Quick Definition
Substance-Based Income Exclusion (SBIE) — The Substance Based Income Exclusion (SBIE) is part of the OECD/G20 Global Anti Base Erosion (GloBE) Model Rules.
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The Substance-Based Income Exclusion (SBIE) is part of the OECD/G20 Global Anti-Base Erosion (GloBE) Model Rules. It reduces a jurisdiction's Net GloBE Income by an amount calculated from eligible payroll costs and eligible tangible assets when determining Excess Profit for the top-up tax calculation.
The exclusion applies by default under the Model Rules. The Filing Constituent Entity may make an annual, jurisdiction-by-jurisdiction election not to apply it.
Current source set: GloBE Model Rules (2021), Article 5.3 and Article 9.2; Consolidated Commentary (2026); and the OECD Global Minimum Tax hub. Source status checked 16 August 2026.
| Component | General basis under the Model Rules | Key boundary |
|---|---|---|
| Payroll carve-out | Applicable rate × eligible payroll costs of eligible employees performing activities in the jurisdiction | Costs capitalised into the carrying value of eligible tangible assets are excluded from payroll costs to prevent double counting |
| Tangible asset carve-out | Applicable rate × carrying value of eligible tangible assets located in the jurisdiction | Cash, financial assets, intangible assets, and assets held for sale, lease, or investment are not eligible tangible assets |
Eligible employees can include employees and independent contractors who participate in the MNE Group's ordinary operating activities under its direction and control. Eligible payroll costs include specified forms of employee compensation and related benefits, as defined in Article 10.1 and applied in the payroll carve-out under Article 5.3.3.
Eligible tangible assets can include property, plant and equipment, natural resources, a lessee's right-of-use asset, and specified government licences or similar arrangements associated with the use of immovable property or exploitation of natural resources. Article 5.3.4 generally uses the average of the opening and closing carrying values for the fiscal year.
The detailed location, attribution, and valuation rules matter. The labels in financial statements alone do not determine eligibility.
Article 9.2 replaces the permanent 5% rates during the transition. For a fiscal year beginning in 2026, the payroll rate is 9.4% and the tangible asset rate is 7.4%.
| Fiscal year beginning | Payroll rate | Tangible asset rate |
|---|---|---|
| 2023 | 10.0% | 8.0% |
| 2024 | 9.8% | 7.8% |
| 2025 | 9.6% | 7.6% |
| 2026 | 9.4% | 7.4% |
| 2027 | 9.2% | 7.2% |
| 2028 | 9.0% | 7.0% |
| 2029 | 8.2% | 6.6% |
| 2030 | 7.4% | 6.2% |
| 2031 | 6.6% | 5.8% |
| 2032 | 5.8% | 5.4% |
| 2033 and later | 5.0% | 5.0% |
Select the row by the date on which the fiscal year begins, not by the filing date.
Assume the following simplified amounts for Jurisdiction M for a fiscal year beginning in 2026:
Illustration only: The €5.0925 million figure is not a complete liability calculation. It omits, among other items, adjustments to GloBE Income and Covered Taxes, Additional Current Top-up Tax, any Qualified Domestic Minimum Top-up Tax, allocation among Constituent Entities, safe harbours, elections, and domestic filing rules.
The OECD Model Rules are a legislative template under a common approach. Actual liabilities, elections, definitions, effective dates, and filing procedures depend on the legislation and guidance enacted in each relevant jurisdiction.
For a live calculation:
The transitional payroll rate is 9.4% and the transitional tangible asset rate is 7.4% under Article 9.2 of the Model Rules.
The exclusion is calculated on a jurisdictional basis using eligible payroll costs and eligible tangible assets attributable to Constituent Entities in that jurisdiction, subject to the detailed rules for particular entities and assets.
SBIE applies by default under the Model Rules, but the Filing Constituent Entity can elect annually not to apply it for a jurisdiction. The election should be checked against the applicable domestic implementation and filing process.
Yes. If SBIE equals or exceeds Net GloBE Income, Excess Profit is zero for that fiscal year. The 2026 Commentary notes that this does not rule out Additional Current Top-up Tax, and unused SBIE is not carried forward or backward.
The 2026 Consolidated Commentary describes them as indicators of substantive activities that are generally less mobile and less likely to create tax-induced distortions. The calculation remains formula-based; it is not a separate factual finding that income has economic substance.