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Legislative Decree 148/2026 created a separate Italian GloBE return obligation — your HMRC filing does not cover it
Does your UK group need to file a separate Pillar Two return in Italy?
Yes. If your group has a consolidated annual revenue of €750 million or more and includes Italian constituent entities, you must file a GloBE Information Return — the dichiarazione GloBE — directly with the Agenzia delle Entrate (Italy's Revenue Agency). Your HMRC filing does not discharge this obligation. Italy introduced its own return form independently of the UK, and the two systems run in parallel.
This is not a technicality. Missing the Italian filing exposes your group to penalties under Italian law that sit entirely outside the UK's Pillar Two penalty regime. Decree 148/2026 made that gap wider, not smaller.
Italy implemented Pillar Two — the OECD's global minimum tax — through Legislative Decree No. 209 of 27 December 2023 (D.Lgs. 209/2023), Articles 8 through 60, effective for fiscal years starting on or after 1 January 2024.
Legislative Decree No. 148 of 7 August 2026 — Italy's fourth amending measure under the Italian tax reform — incorporated the OECD Side-by-Side Package into domestic law. That package recalibrates how the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) interact when a qualifying domestic minimum top-up tax is already in place. For UK groups, the practical effect is this: the Italian Qualified Domestic Minimum Top-up Tax (QDMTT) may reduce or eliminate the top-up tax owed under your UK IIR — but only if the Italian QDMTT qualifies as a Qualified DMTT in both the Italian and the UK returns, and only if the election is properly made in each jurisdiction separately.
Decree 148/2026 also extended the UTPR rules to cover certain situations involving non-cooperative jurisdictions and updated the safe harbour calculations. Groups that concluded they had no Italian exposure under the pre-2026 rules should recheck their position.
Agenzia delle Entrate Ordinance No. 46523 of 6 February 2026 approved the official GloBE return model — the form that Italian constituent entities (or their designated filer) must submit. The return covers three components: IIR, UTPR, and QDMTT. The filing window is 12 months from the close of the relevant fiscal year. For a group on a calendar year, that means the Italian GIR for fiscal year 2024 was due by 31 December 2025 — and the return for fiscal year 2025 is due by 31 December 2026.
If your Italian subsidiary's fiscal year does not align with the calendar year, the deadline shifts accordingly, but the 12-month rule under D.Lgs. 209/2023 remains fixed.
One further procedural point: Italy permits a designated filer within the group to submit a single consolidated GIR covering all Italian constituent entities. That election must be made formally and cannot be assumed. In our experience, the most common mistake at this stage is a UK group assuming that because the Ultimate Parent Entity has filed in the UK, the Italian filing requirement is automatically satisfied by secondary exchange of information. It is not. Italy's Ordinance 46523/2026 requires direct submission to the Agenzia delle Entrate.
Unlike in most common-law countries, where a single consolidated return at the UPE level satisfies the group's global minimum tax reporting, Italy requires local filing by or on behalf of Italian constituent entities. The UK implemented Pillar Two through Finance (No. 2) Act 2023, and HMRC expects UK-parented groups to report at the UPE level in the UK. HMRC guidance does not address Italian local filing obligations — that is not HMRC's job.
The structural divergence goes deeper than process. The UK's Pillar Two computation uses IFRS consolidated accounts as the base. Italy's QDMTT calculation, by contrast, uses Italian GAAP — the Organismo Italiano di Contabilità (OIC) standards — for each Italian constituent entity. This creates a genuine computational divergence. Your Italian subsidiary's effective tax rate as calculated under OIC may differ from the same entity's contribution to your group's IFRS-based GloBE computation.
Timing differences, different treatment of deferred taxes, and OIC-specific asset recognition rules can all affect the outcome. The divergence is not always material, but it must be modelled before you file. Filing the Italian QDMTT component using IFRS-derived figures, [sentence cut off mid-clause] OIC reconciliation, risks a miscalculation that the Agenzia delle Entrate can challenge on audit.
