Who is in scope

The GloBE rules apply to multinational groups with consolidated revenue of at least €750 million in at least two of the four preceding years. Smaller groups and purely domestic companies are not affected. For groups in scope, the effective tax rate is calculated per jurisdiction. If it is below 15%, a top-up tax is due on the difference.

The building blocks

• Qualified Domestic Minimum Top-up Tax (QDMTT): the country where the low-taxed profit arises collects the top-up tax itself. It takes priority over the other rules.
• Income Inclusion Rule (IIR): if the source country does not collect, the country of the parent company does.
• Undertaxed Profits Rule (UTPR): a backstop that lets other countries where the group operates collect what remains.
• Subject to Tax Rule (STTR): a separate treaty rule that lets developing countries tax certain intra-group payments, such as interest and royalties, that are taxed below 9% in the receiving country.

Profits linked to real substance are partly carved out: a percentage of payroll costs and of tangible assets is excluded from the top-up calculation (the substance-based income exclusion).

Where things stand in 2026

The EU, the United Kingdom, Japan, South Korea, Canada, Australia and many other jurisdictions apply the rules. In January 2026 the Inclusive Framework agreed a "side-by-side" package. It includes:

• a side-by-side safe harbour that switches off the IIR and UTPR for groups headquartered in a qualifying country with its own minimum tax system. So far only the United States qualifies. A QDMTT still applies to these groups;
• a substance-based tax incentive safe harbour, under which certain incentives tied to real expenditure or production do not trigger top-up tax, within a cap linked to payroll or tangible assets;
• a permanent simplified effective tax rate safe harbour, which reduces the calculation burden.

What this means for Costa Rica

Costa Rica taxes companies on a territorial basis. The general corporate income tax rate is 30%; smaller companies pay progressive rates from 5% to 20%. Companies in the free trade zone regime (Ley 7210) can receive full or partial income tax exemptions for a set number of years, depending on their activity and location.

That is where the GloBE rules bite. A free-zone subsidiary of a large group may have an effective tax rate well below 15%. Without a Costa Rican QDMTT, the difference can be collected elsewhere: by the parent's country under the IIR, or by other countries under the UTPR. The incentive then shifts tax revenue abroad rather than benefiting the investor.

As of late 2025, Costa Rica had not announced legislation to implement the GloBE rules or a QDMTT, and we have not found a bill since. The government has said it wants to review the incentive system carefully so as not to lose ground in attracting foreign investment, and to rely more on non-tax strengths such as stability, legal certainty and a skilled workforce.

The side-by-side package changes the picture for many free-zone investors, a large share of whom have US parent companies. For those groups the IIR and UTPR are switched off, so foreign top-up tax on Costa Rican profits becomes less likely. A Costa Rican QDMTT, if adopted, would still apply to them.

What groups in scope can do now

• Calculate the GloBE effective tax rate for the Costa Rican entities, including the effect of free-zone exemptions.
• Check whether the substance-based income exclusion or the new incentive safe harbour reduces the exposure.
• Keep transfer pricing in order: the GloBE calculation starts from the profit each entity reports, so the arm's length allocation of profit (see CUP, cost plus and TNMM) directly drives any top-up tax.
• Follow Costa Rican legislative developments on a QDMTT.

Last checked: October 2026. Photo: Meagan Carsience on Unsplash

The allocation of head office costs becomes important when your group has entities outside the home jurisdiction (country), because the allocation affects the profit in each jurisdiction where the group has subsidiaries or permanent establishments. It is therefore good to analyse these costs regularly to meet your transfer pricing obligations.

What the OECD Guidelines say

Chapter VII of the OECD Transfer Pricing Guidelines sets the test: a charge is justified only if the subsidiary receives a service an independent company would pay for, or would have performed itself (the benefit test).

• Shareholder activities, which the parent performs only as owner (its own board meetings, group consolidation, investor relations, listing costs), are not chargeable.
• Duplicate services that the subsidiary already performs itself are not chargeable either.
• Charges can be direct (per service) or indirect (through allocation keys such as headcount, turnover or usage). The key must reflect the benefit actually received.
• For low value-adding services such as bookkeeping, HR administration and IT support, the Guidelines offer a simplified approach: the pooled costs are charged with a 5% markup and lighter documentation. Not every country accepts this.

