Entity Setup
Entity Setup & Digital Nomad Considerations under Australia’s Minimum Tax Rules
With new global minimum tax laws now law in Australia, setting up your residency, entity or cross-border structure needs fresh care—especially if you travel, work remotely, or run a small cross-border enterprise.
By NomadicTax Research Team • 5-8 min read • April 13, 2026
## Pillar Two: Australia’s Global & Domestic Minimum Tax Laws
Australian legislation implementing OECD Pillar Two (GloBE rules) is now law.([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/international/implementation-of-a-global-minimum-tax-and-a-domestic-minimum-tax?utm_source=openai)) Effective dates:
- **Income Inclusion Rule (IIR)** applies for fiscal years starting on or after **1 January 2024**.([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/international/implementation-of-a-global-minimum-tax-and-a-domestic-minimum-tax?utm_source=openai))
- **Undertaxed Profits Rule (UTPR)** starts for years beginning **1 January 2025**.([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/international/implementation-of-a-global-minimum-tax-and-a-domestic-minimum-tax?utm_source=openai))
- Domestic Minimum Tax also begins **1 January 2024**.([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/international/implementation-of-a-global-minimum-tax-and-a-domestic-minimum-tax?utm_source=openai))
## Digital Nomads & Entity Choices: What to Know
If you live part-time in Australia, or operate a company or trust across borders, these rules may affect you.
- **Residency**: Individuals and entities resident in Australia may be subject to top-up taxes if their global profits are taxed below the 15% minimum in other jurisdictions.
- **Entity structure**: Trusts, companies, partnerships across border risk triggering UTPR or IIR liabilities where income is shifted or treated in a low-taxed foreign entity.
- **Permanent establishment risk**: Remote work may create an Australian presence or activity that causes withholding or tax exposure.
## Practical Examples
- Jessica runs a consulting firm through a company incorporated abroad with headquarters in Australia part of the year. Under Pillar Two, her foreign entity’s profits taxed below 15% may attract a top-up tax in Australia if assessed under IIR or UTPR.
- Ben is a digital nomad, doing online sales with IP held overseas. If he’s an Australian resident, royalties or other income may face royalty withholding or Pillar Two allocation rules depending on where income is recognized and taxed.
## Setting Up Entities with an Eye on Minimum Tax and Royalties
- Consider **where your company/trust is incorporated** and whether profits will be considered earned in low tax jurisdictions.
- Check how intangible assets are held and whether payments to licensors or IP owners are appropriately documented and valued.
- Use **formal agreements** and seek valuation reports if needed, particularly for royalties or licensing fees.
## Advice and Guidance Being Developed
- The ATO is drafting public advice and guidance for Pillar Two lodgment obligations, transitional approach, and decline-to-rule provisions.([ato.gov.au](https://www.ato.gov.au/media-centre/key-developments-in-tax-administration-in-australia?utm_source=openai))
- Tax rulings (e.g. TR 2024/D1) and practical compliance guidelines are forthcoming.([ato.gov.au](https://www.ato.gov.au/about-ato/ato-advice-and-guidance/advice-under-development-program/advice-under-development-international-issues?utm_source=openai))
## Action Plan
1. Audit your income sources—IP, software, royalties, cross-border arrangements. 2. If using overseas entities, assess whether they are taxed below 15%. 3. Build strong documentation: contracts, invoices, valuations. 4. Consult tax professionals versed in Pillar Two and withholding rules. 5. Monitor upcoming guidance and rulings from ATO to stay compliant and avoid surprises.