GloBE Tax and Prepayment Calculations

Why is the GloBE tax calculation a separate workstream?

Under the global minimum tax framework, calculating the top-up tax payable is not the same as preparing a corporate income tax calculation. The calculation must be performed on a jurisdictional basis and must consider, among other matters, GloBE income or loss, covered taxes, the effective tax rate, any available safe harbours, and whether a Qualified Domestic Minimum Top-up Tax (QDMTT) liability arises in a particular jurisdiction.

For groups headquartered in Hungary, this is generally a group-wide calculation spanning several jurisdictions. For Hungarian subsidiaries, the principal focus is usually the Hungarian QDMTT position and the provision of the relevant data to the parent entity.

QDMTT, IIR and UTPR: what needs to be calculated?

The purpose of the GloBE calculation is to determine whether the group’s effective tax burden in a given jurisdiction reaches the 15% minimum rate and, if it does not, which charging rule may give rise to a top-up tax liability.

In Hungary, particular attention must be paid to the Qualified Domestic Minimum Top-up Tax (QDMTT). Where a Hungarian top-up tax liability arises, both the tax prepayment and the final liability must be calculated, reported and documented in accordance with the QDMTT rules. In connection with the QDMTT liability, the Hungarian constituent entity, or the designated local entity acting on its behalf, must also comply with the filing and information-reporting obligations relating to the tax prepayment and final tax liability. The Hungarian tax authority publishes the relevant forms and guidance each year.

Where top-up tax arising in a low-tax jurisdiction is not collected, or is not collected in full, under a QDMTT, the application of the Income Inclusion Rule (IIR) must be considered. Under the IIR, the parent entity is generally required to calculate, report and pay the top-up tax attributable to the relevant low-taxed constituent entity.

The Undertaxed Profits Rule (UTPR) may become relevant where the top-up tax is not collected in full under either a QDMTT or the IIR. In that case, the residual UTPR top-up tax must be determined and allocated among the jurisdictions applying the UTPR using the allocation key prescribed by the GloBE rules.

Data quality and assessment of available reliefs

One of the main practical challenges in calculating the GloBE tax and tax prepayment is that the computation relies on several data sources, including financial statements, corporate income tax data, CbCR information, deferred tax positions and other group-level reports. Before performing the calculation, it is therefore necessary to establish whether complete and reliable data are available, whether a safe harbour may be applied, and whether the data of the Hungarian constituent entities are consistent with the group-wide GloBE calculations.

Accordingly, preparing accurate tax prepayment and final tax returns requires the QDMTT calculations and any calculations supporting available safe harbours to be completed first.

Hungarian-headquartered group or Hungarian subsidiary: different calculation priorities

For multinational groups headquartered in Hungary, the GloBE tax calculation is a group-wide task. The group must assess its GloBE exposure jurisdiction by jurisdiction, address QDMTT, IIR and any UTPR implications, and ensure the consistency and completeness of the data required for GIR/DAC9 reporting.

For a Hungarian subsidiary of an international group, the focus is generally narrower and centred on local obligations. The principal tasks are assessing the Hungarian QDMTT liability, determining the tax prepayment and final top-up tax, completing the related Hungarian administrative requirements, and properly collecting the Hungarian data required for the ultimate parent entity’s reporting obligations.