Costa Rica

A Costa Rican subsidiary can deduct a head office charge only if it can show that the cost was needed to earn taxable income in Costa Rica (Ley del Impuesto sobre la Renta, art. 8), and that the price is at arm's length. An intercompany agreement and an invoice alone are not enough. In an audit, the tax administration expects evidence of what was done, by whom, what local need it met, and how the allocation key and markup were chosen (see CUP, cost plus and TNMM).

Photo: Meagan Carsience on Unsplash

What counts as a PE

Most tax treaties follow Article 5 of the OECD Model Tax Convention. A PE is a fixed place of business through which the business of an enterprise is wholly or partly carried on: a branch, an office, a factory, a workshop, a mine. A building site or installation project becomes a PE once it lasts longer than twelve months (six months in the UN Model, which many developing countries prefer).

A company can also have a PE without any premises, through a dependent agent: a person who habitually concludes contracts on its behalf, or habitually plays the principal role leading to such contracts. Since the 2017 update (BEPS Action 7), this test is wider than before.

Activities that are only preparatory or auxiliary, such as storage or purchasing, do not create a PE. Splitting activities over several places to stay below that threshold no longer works (anti-fragmentation rule).

What happens next

The host country taxes the profits attributable to the PE (Article 7). The home country, which taxes the company's worldwide profit, gives relief: either by exempting the PE profit (Article 23A) or by crediting the tax paid abroad (Article 23B). Without a treaty, domestic law alone decides, and double taxation becomes a real risk.

How much profit belongs to the PE

Under the Authorised OECD Approach, the PE is treated as if it were a separate, independent enterprise. You map its functions, assets and risks, and then price its dealings with the head office using the transfer pricing methods (see CUP, cost plus and TNMM). Older treaties may still use the pre-2010 wording of Article 7, which leaves more room for different outcomes.

Costa Rica

Costa Rica defines a PE in its own income tax law (Ley 7092, art. 2). In 2023 the Legislative Assembly approved a bill (expediente 23.581) that removes the word "essential" from that definition, so any fixed place where the business is carried on, wholly or partly, can qualify. Costa Rica has only a small treaty network, so for many foreign companies the domestic definition is the one that applies.

Typical risk points

Staff who sign or negotiate contracts locally, employees working from home abroad, warehouses, long-running projects, and servers.

Photo: Dan Freeman on Unsplash

Code of conduct on transfer pricing documentation for associated enterprises in the European Union (EU TPD)

Without prejudice to the respective spheres of competence of the Member States and the Community, this Code of Conduct concerns the implementation of standardised and partially centralised transfer pricing documentation for associated enterprises in the European Union. It is addressed to Member States but is also intended to encourage multinational enterprises to apply the EU TPD approach.

1. Member States will accept standardised and partially centralised transfer pricing documentation for associated enterprises in the European Union (EU TPD), as set out in the Annex, and consider it as a basic set of information for the assessment of a multinational enterprise group’s transfer prices.
2. The use of the EU TPD will be optional for a multinational enterprise group.
3. Member States will apply similar considerations to documentation requirements for the attribution of profits to a permanent establishment as apply to transfer pricing documentation.
4. Member States will, wherever necessary, take duly into account and be guided by the general principles and requirements referred to in the Annex.
5. Member States undertake not to require smaller and less complex enterprises (including small and medium-sized enterprises) to produce the amount or complexity of documentation that might be expected from larger and more complex enterprises.
6. Member States should: a. not impose unreasonable compliance costs or administrative burden on enterprises in requesting documentation to be created or obtained; b. not request documentation that has no bearing on transactions under review; c. ensure that there is no public disclosure of confidential information contained in documentation.
7. Member States should not impose a documentation-related penalty where taxpayers comply in good faith, in a reasonable manner and within a reasonable time with standardised and consistent documentation as described in the Annex or with a Member State’s domestic documentation requirements, and apply their documentation properly to determine their arm’s length transfer prices.
8. In order to assure the even and effective application of this Code, Member States should report annually to the commission on any measures they have taken further to this Code and its practical functioning.

Photo: Meagan Carsience on Unsplash