ITR Pillar Two Forum: New regime to supplant state aid pushback on favourable rulings

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

ITR Pillar Two Forum: New regime to supplant state aid pushback on favourable rulings

JamesAndersenPillar2.JPG
James Anderson, of Skadden, speaking at the ITR Pillar Two Forum 2024

The head of Skadden’s European tax practice said the recent Apple CJEU ruling could be the last of its kind as pillar two develops

Pillar two offers more tools for regulators and other countries against global group tax rate management, and could mark the end of an era in state aid enforcement, a speaker at the ITR Pillar Two Forum said on Thursday, September 19.

James Anderson, head of the European tax practice at law firm Skadden in London, said Apple’s recent court defeat over state aid rules might appear irrelevant to pillar two but could in fact be the “high watermark” of such activity due to the arrival of the new tax regime.

In a major victory for the European Commission, the Court of Justice of the EU ruled on September 10 that Apple had to repay Ireland €13 billion ($14.5 billion) in unpaid taxes, in a long-running battle over two tax decisions relating to transfer pricing arrangements.

“It’s almost speaking to a redundant law from the competition world that won’t need to be applied to tax rulings any more,” said Anderson, who argued that the new pillar two regime including its undertaxed profits rule gives authorities more tools to play with.

Anderson and his colleague Jisun Choi, also a partner at Skadden, were speaking in a session called ‘What does the future hold for pillar two?’ at ITR’s inaugural event focusing on the new rules.

One of their key topics was the impact on M&A deals, a potentially complex side-effect of pillar two. The partners walked through several M&A scenarios and considerations, including modelling, due diligence and separation planning.

They also assessed whether private equity houses will have an advantage over multinational trade buyers or sellers, with Choi saying they possibly will.

She added that joint ventures (JVs) will be “particularly tricky” because a typical JV is not deemed to be as such within the meaning of the GloBE rules.

Anderson said that some entities may look for workarounds to pillar two by setting up as funds rather than corporates, as funds are not within scope if the fund or manager is regulated. He admitted, however, that this is “beset with difficulty, extremely complicated and fraught with PR issues”.

On the future of pillar two, Anderson likened the new regime to a “living beast” with a new set of rules or administrative changes every six months. When asked to predict what the next 25 years might look like, he said that a global enforcement regime for the tax levied rules – rather than just a set of principles for each country to apply – was likely.


more across site & shared bottom lb ros

More from across our site

Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
The deal to acquire ITR's parent company is expected to complete by the end of May 2025
JBS, the biggest meat company in the world, allegedly used Luxembourgian ‘mailbox companies’ to avoid taxes between 2019 and 2022
Despite the conviction of Jessa Dabalos, the Tax Practitioners’ Board’s investigative work continues with five outstanding PwC scandal probes
Heads of tax need to push their teams forward as strategic business advisers to add value across their organisations, says Sandy Markwick
Scott Bessent reportedly felt undermined by Musk naming Gary Shapley as acting IRS commissioner; in other news, Baker Tilly will combine with a top 15 US firm
The promise of nine years’ tax certainty and a ‘rational and pragmatic’ government process makes APAs a no-brainer, Indian tax advisers tell ITR
Despite garnering significant revenues from multinationals, Italy’s digital services tax presents pressing double taxation issues, say Stefano Simontacchi and Francesco Saverio Scandone of BonelliErede
ITR’s research shows that in-house tax counsel in Asia also feel underserved by their advisers’ international networks
World Tax global head of research Jon Moore tells ITR how his team spots standout submissions, and gives early statistical insights into this year’s entries
Gift this article