--- name: pillar-two-global-minimum-tax-impact-calculator description: "Computes estimated Pillar Two top-up tax exposure from jurisdiction-level financial data under OECD GloBE rules — calculating GloBE ETR per jurisdiction, applying the substance-based income exclusion, flagging jurisdictions below the 15% minimum, and producing a ranked exposure summary with mitigation levers. Use when modeling global minimum tax liability, assessing which jurisdictions trigger top-up tax, or preparing Pillar Two impact analysis for a multinational group." argument-hint: "[jurisdiction-financials] [group-structure]" allowed-tools: ["Read"] --- # Pillar Two Global Minimum Tax Impact Calculator ## Purpose Convert jurisdiction-level financial and tax data into an estimated Pillar Two top-up tax exposure — calculating the GloBE effective tax rate per jurisdiction, netting the substance-based income exclusion, and identifying exactly which jurisdictions push the group below the 15% minimum and how much top-up tax results. Replaces error-prone spreadsheet modeling with a repeatable, rule-aligned calculation the tax function can run each time entity data updates. ## When to Use Invoke this skill when the user asks to: - Estimate Pillar Two / GloBE top-up tax exposure across a multinational group - Determine which jurisdictions fall below the 15% global minimum tax rate - Calculate the substance-based income exclusion (SBIE) offset for a jurisdiction - Model the tax impact of Pillar Two before filing or board reporting - Assess whether a low-tax jurisdiction triggers Income Inclusion Rule (IIR) or UTPR liability - Stress-test restructuring or investment scenarios against the global minimum tax ## Inputs Required Before starting, collect: - **Jurisdictions in scope**: List of jurisdictions where constituent entities operate - **GloBE income per jurisdiction**: Net accounting income adjusted for GloBE (financial accounting profit before tax as a starting point if adjustments unknown) - **Covered taxes per jurisdiction**: Current + deferred tax expense attributable to each jurisdiction - **Payroll costs per jurisdiction**: Eligible employee compensation for the SBIE carve-out - **Tangible assets per jurisdiction**: Net book value of eligible tangible assets for the SBIE carve-out - **Ownership / group structure**: Which parent(s) hold the low-tax entities — to determine whether IIR, UTPR, or a QDMTT applies - **Fiscal year**: The reporting period — determines the applicable SBIE transition rate If GloBE adjustments are unavailable, use financial-accounting profit before tax as the income proxy and covered taxes as reported income tax expense, and flag these as unadjusted estimates. If ownership structure is not provided, assume top-up tax is collected via the IIR at the ultimate parent. ## Instructions ### Step 1: Confirm Scope and Assumptions - Confirm the group meets the €750M consolidated revenue threshold; if unknown, note that Pillar Two applies only at or above this threshold and proceed as if in scope. - State the fiscal year and the corresponding SBIE transition percentages (see Step 4). - List every jurisdiction to be calculated and confirm each has income, covered taxes, payroll, and tangible asset figures. Flag any jurisdiction with missing data. ### Step 2: Calculate GloBE ETR per Jurisdiction For each jurisdiction: - **GloBE ETR = Adjusted Covered Taxes ÷ Net GloBE Income** - Aggregate all constituent entities within the same jurisdiction (jurisdictional blending) before computing the ratio — do not calculate entity-by-entity. - Express the ETR as a percentage to one decimal place. - Where net GloBE income is zero or negative, note that no top-up tax arises for that period and set aside for the loss-carryforward note in Step 8. ### Step 3: Flag Low-Tax Jurisdictions - Compare each jurisdictional GloBE ETR to the **15% minimum rate**. - Mark each jurisdiction: **Above 15% (no top-up)** or **Below 15% (at risk)**. - For each at-risk jurisdiction, compute the **Top-up Tax Percentage = 15% − GloBE ETR**. ### Step 4: Calculate the Substance-Based Income Exclusion (SBIE) The SBIE reduces the income subject to top-up tax by a percentage of payroll and tangible assets. For each at-risk jurisdiction: - **SBIE = (Payroll Carve-out % × Eligible Payroll) + (Tangible Asset Carve-out % × Net Tangible Assets)** - Apply the transition-year rates for the fiscal year in scope: - Steady state (2033+): 5% payroll / 5% tangible assets - Transition schedule declines annually from higher rates (e.g., ~9.8% payroll / ~7.8% assets in early years) toward 5% — apply the rate matching the stated fiscal year and cite the rate used. - **Excess