The €750 Million Threshold: Is Your Company Within Scope?
The answer to the scope question does not lie in your own turnover, but is hidden in the consolidated financial statements of the company at the top of your group. This distinction is a point that many Turkish companies overlook.
Why Does It Matter?
A company that assumes it is out of scope and makes no preparations may one day find itself in the middle of a weeks-long data-gathering process triggered by an email from group headquarters. Scope determination is the first and cheapest step to take under Pillar 2.
How Exactly Is the Threshold Measured?
The rule is as follows: if the annual consolidated revenue in the ultimate parent entity's consolidated financial statements exceeds the Turkish lira equivalent of €750 million in at least two of the four fiscal years preceding the relevant fiscal year, the group falls within scope.
This definition has three critical elements:
"Of the ultimate parent entity" — not the turnover of your company in Türkiye. An affiliated entity generating TRY 200 million in turnover in Türkiye is within scope if the consolidated turnover of the parent company in Germany exceeds the threshold.
"In at least two of the four periods" — a single year's spike does not bring you into scope; nor does a single year's decline take you out. The threshold test looks back over four years.
"Turkish lira equivalent" — the TL equivalent of the euro amount is not fixed. It is calculated each January based on the European Central Bank's average exchange rate for the preceding December and announced by the Revenue Administration.
What Falls Outside the Scope
Purely domestic groups — that is, structures with no foreign affiliated entities or places of business abroad — are outside the scope. In addition, government entities and agencies, international organizations, non-profit organizations, pension funds, and investment funds and real estate investment vehicles that are the ultimate parent entity are exempt.
A temporary relief is also provided, subject to certain conditions, for groups in the early stages of international activity: for groups with affiliated entities in no more than six different jurisdictions and whose total tangible assets in other jurisdictions do not exceed €50 million, the global minimum top-up tax is deemed to be zero for five fiscal years. Since this relief does not automatically eliminate the scope test or all local obligations, it must be separately examined in light of the concrete group structure.
Why Does the Consolidation Perimeter Create Disputes?
The scope test does not look only at legally affiliated companies. Special provisions may come into play for entities that are, or should be, fully consolidated under the applicable accounting standard, as well as for joint ventures, permanent establishments and multi-parent structures. An entity's not actually being consolidated does not take it outside Pillar 2's scope in cases where it should have been consolidated.
Mechanically applying the four-year revenue test in mergers and demergers can also be misleading. Whether group size is carried over from pre-merger periods, how short fiscal years are annualized, or on what date a new group falls within scope are all subject to special rules. For this reason, the scope opinion should be based not only on the latest financial statements but also on the group's history and restructuring documentation.
Concluding that an entity is out of scope is itself a legal position that must be documented. The confirmation of the ultimate parent entity, the consolidated financial statements used, the method used to calculate the euro equivalent, the rationale for being out of scope, and, where applicable, the conditions of the initial-phase relief should all be retained in a file.
Points to Note
"If we are not within scope, we don't need to do anything"
Partially incorrect. An affiliated entity in Türkiye of an in-scope group may be subject to a notification obligation even if it is not itself a taxpayer. No tax arising does not justify failing to file a form.
Action Items
- Map out your group structure: who the ultimate parent entity is and in which jurisdiction
- Obtain the consolidated revenue figures for the last four fiscal years in writing
- If you are close to the threshold (e.g., in the €600–750 million range), model your likelihood of falling within scope in the following year
- Document whether you benefit from an exemption or the initial-phase relief
- Even if you conclude that you are out of scope, retain your rationale and supporting basis in writing
Conclusion
Scope determination forms the basis for the calculation and filing processes that follow. It is important that the ultimate parent entity, the consolidation perimeter, out-of-scope entities and the revenue data for the past four fiscal years are all shown within the same working file.