Luxembourg has introduced a standardized Top-up Tax Information Return (TTIR) for Pillar Two taxes through the Law of 19 December 2025 (Law) transposing European Union (EU) Directive on Administrative Cooperation (DAC9).¹ DAC9 sets out the rules for implementing the Organisation for Economic Co-operation and Development's (OECD's) Global Anti-Base Erosion (GloBE) Information Return (GIR). In line with DAC9, the Law also establishes a legal framework for the automatic exchange of information of (specific sections of) the TTIR between competent authorities.

The Law also amends the Pillar Two Law² by incorporating the OECD Administrative Guidance released in January 2025, which clarifies the treatment of deferred tax assets and liabilities that arose prior to the application of the Pillar Two Law. For background on the OECD Administrative Guidance, see EY Global Tax Alert, OECD releases new documents on GloBE rules and on qualified jurisdiction status, dated 17 January 2025.

For more information on the Law, see EY Global Tax Alert, Luxembourg proposes legislation on GloBE Information Return, exchange of information and Administrative Guidance on Article 9.1, dated 19 August 2025.

The Law specifies that the Qualifying Domestic Minimum Top-Up Tax Safe Harbor does not apply in respect of a jurisdiction that does not exclude the deferred tax expense from (1) Covered Taxes when determining the amount of top-up-tax or (2) Simplified Covered Taxes under the Transitional Country-by-Country Reporting Safe Harbor. Compared to the earlier proposal, the Law introduces an exception to this rule, in line with the Administrative Guidance. This exception allows a portion of the deferred tax expenses attributable to the reversal of such deferred tax asset to be taken into account during the two-year Grace Period, provided that the jurisdiction concerned has limited the maximum amount that may be included during the Grace Period to 20% of the deferred tax assets amount originally recorded and taken into account at the lower of the 15% minimum tax rate or the applicable domestic tax rate.

The Law also clarifies that the Grace Period covers fiscal years:

• Beginning from 31 December 2023 and before 31 December 2025 (for deferred tax assets generated no later than 18 November 2024)
• Beginning 31 December 2024 and before 31 December 2025 (for deferred tax assets related to the introduction of a new corporate income tax)

This replaces the earlier proposal covering fiscal years beginning in 2024, 2025 and 2026.

The Law enters into effect on 1 January 2026, with the provisions incorporating the OECD Administrative Guidance effective for financial years starting from 31 December 2023 onward.