For EU Member States, the complexity of Pillar Two has been compounded by the decision to implement through an EU directive that can only be amended unanimously. That was very apparent in the recent negotiations on the side-by-side package when the implementing framework operated as a straitjacket for EU Member States. Although, the European Commission came-up with a workaround to implement the package, it is unlikely to be the last time EU Member States face the same dilemma.
Apart from the legal constraints inherent in the implementing framework, other EU law risks that are unique to the EU legal system might impact the operation of Pillar Two in the EU. The undertaxed profits rule (“UTPR”) is already facing one legal challenge at the Court of Justice of the European Union (“CJEU”). A separate action for the annulment of the Pillar Two Directive was deemed inadmissible by the CJEU late last year on the basis that the party bringing the challenge lacked legal standing. It seems
