Does “Initial Phase Relief” Make the EU Minimum Taxation Directive (2022/2523) Invalid?

In this article, the authors critically examine the “initial phase relief” granted under Pillar Two, which prevents the undertaxed payments rule from initially applying in order to promote the development of cross-border activities by purely domestic enterprises, a provision which is mirrored in the EU Minimum Taxation Directive (2022/2523). The authors conclude that the Directive’s approach to this relief might lead to discriminatory treatment by the Member States in certain scenarios, but this error will not likely invalidate the Directive.