Robert Danon

Mr. Robert Danon began his intervention with a gentle clarification: although he had been invited to reflect on the European experience, he spoke from a Swiss vantage point. His reference to “Europe,” he noted, therefore carried a broader geographical and institutional meaning. With that framing, he turned to the broader architecture of Pillar Two, offering a set of reflections shaped both by the political realities that underpinned the project and by the practical challenges emerging from its implementation.

Mr. Danon first revisited an issue raised earlier in the session- the perception that Pillar Two implementation has become fragmented across jurisdictions. While Dr. Achim Pross had explained that, even amidst divergent domestic legislation, a common conceptual approach underlies the framework, Mr. Danon went further. In his view, the international community began with no political traction to develop a fully harmonised multilateral treaty on minimum taxation. Faced with this reality, the OECD worked with the political commitment that did exist: an agreement to create a globally aligned model. From that limited starting point, he argued, the OECD has done an impressive job of designing a framework that, although not a treaty, mirrors the coherence and functional effect of one.

This quasi-treaty structure- comprising model rules, administrative guidance, transitional and permanent safe harbours, qualified status mechanisms, and the widespread adoption of the QDMTT has effectively enabled a coordinated global system despite the absence of a binding multilateral instrument.

Turning to disputes, Mr. Danon highlighted a gap that remains unaddressed. He emphasised his long-standing position that a dedicated dispute settlement mechanism for Pillar Two is essential. While the peer review process for qualified rules is valuable, it is not a substitute for a concrete, reciprocal avenue to resolve disagreements between jurisdictions. He noted that although several models had been proposed, only Italy has thus far adopted a reciprocal mechanism. In the long term, he believes a robust dispute settlement framework is indispensable for the stability of Pillar Two.

On implementation challenges, he noted unavoidable tensions arising from the nature of the framework itself. Within the European Union, discrepancies naturally arise between the global model rules, the evolving administrative guidance, and the EU Minimum Tax Directive. As guidance continues to evolve, questions repeatedly emerge about whether it aligns with the Directive. Similar friction exists between the GloBE rules and domestic primary law, as well as between Pillar Two and existing tax treaties. Such tensions, he said, are inherent in a regime constructed through model rules that must be transposed individually into domestic legislation.

Shifting to the “side-by-side” approach, Mr. Danon agreed with Dr. Pross that the concept is not entirely new; the idea of synchronising the GloBE rules with domestic minimum tax systems has been embedded in the framework since 2021. However, the G7 statement introduces new elements worth close attention. One such aspect is the possibility of excluding US-parented groups from the Pillar Two architecture under certain conditions. Another is the potential alignment of refundable and non-refundable tax credits a discussion that has significant implications for the future treatment of tax incentives under Pillar Two.

These developments, he said, do not merely address political concerns around US multinationals; they also open broader questions about the future of tax incentives, the boundary between acceptable reliefs and harmful tax competition, and the legacy of BEPS Action 5. In his view, the side-by-side model may ultimately reshape how tax incentives are designed, evaluated, and constrained in a minimum-tax world.

Mr. Danon closed by referencing an important ongoing development within the OECD: the work on a dedicated multilateral convention for Pillar Two a kind of MAP provision crafted specifically for domestic law disputes arising under the GloBE rules. This is remarkable, he observed, because it would be the first time an international instrument provides a MAP-like mechanism for reconciling differences in domestic minimum-tax legislation rather than treaty interpretation. The work is progressing through the Inclusive Framework and may eventually provide the stability and coherence that the current piecemeal implementation lacks.