Is Pillar Two here to stay?

OECD/G20's 15-Action Plan to address BEPS (Base Erosion and Profit Shifting) was designed to counter the harmful effects of tax avoidance and prevent the erosion of the tax base.

The goal of the BEPS Action Plan was to align the allocation of taxable profits with the locations where real economic substance is created. The disconnect between the jurisdictions where economic value is generated and the jurisdictions where tax is actually paid is viewed by the OECD as undermining the foundation of tax systems worldwide.

According to the OECD, global corporate income tax losses are estimated at around $140 billion - $240 billion^[1].

It is widely acknowledged that globalization and the interaction between domestic tax laws have made it easier to exploit loopholes and reduce the tax base.

Following the significant changes brought about by the BEPS Actions, most governments felt that the results were insufficient and continued to prioritise the taxation of large multinational companies. Additionally, the OECD recognised the need to continue its work, as the tax challenges arising from digitalisation, highlighted in BEPS Action 1, remained unresolved.

As a result, in October 2021, the OECD, with the support of the largest economies, developed the Global Anti-Base Erosion Model Rules (Pillar Two) to adapt the international tax system to the complexities of the rapidly changing globalized economy.

Building on the OECD’s BEPS principles, Pillar Two was designed to allow jurisdictions to tax profits shifted to so-called low-tax jurisdictions. In other words, Pillar Two aims to discourage base erosion and profit shifting by ensuring that multinational groups pay a minimum corporate tax rate of 15% in all jurisdictions where they operate.

The new set of Pillar Two rules, also referred to as the GloBE rules, aims to protect the tax base of jurisdictions amid a volatile economic climate marked by uncertainty, supply chain disruptions, and increased pressure on states to control public spending.

While the OECD’s consensus approach provides flexibility and respects the tax sovereignty of its member countries, the absence of a binding legal framework means that not all OECD countries will implement the Pillar Two principles, creating additional compliance challenges for multinational groups.

According to the OECD’s 2025 central record of jurisdictions with qualified Pillar Two legislation, 30 countries had implemented Pillar Two rules in their domestic legislation as of March 2025. However, back in 2021, over 130 countries, including the US, committed to implementing Pillar Two.

At the beginning of 2025, the US administration withdrew from implementing Pillar Two and announced potential retaliatory measures against countries imposing Pillar Two taxes on US taxpayers. Since the Pillar Two mechanism is based on global consensus and a common approach, the US pullback raises questions about the future of Pillar Two. Within the EU, some voices have raised concerns about ensuring that Pillar Two does not become an EU-only initiative, which could adversely affect the competitiveness of EU companies in the global market.

EU approach

The European Union (EU) has traditionally played a significant role in incorporating the OECD’s BEPS recommendations into EU law. Examples of EU Directives enforcing BEPS initiatives include BEPS Action 13, which introduced Country-by-Country Reporting, the European Anti-Tax Avoidance Directive (ATAD), and the EU Directive on Tax Dispute Resolution Mechanisms (Mutual Agreement Procedure, in line with BEPS Action 14).

Similarly, following the 2021 OECD consensus on Pillar Two, the EU adopted Directive 2022/2523 to implement Pillar Two rules at the Member State level. According to a 2024 EU Commission press release, the Pillar Two rules have the potential to generate €220 billion annually^[2].

At present, the EU’s leadership in Pillar Two implementation faces a shifting international paradigm, characterised by a weaker consensus due to the lack of US endorsement and an uneven playing field amid retaliatory tax measures.

Against this background, the EU appears to be maintaining momentum for Pillar Two implementation with the adoption of EU Directive 2025/872 in May 2025, amending Directive 2011/16/EU on administrative cooperation in the field of taxation (“DAC9”). DAC9 is designed to facilitate Pillar Two filing obligations in the EU and establish the rules and procedures for the standardised exchange of Pillar Two information.

While international consensus on coordinated tax rules like Pillar Two may be at a low point, it is expected that Pillar Two will still be enforced in EU jurisdictions.

Pillar Two in Romania

Romania has implemented the Pillar Two rules, meaning that the Romanian tax authorities will be entitled to collect an additional or top-up tax when the effective tax rate of a multinational group operating in Romania is below the minimum 15% rate. The Romanian Pillar Two legislation is aligned with the provisions of EU Directive 2022/2523 on Pillar Two.

Romania has also been included in the OECD’s 2025 Central Record of legislation with transitional qualified status for Pillar Two purposes.

_{[1]Base erosion and profit shifting (BEPS)}

_{[2]A new era for corporate taxation in the EU}