The transposition in Spain of Council Directive (EU) 2022/2523 of 15 December 2022, on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union, has introduced the new Top-up Tax into Spanish law.
This legislation, linked to the OECD’s Pillar Two framework, aims to ensure that certain large groups are generally taxed at a minimum effective rate of 15% per jurisdiction. Its application requires groups to review not only their tax burden, but also their consolidation perimeter, available accounting information, internal reporting systems and coordination between tax, finance and legal teams.
Although the application threshold focuses on large groups, the practical impact is not limited to calculating a potential tax liability. In many cases, the real challenge will be correctly identifying the entities affected, gathering the necessary information and documenting a coherent tax position across all relevant jurisdictions.
Pillar Two should therefore be approached as a matter of tax compliance in Spain for international companies, rather than merely as an isolated legislative development.
Pillar Two forms part of the international project promoted by the OECD and the G20 to address base erosion and profit shifting to low-tax or no-tax jurisdictions. Its objective is to establish a coordinated framework so that large multinational groups and certain large-scale domestic groups are subject to a minimum level of effective taxation.
In the European Union, this objective was implemented through Directive (EU) 2022/2523, which creates a common framework to avoid a fragmented application of the global minimum tax rules among Member States.
The system does not operate as a simple increase in the nominal Corporate Income Tax rate. Pillar Two is based on calculating the effective tax rate in each jurisdiction and, where that rate is below the 15% minimum, charging an additional or top-up tax to bring the taxation up to that threshold.
Spain has incorporated these rules through Law 7/2024 of 20 December, which establishes the Top-up Tax to ensure a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups.
Subsequently, Royal Decree 252/2025 of 1 April approved the Top-up Tax Regulations, developing certain aspects of application, interpretation and coordination with OECD and European Union criteria.
Spanish law configures the Top-up Tax as a direct tax of a personal nature. Its purpose is to tax the income of constituent entities of affected groups where they are located in jurisdictions with an effective tax rate, calculated on a jurisdictional basis, below the minimum rate.
In practical terms, this means that affected groups must analyse whether the effective taxation of their entities in each jurisdiction falls below 15% and, if so, determine whether a top-up amount is due under any of the modalities provided for in the legislation.
The Top-up Tax applies to entities located in Spain that form part of multinational enterprise groups or large-scale domestic groups whose consolidated net turnover amounts to at least EUR 750 million in at least two of the four fiscal years immediately preceding the beginning of the fiscal year.
This threshold is close to that used for Country-by-Country Reporting (CbCR), although Pillar Two introduces a different and more complex analysis: it is not limited to reporting, but may result in a top-up tax being charged where the effective tax rate of a jurisdiction does not reach the global minimum.
Groups should therefore review, among other matters:
One of the most important points is to understand that Pillar Two is not equivalent to simply applying a nominal minimum rate of 15% to the Spanish Corporate Income Tax base.
The system starts from the calculation of the effective tax rate by jurisdiction. For this purpose, qualifying income and adjusted covered taxes of the constituent entities located in each jurisdiction are taken into account in accordance with the specific rules of the legislation.
If the effective tax rate of a jurisdiction is below 15%, a top-up tax may arise. The amount is not determined by a direct comparison with the local nominal rate, but through a specific methodology requiring accounting, tax and jurisdictional allocation adjustments.
This distinction is key: a group may operate in jurisdictions with apparently sufficient nominal rates and still need to analyse adjustments, incentives, exemptions, deductions, timing differences or special regimes that affect the calculation of the effective tax rate.
Law 7/2024 provides for three modalities of Top-up Tax, which respond to different allocation and collection rules:
The application of one modality or another requires an analysis of the group structure, the location of the ultimate parent entity, the presence of constituent entities in Spain and the existence of equivalent or admissible rules in other jurisdictions.
Adapting to Pillar Two should not be limited to a one-off review of tax rates. The rules require a cross-functional analysis combining accounting, tax, corporate governance and internal information systems.
