A Review of Romania’s Draft Pillar Two Law

Overview

On October 4, 2023, the Romanian Ministry of Finance issued a draft law to implement the Pillar Two GloBE rules/EU Minimum Tax Directive. As provided in the EU Directive, the draft law includes an income inclusion rule (IIR) and an under-taxed profits rule (UTPR). 

The IIR is to apply to financial years beginning on or after December 31, 2023. The UTPR will generally apply to financial years beginning on or after December 31, 2024.

Chapter III of the draft law provides that Romania will apply a domestic minimum top-up tax (intended to be a QDMTT) for financial years beginning on or after December 31, 2023.

Under Article 5 of the Draft Law, the OECD GloBE Commentary, as well as other OECD guidance such as the Administrative Guidance and Safe Harbour rules are to be used as a source of ‘illustration and interpretation’ for the application of the Romanian Draft Law.

General