On January 5 2026, the OECD/G20 Inclusive Framework on BEPS agreed on an administrative guidance package that significantly affects the global minimum tax regime, referred to as the “side-by-side package”.
The agreement introduces a mechanism allowing the OECD Global Anti-Base Erosion Model Rules (the GloBE Rules) to operate alongside existing domestic regimes considered substantially equivalent to the pillar two framework.
Multinational enterprise (MNE) groups within scope and headquartered in jurisdictions identified as having a qualified side-by-side regime may elect to apply a special arrangement known as the side-by-side safe harbour. In this case, no additional top-up tax arises under the GloBE Rules and the income inclusion rule and the undertaxed profits rule do not apply. This election does not affect the application of domestic minimum taxes, such as qualified domestic minimum top-up taxes, that jurisdictions may impose on entities operating within their territory.
As of today, the US is the only jurisdiction recognised as having a qualified side-by-side regime.
In addition to operational simplifications, the side-by-side package provides more favourable treatment for certain tax incentives when calculating the effective tax rate (ETR) for the purposes of the global minimum tax.
The application of the transitional country-by-country reporting (CbCR) safe harbour – a short-term measure that would exclude MNE groups’ operations in lower-risk jurisdictions from the scope of GloBE in the initial years and based on CbCR data for calculating MNE groups’ revenue and income – has been extended.
The package also includes a commitment to simplify GloBE reporting obligations.
GloBE reporting within the OECD framework
Within the global minimum tax system, the primary reporting obligation is the GloBE Information Return (GIR). The GIR is a standardised information return containing the data required to verify the correct application of the GloBE Rules. Its purpose is to enable tax administrations to assess compliance with the 15% global minimum tax rate while facilitating the automatic exchange of information between jurisdictions and avoiding duplicative reporting requirements.
Under the GloBE framework, reporting generally follows the central filing approach, whereby the GIR is filed once for the entire group. The return is usually submitted by the ultimate parent entity (UPE) or by another entity designated by the group.
The GIR includes a general section containing information on the group and jurisdiction-by-jurisdiction sections covering the information necessary to compute the ETR and any applicable top-up tax.
Following central filing, the receiving tax administration shares the GIR with other relevant jurisdictions through automatic exchange of information. Where this mechanism operates effectively, other jurisdictions generally do not require a local filing. Local filing therefore operates as a backup rule. A jurisdiction may require a local group entity to file the GIR where:
The GIR has not been filed elsewhere;
No information exchange agreement is in place; or
The jurisdiction does not receive the GIR in a reliable manner.
In such cases, the local entity must file a copy of the GIR with the relevant tax administration.
Within the EU, under Directive 2025/872 – amending Directive 2011/16/EU on administrative cooperation in the field of taxation in order to implement the global minimum tax framework (DAC9) – a GIR filed in one member state is automatically transmitted to the other member states through the administrative cooperation system.
Changes to GloBE reporting under the side-by-side package
The side-by-side package introduces coordination mechanisms between domestic tax systems with the aim of reducing the administrative burden on MNE groups.
Where a jurisdiction applies a tax regime recognised as equivalent to the GloBE Rules, other jurisdictions may rely on the domestic calculation performed in that jurisdiction. As a consequence, where the side-by-side safe harbour applies, reporting obligations may be significantly reduced.
The GIR continues to be filed; however, for jurisdictions covered by the safe harbour, only limited information may be required, typically restricted to the identifying data of the MNE group. In these cases, jurisdictions relying on the domestic regime do not require the full calculation of the ETR or detailed entity-level information.
The side-by-side package therefore introduces an important simplification by allowing a reduced level of detail in the GIR for jurisdictions falling within the scope of the side-by-side safe harbour.
GloBE reporting obligations under Italian tax law
Italy implemented the GloBE Rules and the GloBE Directive into its domestic legal system through Legislative Decree No. 209/2023.
Under the Italian framework, three compliance obligations are provided for:
The communication to the Italian Revenue Agency of the entity responsible for filing the GIR;
The submission of the “Comunicazione rilevante”, corresponding to the GIR and intended to enable the Italian tax authorities to verify the correct application of the top-up tax; and
The filing of an annual tax return through which the top-up tax is declared and paid.
For MNE groups whose first year of application is 2024, the return must be submitted by June 30 2026.
Focusing on the GIR, Italian rules provide that each entity located in Italy belonging to an in-scope MNE group must submit the relevant communication to the Italian Revenue Agency. However, the communication may also be filed by a designated entity of the group located in Italy or abroad.
An entity located in Italy is not required to submit the communication where this obligation is fulfilled by the foreign UPE or by a designated foreign entity, located in a country that has a qualified competent authority agreement in force with Italy. With reference to the EU member states, DAC9 constitutes a qualified agreement.
Each entity located in Italy must communicate to the Italian Revenue Agency the identifying details of the local designated entity and of the UPE or designated foreign entity.
Impact of the side-by-side package on MNE groups in Italy
Italy, like other EU member states, will need to adapt its domestic framework to reflect the side-by-side package. The European Commission has clarified that, pursuant to Article 32 of the GloBE Directive, agreements reached at the OECD level within the Inclusive Framework are automatically reflected in the directive.
In Italy, legislative adjustments will be needed to implement the GIR simplification rules under the side-by-side package. Appropriate coordination with DAC9 will also be necessary with respect to the information exchanged between tax administrations. Italy is still evaluating whether to implement the package through legislation or through ministerial decrees, depending on potential budgetary implications.
In any case, within the framework of the obligations already provided for, the implementation of the side-by-side package may lead to a reduction in the information required in the GIR for jurisdictions covered by the side-by-side package.
Pending a clearer understanding of the broader effects of the flexibility introduced by the side-by-side package – including its potential impact on the coordination of international tax rules – the coexistence of multiple domestic regimes alongside the global minimum tax is likely to increase the compliance complexity. Recent statements by the Italian deputy minister of the economy suggest that India and China could join the US among the jurisdictions listed as qualified side-by-side regimes.
This development adds to the issue of the simultaneous application, in certain years, of permanent safe harbours and the transitional CbCR safe harbour, further contributing to the overall complexity of the reporting framework.
