Intertax
Volume 53, Issue 5 [pre-publication] (2025) pp. 1 – 24

Abstract

This article addresses the emerging conflicts between Pillar Two taxation rules and international investment agreements (IIAs) by focusing on developing methodologies for assessing economic damages in related disputes. The study aims to establish a comprehensive framework for quantifying economic losses arising from potential IIA violations due to Pillar Two implementation. It examines the legal basis for damage claims under IIAs by analysing relevant precedents and provisions. The research evaluates various methodological approaches for calculating damages in international investment disputes and assesses their suitability for Pillar Two-related scenarios. Economic models and quantitative techniques, such as the discounted cash flow (DCF) analysis and the lost profit method, are examined for their effectiveness in estimating Pillar Two’s financial impact on investors. The article incorporates case studies and reviews past damage assessments in tax-related contexts. It discusses policy implications and offers guidelines for key stakeholders including policymakers, investors, and arbitral tribunals as well as focusing on best practices and potential challenges in damage assessment. This research aims to alleviate a critical deficiency in the existing literature by providing a nuanced, multidimensional framework to facilitate a more informed approach to resolving disputes at the intersection of Pillar Two rules and IIAs.

Extract

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