ARTICLE · 10 JANUARY 2025

Navigating The UTPR And ISDS: Implications In The EU

McDermott Will & Emery

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The global tax landscape is experiencing a profound transformation as the OECD/G20's Pillar Two rules are adopted. Among these, the Undertaxed Profits Rule (UTPR)...

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Lisa M. Richman

Maria Cristina Rosales del Prado

Maxime Delabarre

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The global tax landscape is experiencing a profound transformation as the OECD/G20's Pillar Two rules are adopted. Among these, the Undertaxed Profits Rule (UTPR) has emerged as a pivotal mechanism designed to ensure that multinational enterprises are subject to a minimum effective tax rate of 15% on their global profits. For those companies operating within the European Union, the implementation of the UTPR presents both a significant compliance challenge and a strategic risk.

In this client alert, we offer an analysis of the operational framework of the UTPR, examine its potential ramifications for businesses within the EU, and explain how Investor-State Dispute Settlement (ISDS) mechanisms can play a pivotal role in resolving disputes arising from this innovative tax measure for States and multinational enterprises.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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