In today’s rapidly evolving business landscape, understanding regulatory frameworks is more crucial than ever. Recognixing the complexities involved, DycoTrade is proud to work closely with our Alliance Partner PwC, whose experts provided valuable insights into the complexities of B2B E-compliance and Pillar Two obligations. These discussions highlight not only the challenges businesses face but also reveal the strategic opportunities that arise from compliance.
Short on Time? Click the link to the Pillar Two country tracker below!
What are these obligations?
E-compliance obligation represent legal requirements in the field of electronic invoicing(near) real-time reporting, transaction-based period-end reporting and e-archiving mainly applicable to B2B, but not limited to. For all these obligations, it is about the communication of invoices or transactional data in a predefined structured and electronic format to different parties, such as customers or the local tax authorities.
Pillar Two requirements, part of the broader OECD Base Erosion and Profit Shifting (BEPS) initiative, aim to ensure that multinational enterprises (MNEs) pay a minimum level of tax (15%) on the income arising in each of the jurisdictions where they operate.
Who is affected?
In principle all companies established in a country where e-compliance obligations have been mandated are in scope. Depending on the country specifics, foreign companies having just a VAT registration in the specific country may also be in scope.
The Pillar Two rules apply to multinational enterprises that typically meet a revenue threshold of revenues exceeding €750 million in 2 out of last 4 years. This includes both the ultimate parent entities and any constituent entities that are part of the MNE group (hence, all entities worldwide fall in scope of Pillar Two in case the Company is operating in a jurisdiction where Pillar Two is applicable).
When are the timelines?
Around the world, countries are increasingly recognizing the importance of digital governance, which led to a growing trend towards the implementation of e-compliance measures. In the European Union, the Commission has published the ViDA proposal draft which focuses on the B2B intra community transactions. No political agreement was reached yet, however, discussions are ongoing, and stakeholders remain committed to finding a viable solution. It should go into force by 2030 if political agreement is timely reached.
In the meantime, EU Member States are mandating e-compliance measures for domestic transactions. Upcoming key deadlines and exact scoping vary per jurisdiction, starting as from January 2025, but generally expected as from FY 2026. Notable countries to specifically consider are Belgium, France, Germany, Poland and Romania.
Pillar Two rules are already applicable as from 1 January 2024 in most European countries as well as some other jurisdictions. As such, for financial statement purposes the Pillar Two impact should be determined as from this year. First compliance requirements are expected as from FY 2026, however, several jurisdictions introduced registration (deadline in FY 2024 already) and advance payment requirements.
What should you do next?
Both the new e-invoicing as well as the Pillar Two requirements are merely a data challenge, with new datapoints being relevant (potentially more than 280(!) for Pillar Two only). In order to be able to be able to meet the new requirements we suggest to consider the following aspects:
- Prioritize the availability and quality of (master) data including the data extraction process and establish clear data ownership
- Define a proper governance model with a clear overview of the roles and responsibilities of the relevant stakeholders
- Understand the impact on the business and systems before starting the vendor selection process
- Initiate an impact assessment and implementation of a reporting solution in a timely manner
- Define a multi-country approach and strategy to create synergies during the implementation process
- Allow sufficient lead time and be flexible to deal with roadmap changes
- Adopt an integrated approach regarding (tax) compliance where possible – prevent point solutions, but look at the bigger picture (e.g. traditional VAT and CIT reporting obligations, CSRD obligations etc) and search for synergies.
Stay informed
To help you navigate these changes, we invite you to explore the OECD Pillar Two country tracker. Developed by PwC, this tracker will keep you updated on the latest developments and help you stay informed about the evolving landscape of global compliance.
Do you need help?If you have any questions, please reach out to Mrs. Marina Piga of PwC at marina.piga@pwc.com or Ben van der Laan of DycoTrade at ben.van.der.laan@dycotrade.com. We’re happy to help!
