Through the Law on the ratification of the Multilateral Convention to Facilitate the Implementation of Pillar Two Subject to Tax Rule, Romania’s adherence to an international mechanism aimed at ensuring minimum taxation for multinational groups is confirmed.
What does it stipulate?
The normative act ratifies a multilateral instrument that will automatically amend some of the double taxation treaties concluded by Romania. The main purpose is to implement the “Subject to Tax Rule” (STTR), a component of the global tax reform known as Pillar II, initiated by the OECD. This mechanism allows Romania, as the source state of the income, to apply an additional tax on certain payments made to affiliated entities in another state.
Specifically, if a company in Romania pays interest, royalties, or other similar income to an affiliated company in a jurisdiction where these incomes are taxed at a nominal rate lower than 9%, Romania will have the right to apply an additional tax. This tax is calculated as the difference between the 9% rate and the effective tax rate in the other jurisdiction, thus ensuring a minimum level of taxation for profits transferred out of the country.
The ratification of the convention represents an essential procedural step. Instead of renegotiating dozens of bilateral treaties individually, Romania will be able to apply these new taxation rules uniformly and efficiently in its relationship with all other signatory states of the convention. The Law also establishes a series of technical options that Romania has chosen within the convention, such as the inclusion of a specific definition for “Recognized Pension Fund” and the application of transitional provisions.
To whom does it apply?
The rules exclusively target multinational enterprise groups with consolidated annual revenues exceeding 750 million euros. Specifically, entities in Romania that are part of such groups and that make cross-border payments (e.g., interest, royalties, service fees) to other affiliated entities within the group, located in jurisdictions with a low taxation level (where the applicable nominal tax rate is below 9%), are affected.
What should you do?
- Evaluate the structure of intra-group payments to identify income streams (interest, royalties, etc.) directed to affiliated entities located in low-tax jurisdictions.
- Analyze the potential tax impact by calculating the exposure to the additional tax that could be applied in Romania for the identified payments.
- Review transfer pricing policies and the group’s financing structures to ensure compliance with the new rules and to optimize the tax burden at a consolidated level.
Source: Official Gazette, Part I, no. 364 of April 30, 2026.
Note: This material is strictly for informational purposes and does not constitute legal, tax, or business advice. As the interpretation and application of legal provisions may vary significantly depending on the specific circumstances of each entity, we recommend seeking specialized legal assistance before making any operational decisions based on these changes.