This generally values the transfer of assets at fair value.
Therefore any gain or loss recognised for accounting purposes would also flow through to the GloBE income calculation.
However, the Article 9.1.3 of the OECD Model Rules provides that if an asset is transferred between group entities after November 30, 2021 and before the first year the GloBE rules apply to the group, the asset is recorded at its historic cost providing the entities would have been subject to the Pillar Two GloBE rules had they been in-scope.
The reason for this is to prevent an uplift in the base cost of assets (with potentially additional tax relief and reduced gains on a future disposal) when any original gain on the intra-group transfer was not taken into account for Pillar Two GloBE purposes as the group was not subject to the rules.
The draft EU Directive allows individual jurisdictions to determine how the provisions of the Directive will be transposed into domestic law.
The Policy Paper notes that the Netherlands has two options. Either to integrate the new rules into the Dutch Corporate Income Tax Act, 1969, or to enact a separate law.
Implementing the Pillar Two Rules into the corporate income tax act would be considerably more complex than having iit as a separate law, as the Pillar Two calculation does not fit in with the design of the corporate income tax system. For instance, the starting point for Pillar Two is the profit from the financial accounts, as opposed to taxable profit.
The Dutch Government will therefore enact separate law, outside the corporate income tax act, to implement Pillar Two.
This is a similar approach taken in the UK, which has issued draft legislation for a separate tax (the ‘multinational top-up tax’) that is outside the corporation tax act. [/s2If]