Ireland proposes Pillar Two safe harbours and GIR penalty changes

On 19 October 2026, Ireland’s Minister for Finance presented Finance (No. 2) Bill 2026, Bill No. 98 of 2026. Section 72 proposes a substantial revision of Part 4A of the Taxes Consolidation Act 1997. The text is a Bill as initiated, and its proposed changes remain subject to enactment.

Proposed implementation of the 2026 OECD package

Section 72(1)(b) would add the January Side-by-Side package, May guidance on 52–53-week years, and September administrative guidance and GIR to Ireland’s statutory list of OECD materials. Section 72 also proposes domestic safe-harbour provisions, amendments to existing reliefs and changes to GIR administration.

Side-by-Side and UPE relief have different reach

Proposed section 111AKC would, on an election by the filing constituent entity, deem the MNE group’s constituent entities’ IIR and UTPR top-up tax to be zero, including specified allocable joint-venture amounts. The ultimate parent must be located in a jurisdiction with a qualified Side-by-Side regime for the fiscal year. Qualification requires an Inclusive Framework determination and an entry in the OECD Central Record. The relief addresses IIR and UTPR; it does not eliminate Ireland’s domestic top-up tax charge.

Proposed section 111AKD is narrower. It would zero UTPR amounts calculated in respect of low-taxed constituent entities and relevant joint-venture entities located in the UPE jurisdiction. It too requires an election, an Inclusive Framework determination and Central Record listing. Relevant information must be included in the GIR. See section 72(1)(q), printed pages 146–149.

Extensions to transitional relief

Section 72(1)(m) would extend the Transitional CbCR Safe Harbour to fiscal years beginning by 31 December 2027 and ending by 30 June 2029. The 17% transition rate would cover both 2026 and 2027. Paragraph (n) would separately revise the transitional UTPR period to a fiscal year of no more than 53 weeks, beginning by 31 December 2025 and ending by 3 January 2027.

Incentive relief and the simplified-ETR framework

Proposed section 111AKB provides elective substance-based tax incentive relief for qualifying expenditure- or production-based incentives, subject to exclusions and a substance cap. The relief reduces the corresponding jurisdictional top-up tax; it does not create a new domestic tax incentive.

Section 72(1)(r) would insert a detailed simplified-ETR chapter. Its opening relief provision, section 111AKG, is subject to eligibility, entry and re-entry, integrity and timing conditions. Groups must assess those conditions rather than relying on a jurisdiction’s headline corporation tax rate.

QDTT safe harbour and fiscal-period matching

Section 72(1)(l) would add express rules where a jurisdiction requires its own QDTT fiscal period. Proposed section 111AI(9) tests qualification for all required periods beginning and all required periods ending in the group fiscal year. Subsection (10) addresses a period that fails the standards and QDTT allocation where periods differ. Subsection (11) provides a special rule for group years beginning by 31 December 2024. These provisions coordinate the relief where accounting periods differ; they do not themselves confer OECD recognition on a jurisdiction.