral Competent Authority Agreement, “MCAA”), and provides adequate safeguards for information dissemination.

By aligning with international standards and leveraging both DAC 9 and the MCAA for information exchange, Luxembourg offers a simplified and efficient framework for multinational groups with a local presence.

Amendments to the Pillar 2 Law

• Amendments to Deferred Tax Asset (DTA) Treatment

Article 53 of the Pillar 2 Law now incorporates OECD’s January 2025 guidance on transitional treatment of DTAs, restricting recognition of certain DTAs (e.g., those arising from post 30 November 2021 governmental arrangements, retroactive elections, or new corporate taxes).

A transitional “grace period” is introduced, allowing up to 20% of such DTAs to be recognised for a limited time.

The start date for this grace period has been aligned with fiscal years beginning on or after 31 December 2023 (not 1 January 2024 as initially included in the draft law), to ensure consistent application for all taxpayers (following State Council comments).

•  “Switch-off” rule for QDMTT safe harbour

The Pillar 2 Law has been amended to introduce a rule that would deactivate (or “switch-off”) QDMTT safe harbour for jurisdictions not excluding certain DTAs from Pillar 2 calculations.

The initial provision under the draft law was stricter than the OECD guidance, as raised by the State Council as it did not consider the application by foreign jurisdictions of the 20% grace period.

Article 14, paragraph 3 was therefore completed to ensure that the “switch-off” rule will not apply to jurisdictions applying the 20% grace period for transitional years, similar to the grace period introduced under article 53, paragraph 6 of the Pillar 2 Law.

Key takeaways

The voted Bill sets the stage for automatic exchange of GloBE Information Returns, bringing Luxembourg’s Pillar 2 implementation in line with the latest OECD and EU standards.

Taxpayers should review both local and group reporting requirements to optimise compliance, including the option to designate a group filing entity through the Pillar 2 registration process. It is worth mentioning that designating a group filing entity may not prevent in certain jurisdictions to have to file QDMTT returns or to have to file e.g. a payment declaration (as in Luxembourg for the latter). Hence all filing obligations in each jurisdiction remain to be looked at carefully and to be anticipated in due time. 

For those navigating the complexities of Pillar 2, tailored training and support, such as PwC's Pillar 2 Training Programme, can help ensure your teams are prepared and compliant.