The transitional CbCR safe harbour (Art. 9.1) is one of the most operationally valuable provisions in the Pillar Two framework. A jurisdiction that passes any one of the three tests is treated as having zero top-up tax — no full GloBE computation required. For many MNE groups, this eliminates the full calculation for the majority of their jurisdictions. But the safe harbour is also one of the most error-prone calculations in the framework.
The data source: CbCR Table 1
The safe harbour uses data from Country-by-Country Report (CbCR) Table 1 — specifically: revenue, profit (loss) before income tax, income taxes paid (on cash basis), income taxes accrued (current year), and stated capital and retained earnings. These figures are at jurisdictional grain, not entity grain — they represent the aggregate of all constituent entities in a jurisdiction.
This distinction matters: you cannot run the safe harbour tests entity-by-entity using CbCR data and then assess qualification per entity. The tests must be run on the jurisdictional totals.
Test 1: De minimis
A jurisdiction passes de minimis if its revenue is below €10 million AND profit before income tax is below €1 million. Both conditions must be satisfied simultaneously. The thresholds are strict less-than — a jurisdiction with exactly €10,000,000 revenue does not qualify.
Common error: testing revenue and profit independently and qualifying a jurisdiction where only one threshold is met.
Test 2: Simplified ETR
The simplified ETR is: simplified covered taxes ÷ profit before income tax. If this ratio meets or exceeds the applicable threshold, the jurisdiction passes.
The thresholds are: 15% for fiscal years beginning in 2024, 16% for 2025, 17% for 2026 and later years.
The numerator — simplified covered taxes — is derived from the financial statements, not the CbCR income taxes accrued column. This distinction is important: the two figures can diverge significantly in jurisdictions with complex deferred tax positions. Using the CbCR income taxes accrued figure directly is an implementation error.
Test 3: Routine profits
A jurisdiction passes the routine profits test if its profit before income tax does not exceed the SBIE computed from CbCR payroll and tangible asset figures. The SBIE uses the same declining rate schedule as the full GloBE computation, applied to the CbCR payroll and tangible asset figures for the jurisdiction.
What happens after qualification
A jurisdiction that qualifies under any of the three tests is treated as having zero top-up tax for the transitional period. This means it is excluded from the full GloBE computation for that year. The qualifying test and the qualifying route (de minimis / simplified ETR / routine profits) must be recorded in the GIR.
If a jurisdiction fails all three tests, the full four-step GloBE ETR calculation must be run using financial statement data — not CbCR data.
Pillar2OS runs the safe harbour pre-screen across all jurisdictions in a single pass before starting the full GloBE computation. Try the live sandbox.