Profit = Net GloBE Income − SBIE** (floor at zero; if SBIE ≥ income, top-up tax is zero for that jurisdiction). ### Step 5: Compute Top-up Tax per Jurisdiction For each at-risk jurisdiction: - **Top-up Tax = Top-up Tax Percentage × Excess Profit** - Subtract any **Qualified Domestic Minimum Top-up Tax (QDMTT)** already imposed locally — if a QDMTT applies in that jurisdiction, the residual top-up tax collected under IIR/UTPR is typically reduced to zero. Note QDMTT status per jurisdiction. ### Step 6: Assign the Collection Mechanism For each jurisdiction with residual top-up tax, determine who collects it based on the group structure: - **QDMTT**: Collected locally in the low-tax jurisdiction (takes priority). - **IIR**: Collected at the ultimate/intermediate parent under the Income Inclusion Rule. - **UTPR**: Backstop where no IIR applies — allocated across UTPR jurisdictions. Label each exposure with its collecting mechanism and paying entity. ### Step 7: Build the Ranked Exposure Summary - Rank at-risk jurisdictions by absolute top-up tax, largest first. - Present a table with: Jurisdiction | GloBE Income | Covered Taxes | GloBE ETR | SBIE | Excess Profit | Top-up % | Top-up Tax | Collection Mechanism. - Total the group-level top-up tax exposure. ### Step 8: Mitigation Levers and Sensitivities Provide 4–6 concrete levers relevant to the jurisdictions that surfaced, such as: - Adopting or crediting a local QDMTT to keep top-up revenue in-country. - Increasing eligible substance (payroll/tangible assets) to grow the SBIE carve-out. - Reviewing deferred tax positions that affect adjusted covered taxes. - Applying the transitional CbCR safe harbours where thresholds are met. - Note the impact of the declining SBIE transition rates on future-year exposure. Flag any calculation driven by unadjusted proxy data as an estimate requiring GloBE-adjusted figures before filing. ## Output Format - **Structure**: Assumptions block → per-jurisdiction ETR calculations → ranked exposure table → collection mechanism assignments → mitigation levers - **Length**: 800–1,200 words plus the exposure table - **Format**: Structured document with one summary table and short calculation walk-throughs per at-risk jurisdiction - **Sections**: Scope & Assumptions → GloBE ETR by Jurisdiction → Low-Tax Flags → SBIE Calculations → Top-up Tax by Jurisdiction → Collection Mechanism → Ranked Exposure Summary (table) → Mitigation Levers & Sensitivities - **Tone**: Technical tax advisory — precise, figures-first, conservative on assumptions, explicit about estimate vs. filing-grade calculation ## Quality Checklist Before delivering output, verify: - [ ] GloBE ETR is computed on a jurisdictional-blended basis, not entity-by-entity - [ ] Every jurisdiction is explicitly flagged above or below the 15% minimum - [ ] The SBIE uses the transition rate matching the stated fiscal year, and the rate is cited - [ ] Top-up tax is applied to excess profit (income net of SBIE), not gross GloBE income - [ ] Each residual exposure is assigned a collection mechanism (QDMTT / IIR / UTPR) and paying entity - [ ] The ranked table totals to a stated group-level exposure figure - [ ] Any output built on unadjusted proxy data is labeled an estimate, not a filing figure ## Notes - QDMTT takes priority: where a low-tax jurisdiction has a qualified domestic top-up tax, residual IIR/UTPR liability generally falls to zero — check this before assuming parent-level exposure. - Jurisdictional blending means a single high-tax entity can pull a jurisdiction above 15% even if another entity there is low-taxed; always aggregate first. - The transitional CbCR safe harbours can exempt a jurisdiction from full calculation for early years — worth checking before running the full model if the group qualifies. - These are planning estimates. Filing-grade GloBE calculations require the full set of GloBE income and covered-tax adjustments, which should be confirmed with the group's tax advisors before submission. --- ## How to use this skill This file is a Claude Code skill in [Anthropic's standard format](https://docs.anthropic.com/en/docs/claude-code/skills) — markdown with YAML frontmatter at the top. **Installing in Claude Code:** - `~/.claude/skills//SKILL.md` — auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects) - `/.claude/skills//SKILL.md` — auto-loads only when working in that project (recommended for project-specific skills) Restart Claude Code or open a new session to register. **Using in Claude.ai, ChatGPT, Gemini, or other AI tools:** 1. Drag this file into a new chat, or copy and paste its contents 2. 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