Urgent Deadline – Romanian Pillar Two Election Mechanism

In brief

FY24 calendar year taxpayers with multiple Constituent Entities in Romania may elect, by 30 June 2025 (six months after the end of the fiscal year), for a single Constituent Entity to be designated to perform the Pillar Two declaration and payment of the Top-up Tax (if any) for all Romanian Constituent Entities. This is instead of each Constituent Entity having to submit the required returns and pay the Top-up Tax for itself.

The tax authorities have issued a draft procedure and template for this designation (in Romania, it is customary to publish a draft for discussion before releasing the final version, although we do not anticipate significant changes).

Takeway: With the deadline fast approaching, clients with multiple Constituent Entities in Romania should take immediate steps to comply, or they may risk a substantial compliance burden for FY24. Interested companies should review the draft procedure and prepare for submission by the deadline after the final version is issued.

By preparing their submissions based in the draft procedure, companies will ensure readiness should there be minor adjustments prior to final approval of the procedure.

In detail

Pillar Two registration requirement

While Romania has implemented a Qualified Domestic Minimum Top-Up Tax (QDMTT) under Law 431/2023 (which transposed the Pillar Two EU Directive into the Romanian legislation), there is currently no formal ‘registration’ or notification requirement in place similar to those in other jurisdictions to notify the authorities that the Romanian company is part of a Pillar Two group.

Election mechanism for multiple Romanian Constituent Entities

However, the Romanian legislation does provide for an election mechanism in cases where there are multiple Romanian Constituent Entities in a Pillar Two group. In such cases, one Romanian entity can designated to submit the QDMTT returns, pay the Top-up Tax (if any) and submit. Information return on behalf of all Romanian Constituent Entities of a certain group. If one entity is not elected, each Romanian entity must file and pay separately. It is generally advisable to designate one filing entity in Romania, to simplify compliance and maintain control over the local filing process. However, if there is only one Romanian Constituent Entity within a Pillar Two Group, this election is not needed

The tax authorities must be notified of the elected entity within six months following the end of the relevant fiscal year. For groups with a calendar fiscal year, this would mean a deadline of 30 June 2025 for FY2024. With only days remaining until this deadline, the tax authorities released on Friday, 20 June 2025, a draft procedure and template for making this designation.

The form is submitted electronically as a PDF with an XML attachment. It includes essential sections such as name of the Pillar Two group, details on the Romanian constituent entities and the designated entity (names, tax identification numbers, addresses, etc.), contact information and fiscal reporting periods.

The draft procedure specifies that the notification form must be signed electronically with a qualified digital certificate and submitted through the portal provided by ANAF.

The final procedure has not yet been published. We will provide more information after the ANAF Order has been published in the Official Gazette.