The Italian QDMTT — the imposta minima domestica qualificata — is a domestic top-up tax charged on Italian constituent entities whose effective tax rate, calculated on an Italian-jurisdiction basis, falls below 15%. Italy's standard corporate income tax (IRES) rate is 24%, and the regional business tax (IRAP) rate adds approximately 3.9% for most entities. In theory, most Italian operations clear the 15% minimum easily. In practice, deductions, tax credits, loss-utilisation rules amended by Decree 148/2026, and certain Italian incentive regimes can reduce the effective rate below the threshold for specific entities.
Decree 148/2026 modified the rules on tax-loss carry-forwards in ways that interact directly with the GloBE Deferred Tax Asset (DTA) calculation. Groups carrying Italian tax losses from prior years need to remodel their GloBE ETR under the updated rules before certifying their QDMTT position.
The strategic importance is this: if the Italian QDMTT qualifies, it allows your UK group to credit the Italian top-up tax against the IIR liability at the UK level, avoiding double charge. But the qualification requires the Italian QDMTT to meet the OECD's Agreed Administrative Guidance criteria, and Decree 148/2026 aligned Italian law with the Side-by-Side Package specifically to preserve that qualification. The election must be reflected correctly in both the Italian GIR and the UK Pillar Two return.
Qui tacet consentire videtur — silence is taken for consent. In a compliance context, silence on a filing obligation is treated as non-compliance.
The Italian-GAAP divergence is the single most underestimated risk in cross-border Pillar Two compliance for UK groups. Your group's Big Four adviser has almost certainly produced a UK Pillar Two compliance memo. That memo, however thorough, was written from an HMRC perspective using IFRS-based calculations. It does not — and is not designed to — address the OIC-based reconciliation required for Italian constituent entities under Ordinance 46523/2026.
The philosopher of law H.L.A. Hart observed that legal obligation exists not merely where a rule is stated but where a secondary rule exists that makes the primary rule binding on specific actors. Italy's Ordinance 46523/2026 is exactly that secondary rule: it activates the filing obligation, names the form, and sets the deadline. It is binding on your Italian constituent entities regardless of what your UK Pillar Two process produces.
The practical steps are three. First, identify all Italian constituent entities within the group and confirm whether a designated filer election is available and has been made. Second, obtain OIC-basis financial data for each Italian entity and run a separate GloBE ETR calculation for Italian jurisdictional purposes — do not import IFRS figures without reconciliation. Third, verify whether the Italian QDMTT position qualifies under the Side-by-Side Package and ensure the resulting credit is properly reflected in your UK IIR return.
Our group files Pillar Two in the UK with HMRC. Does that cover our Italian subsidiary?
No. The UK filing satisfies your obligations to HMRC as the Ultimate Parent Entity jurisdiction. Italy's filing obligation under Ordinance No. 46523 of 6 February 2026 is separate and must be discharged with the Agenzia delle Entrate. The two returns run in parallel and neither discharges the other.
What happens if we miss the Italian GloBE return deadline?
Late or omitted filing of the Italian GIR triggers penalties under D.Lgs. 209/2023 and Italy's general tax penalties framework. For a multinational group, the sums at issue can be significant. Beyond the financial penalty, a missing or defective Italian return can trigger a full audit of the Italian constituent entities' GloBE position, including the QDMTT calculation, which may result in a top-up tax assessment.
Does the Italian QDMTT automatically reduce our UK Pillar Two liability?
It can, but not automatically. The Italian QDMTT must meet the OECD's qualification criteria, and the offset must be properly elected and documented in both the Italian GIR and the UK return. Decree 148/2026 aligned Italian law with the Side-by-Side Package to preserve this qualification, but the mechanics require both filings to be consistent. A group that files the Italian GIR incorrectly — for instance using IFRS rather than OIC figures for Italian entities — risks losing the offset and facing top-up tax in both jurisdictions.
HREFLANG BLOCK:
Editorial Team — Panato Law Firm Staff