In practice, affected groups should review at least:
This work should be coordinated with the general review of the group’s tax obligations in Spain and with supporting resources such as the Tax Compliance in Spain guide for international companies, especially where there are subsidiaries, branches, permanent establishments or intragroup transactions.
One of the points requiring particular attention is the impact of Pillar Two on groups operating under special tax regimes or reduced-tax regimes.
Regimes such as the Canary Islands Special Zone (ZEC), certain sector-specific incentives or specific rules applicable to international maritime transport may alter the outcome of the effective tax rate calculation by jurisdiction. This does not necessarily mean that the regime ceases to be useful, but its effect must be analysed within the Pillar Two framework.
In these cases, the analysis must go beyond the local tax treatment of the incentive. It will be necessary to determine whether the tax benefit creates a relevant difference in the effective tax rate calculation, whether an exclusion applies, whether the regime is affected by specific rules or whether the group may end up bearing a top-up tax in Spain or in another jurisdiction.
The same logic applies to international holding structures and vehicles under special regimes, such as ETVEs and their role in international tax planning, whose efficiency must be assessed not only from a Spanish tax perspective, but also from the global perspective of the group.
Pillar Two represents a significant change because it shifts part of the tax work towards a model based on data control and documentary consistency. Even where the analysis concludes that there is no material tax due, the group may be required to justify its position, document calculations and maintain sufficient information to respond to the Tax Authorities.
The main risk will therefore not always be the payment of the tax, but the lack of internal preparation: incomplete information, incorrectly defined perimeters, differences between accounting and tax data, lack of coordination between jurisdictions, non-homogeneous information or the absence of internal procedures to collect, harmonise and validate the information.
In this context, the involvement of specialised teams providing tax advice for international groups may be key to designing an orderly diagnosis and a reasonable compliance strategy.
To avoid Pillar Two adaptation becoming a reactive exercise, potentially affected groups should begin with a preliminary diagnosis to identify risks, information gaps and possible internal coordination needs.
An initial review could be structured in the following phases:
The transposition of Pillar Two in Spain should not be understood merely as the introduction of a new tax for large groups. Its real impact will lie in the need to review structures, data, systems and tax consolidation criteria from a global perspective.
Groups that may fall within its scope should anticipate the impact analysis, especially if they operate in several jurisdictions, apply special tax regimes or have complex holding structures.
The key will not only be to determine whether there is a tax liability to pay, but to demonstrate that the group has correctly identified its perimeter, properly calculated its effective tax rate by jurisdiction, assessed potential adjustments, harmonised the necessary information and documented its position coherently.
In this new context, tax planning and compliance are no longer separate compartments: Pillar Two requires an integrated, anticipated and coordinated approach across tax, accounting, corporate governance and international reporting.
Pillar Two is an international initiative promoted by the OECD and the G20 to ensure that large multinational groups are generally taxed at a minimum effective rate of 15% per jurisdiction.
The Top-up Tax is the figure introduced in Spain to ensure a global minimum level of taxation for certain multinational enterprise groups and large-scale domestic groups.
It affects entities located in Spain that form part of multinational enterprise groups or large-scale domestic groups with consolidated net turnover of at least EUR 750 million in at least two of the previous four fiscal years.
Not exactly. Pillar Two requires the effective tax rate to be calculated by jurisdiction and, where it is below 15%, a top-up tax may arise to reach that minimum.
Spanish legislation provides for three modalities: domestic top-up tax, primary top-up tax and secondary top-up tax.
They should review their consolidation perimeter, constituent entities, affected jurisdictions, covered taxes, accounting data, special tax regimes, information obligations and internal reporting systems.
Groups benefiting from special tax regimes or reduced-tax regimes should analyse whether those regimes may create relevant differences in the effective tax rate calculation by jurisdiction and, where applicable, a top-up tax.
Because applying Pillar Two requires collecting and reconciling accounting, tax and corporate information from different jurisdictions, which may require time, internal coordination and system adaptation. In addition, the information maintained by groups is sometimes not homogeneous, so harmonising the data before performing the calculations may also be necessary.
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