By Russell Gammon, Chief Innovation Officer at Tax Systems
As the next Pillar Two filing deadline approaches on 30th June 2026, organisations around the world are scrambling to ensure their filings are in order. But for many, this is proving a complicated and stressful exercise.
First released by the Organisation for Economic Co-operation and Development (OECD) in 2021, Pillar Two establishes a global minimum tax regime of 15% to both public and privately held multinational groups with consolidated revenue over €750m, which is applicable to all accounting periods that started on/after December 2023. In the relatively short time since, it has transformed the global tax landscape, introducing a wide range of new reporting and compliance challenges that demand vast amounts of complex data from multiple systems and jurisdictions.
Even for large multinational organisations with sufficient in-house accounting capabilities and a dedicated Pillar Two software solution in place, the sheer scale of data aggregation and validation required is unprecedented. For smaller, already over-stretched tax teams that find themselves in scope, Pillar Two’s requirements have quickly become overwhelming.
Historically, many of these smaller teams would consider outsourcing their Pillar Two obligations to quickly ensure compliance. However, full outsourcing isn’t without its downsides, with issues ranging from rising costs and a loss of control to inflexibility, governance concerns, and lack of integration with wider tax processes.
For these reasons, a growing number of multinationals are choosing co-sourcing as an effective way to achieve Pillar Two compliance without handing over control of their entire tax accounting process to a third party provider.
What is co-sourcing?
Co-sourcing bridges the gap between outsourcing and full in-house responsibility. It’s a collaborative model where the original organisation retains control of its data and selects its own compliance software, while external advisors provide expert support, review and assurance through that same platform.
What are the main benefits of co-sourcing?
Under the co-sourcing model, both parties – the organisation and external advisors – work within a single shared system, ensuring transparency, consistency, and efficiency. The result is the best of both worlds: advisory assurance and cost savings with control.
Some of the key benefits of this approach include:
- Data ownership and visibility: Organisations’ data remains in their own systems, under their own governance.
- Expertise on demand: Advisors can still review, validate, and provide assurance wherever needed.
- Future-proof technology: Using a leading independent software solution avoids lock-in to a third-party advisory firm’s technology and process.
Co-sourcing lets organisations evolve their in-house capabilities over time
In addition to the benefits above, one of the biggest strengths of co-sourcing is the ability to scale the amount of external assistance received up and down as needed, which enables organisations to grow and evolve their own in-house capabilities over time.
For example, in the early stages of Pillar Two reporting it’s common to require high levels of advisor involvement for initial setup, validation and filing assurance. However, as organisations gain confidence and knowledge over time, some may wish to take more of the responsibility in-house. In these instances, co-sourcing allows them to seamlessly make this transition without any of the major system changes or data migration issues they would encounter if relying on a fully outsourced model from the outset.
Technology is making co-sourcing easier than ever to adopt
In the past, organisations might have dismissed co-sourcing as prohibitively complex to implement. However, technological innovations and trends in recent years have not only made it more viable, but also more cost effective than fully outsourced solutions in many instances.
Central to this is the proliferation of cloud-based solutions, which allow both organisations and advisers to access the same data and applications for effective collaboration in real time. Elsewhere, adoption of AI-powered data analytics and automation has enabled organisations to significantly elevate their tax processes using business insight to deliver more rapid and accurate reporting. Furthermore, improvements in data security and access control, such as multi-factor authentication, ensure that confidential data remains protected at all times and is only accessible to authorised personnel.
For many organisations around the world, Pillar Two represents one of the biggest tax changes they have faced in decades. While those with large tax and accounting teams may have the expertise to go it alone, those without the resources or confidence to do so face much a harder decision. Choosing to fully outsource risks loss of control, however, attempting to tackle it in-house risks dangerous capability and compliance gaps.
Co-sourcing offers a much smarter path, combining the strength of external expertise with the control, transparency, and future-readiness of owning your own compliance platform. Simply put, co-sourcing is compliance without compromise.