Romania deposits ratification of the Pillar Two STTR Convention

Entry into force is not treaty-level commencement

Romanian Law No. 60 of 30 April 2026 ratified the Convention and recorded Romania’s covered tax agreements and elections. Following deposit of the instrument, the Convention enters into force for Romania on 1 February 2027. That date does not mean that the Subject to Tax Rule will automatically apply to every covered payment or treaty from that day.^[1][2][3]

For an individual covered tax agreement, the Convention must also be in force for the other treaty partner. The explanatory statement generally applies the STTR after a six-month period and recognises notifications under Article 12(5) where a jurisdiction must complete internal procedures before provisions take effect. Groups therefore need a treaty-by-treaty check rather than treating 1 February 2027 as a universal operational date.^[1][3]

What the STTR changes

The STTR is a treaty-based source-state taxing rule for specified categories of income paid between connected persons. Where the residence state taxes the income below the agreed minimum rate, the source state may impose additional tax up to the difference between 9% and the adjusted nominal tax rate, subject to the Convention’s detailed conditions.^[3][4]

The rule is not a general withholding tax on all related-party payments. The model provision defines covered income, excludes specified recipients and categories, includes a targeted anti-avoidance rule and applies annual materiality thresholds. OECD commentary states that the threshold is EUR1 million where the relevant contracting state’s GDP is at least EUR40 billion and EUR250,000 where GDP is lower.^[4]

Practical consequence

MNE groups with Romanian payment streams should map each potentially covered treaty, counterparty and payment category, then monitor the other jurisdiction’s ratification and any Article 12(5) notification. A treaty can become operational later than the Convention’s Romanian entry-into-force date, and the source-state charge remains constrained by the effective rate differential and the rule’s exclusions and thresholds.^[1][3][4]