Law 7/2024 – Global Minimum Tax for Multinational Groups (Pillar Two)
Law 7/2024, published in the BOE on 20/12/2024 (BOE-A-2024-26694), transposes EU Directive 2022/2523 and sets a 15% global minimum effective tax rate for multinational and large domestic groups with consolidated annual turnover of €750 million or more in at least 2 of the last 4 fiscal years. It took effect for fiscal years starting on or after 1/1/2024 and applies via the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) – it does not affect the vast majority of SMEs and self-employed clients of a typical tax firm, except when advising subsidiaries of qualifying multinational groups.
How IgeraGestories automatically resolves Impost mínim global — Pilar 2 OCDE queries
€750 million consolidated turnover threshold
Law 7/2024, transposing EU Directive 2022/2523 (BOE-A-2024-26694)
Groups are within scope only if consolidated annual turnover reaches €750 million or more in at least 2 of the last 4 fiscal years. This mirrors the Country-by-Country Reporting threshold already used internationally, so many groups can reuse existing CbCR data to pre-screen exposure.
15% minimum effective tax rate
Law 7/2024, Pillar Two framework (BOE-A-2024-26694)
The effective tax rate is computed jurisdiction by jurisdiction, not entity by entity. If covered taxes divided by qualifying income falls below 15% in any jurisdiction where the group operates, a top-up tax closes the gap for that jurisdiction as a whole.
Income Inclusion Rule (IIR)
Law 7/2024, primary charging mechanism (BOE-A-2024-26694)
The IIR is the primary rule: it requires the ultimate (or an intermediate) parent entity to bring into charge a top-up tax on the low-taxed income of any group entity, wherever located, that falls below the 15% floor.
Undertaxed Profits Rule (UTPR)
Law 7/2024, backstop mechanism (BOE-A-2024-26694)
The UTPR is a backstop that reallocates any top-up tax not collected under the IIR – for example because the parent jurisdiction has no qualifying IIR – among the group’s entities in UTPR jurisdictions, typically via a denial of deductions or an equivalent adjustment.
Effective date: fiscal years from 1/1/2024
Law 7/2024, entry into force (BOE-A-2024-26694, published 20/12/2024)
Although published on 20/12/2024, the law applies retroactively in effect to fiscal years starting on or after 1/1/2024, meaning affected groups needed Pillar Two data-gathering processes in place from the start of that fiscal year, not from the publication date.
Scope exclusion for SMEs and non-qualifying groups
Law 7/2024, scope provisions (BOE-A-2024-26694)
Entities and groups below the €750 million consolidated turnover threshold are entirely outside the scope of Law 7/2024 and continue to be taxed exclusively under ordinary Corporate Income Tax rules, with no top-up tax obligations whatsoever.
IgeraGestories in action — Impost mínim global — Pilar 2 OCDE
User
One of our clients is the Spanish subsidiary of a multinational group. Does Law 7/2024 create any new tax obligation for that subsidiary?
IgeraGestories
It depends on the group’s consolidated turnover, not the subsidiary’s size alone. Under Law 7/2024 (BOE-A-2024-26694), if the ultimate parent’s consolidated annual turnover reached €750 million or more in at least 2 of the last 4 fiscal years, the group falls within Pillar Two scope, and a top-up tax may apply via the IIR or UTPR if any group entity – potentially including this Spanish subsidiary – is taxed below the 15% effective rate in its jurisdiction. This applies to fiscal years starting on or after 1/1/2024. Recommend checking the parent group’s consolidated financial statements and consulting a licensed tax advisor before filing.
Font: Law 7/2024, of 20 December (BOE-A-2024-26694), transposing EU Directive 2022/2523 – boe.es/buscar/act.php?id=BOE-A-2024-26694
Frequently asked questions — Impost mínim global — Pilar 2 OCDE
Does Law 7/2024 apply to my SME or self-employed clients?
No. The 15% global minimum tax under Law 7/2024 only applies to multinational or large domestic groups with consolidated annual turnover of €750 million or more in at least 2 of the last 4 fiscal years. The overwhelming majority of SMEs and self-employed taxpayers fall well below this threshold and are entirely unaffected.
Is Law 7/2024 already in force, or still pending?
Law 7/2024 is fully in force: it was published in the BOE on 20/12/2024 as BOE-A-2024-26694 and applies to fiscal years beginning on or after 1/1/2024, meaning some groups already had reporting obligations retroactive to that date. It is not a draft or a pending transposition – it is enacted Spanish law implementing EU Directive 2022/2523.
What are the IIR and UTPR mechanisms?
The Income Inclusion Rule (IIR) requires a parent entity to pay a top-up tax when a group entity in another jurisdiction is taxed below the 15% effective rate. The Undertaxed Profits Rule (UTPR) acts as a backstop, reallocating any remaining top-up tax to other group entities when the IIR has not fully captured it. Together they ensure the group’s effective tax rate reaches 15% in every jurisdiction where it operates.
How is the 15% effective tax rate calculated?
The effective tax rate is calculated on a jurisdictional basis, dividing the group’s covered taxes by its net qualifying income in that jurisdiction, both computed under the rules set out in Law 7/2024 following the OECD Pillar Two model rules. If the result falls below 15%, a top-up tax is due for the difference, regardless of the nominal corporate tax rate applied locally.
Which turnover figure counts toward the €750 million threshold?
The relevant figure is the consolidated annual turnover reported in the ultimate parent entity’s consolidated financial statements, and the threshold must be met in at least 2 of the 4 fiscal years immediately preceding the tested year. A single year above €750 million does not by itself trigger the group’s inclusion if the 2-out-of-4 condition is not otherwise satisfied.
Does Law 7/2024 replace ordinary Corporate Income Tax?
No. Law 7/2024 introduces a supplementary top-up tax that applies on top of ordinary Corporate Income Tax obligations administered by the AEAT; it does not replace or modify the standard Corporate Income Tax return or rates applicable to non-qualifying entities.
Is this a substitute for professional advice?
No. This content is informative only and does not constitute tax or legal advice. Given the complexity of Pillar Two calculations and the significant penalties for non-compliance by qualifying groups, always consult a licensed tax advisor (gestor) or lawyer before making decisions based on Law 7/2024.