Shaping a Fair and Consistent Tax Order in a Fragmented World: Between Realism and Ambition

Assonime’s second International Tax Italian Conference confronts the side-by-side era

Federico De Alfieri1 – Nicola Vernola2

Tax experts, business leaders and policymakers convened in Rome on 21 November 2025 for the second Assonime International Tax Italian Conference, under the patronage of the Ministry of Economy and Finance. The event explored how to maintain a fair and consistent international tax environment in an era defined less by global consensus and more by fragmentation, unilateralism and geopolitical tension. At the heart of the discussions laid a simple but uncomfortable question: after the United States’ withdrawal from the two-pillar agreement and the emergence of a parallel UN tax process, can Europe still rely on the original G20/OECD architecture, or must it rethink its strategy to preserve competitiveness and legal certainty?

The Rome conference traced the contours of a new international tax landscape. The optimism of 2021–2022 – when Pillars One and Two seemed to herald a new era of coordinated rule-making – has given way to a more sober realism. The US has stepped back, the UN has entered the scene, and a regime conceived as global is implemented by only a subset of jurisdictions, with Europe at the core. Across institutions, business and academia, speakers converged on a shared diagnosis: fragmentation is a fact, but it need not become chaos. In that context, carefully designed safe harbours, smarter coordination between regimes, and genuine engagement with business, policymakers can still reduce friction, preserve the integrity of tax bases and support investment. What emerged is that the promise of a fair and efficient international tax environment has not disappeared: it has simply become harder, requiring more leadership, more creativity and, above all, more honest conversation about what can realistically be achieved in a world that is no longer moving in one direction.

A new phase of fragmentation: Europe caught in the middle

Opening the conference, Assonime Managing Director Mr. Stefano Firpo underlined how quickly the climate around international taxation has changed. When the first edition of the conference was held in 2024, there were already two looming worries: US reluctance to move ahead with Pillars One and Two, and the risk that Europe would find itself squeezed between diverging global approaches. One year later, he noted, both fears have materialised. With the United States now formally outside the Pillar Two implementation club, and the UN process moving in a “rather divergent direction”, the trajectory of international cooperation has derailed. Instead of convergence, tax systems across continents are beginning to overlap, collide and compete. Mr. Firpo  pointed the urgent need to focus on simplification. Within the OECD, work is advancing on extending the transitional safe harbour and potentially moving towards a permanent solution, while in Europe, discussions have started on “decluttering” measures that weigh on businesses without adding real integrity to the system. Assonime has suggested to consider assessing effective tax rates on a global basis as a way to significantly reduce compliance burdens.

Assonime Co-Managing Director and Head of the Tax Department Mr. Alberto Trabucchi sharpened the focus on Europe’s structural vulnerabilities. The US, he argued, has a complex but fundamentally autonomous tax system designed to support domestic investments; its minimum tax architecture aligns with its strategic objectives. Europe, by contrast, has adopted Pillar Two through a rigid directive that make it more difficult for EU member states to adjust. Mr. Trabucchi identified three fronts where Europe must move quickly: aligning investment incentives with Pillar Two rather than against it; rationalising the interaction between GloBE rules, EU directives and domestic law; managing the profound implications of a side-by-side regime that could turn today’s level playing field into tomorrow’s “fighting field” if competitiveness gaps widen.

The OECD’s evolving agenda beyond the two-pillars

The morning’s keynote by Ms. Fabrizia Lapecorella, Deputy Secretary-General of the OECD, placed the discussion in a wider macroeconomic and political setting: trade tensions and protectionist measures are intensifying worldwide; tariffs and reshoring policies threaten to disrupt supply chains, raise prices, and materially shrink global trade and energy use, just as governments struggle with post-pandemic debts, demographic pressures and the enormous costs of green and digital transitions. In this context, public finances are stretched and political polarisation is deepening. Against that backdrop, Ms. Lapecorella noted that international tax cooperation can be a stabilising force. Far from being a purely technical exercise, it reduces double taxation and regulatory arbitrage, supports investment and innovation, and provides a common language for dispute resolution. Acknowledging that work on Pillar One is suspended and that the rest of the event would focus on Pillar Two, she outlined the OECD’s tax agenda beyond the two-pillar compromise. She mentioned a first new workstream on global mobility examines how existing tax rules, treaties and administrative frameworks cope with remote work, cross-border assignments and increased talent mobility. The aim is not to rewrite the rulebook from scratch, but to modernise where necessary and improve certainty while avoiding obstacles to growth. A second workstream explores the interaction between tax policy, inequality and growth, reflecting strong interest from the Inclusive Framework and the G20 in understanding how tax systems can support inclusive and resilient growth while maintaining public trust. This effort will be long-term, evidence-based and non-prescriptive, focusing on shared analysis rather than one-size-fits-all solutions. Ms. Lapecorella also underscored how the OECD is continuing its work on the following three core items: tax certainty (including a forthcoming report on how simplicity can foster certainty and growth); transparency (with new standards for crypto-assets and real-estate information); and capacity building for developing countries, notably through Tax Inspectors Without Borders and the Platform for Collaboration on Tax.

Side-by-side with the United States: risks and possible guardrails with an eye to simplification

The session on “Balancing side-by-side implementation and simplification in the Pillar 2 structure” was introduced by Mr. John Peterson (Head of Cross Border and International Tax Division at the OECD Centre for Tax Policy and Administration) and Professor Itai Grinberg (Professor of Law at Georgetown University, Crux Advisor and former Deputy Assistant Secretary at U.S. Treasury).

Mr. Peterson noted the existing political realities with the Inclusive Framework now racing to finalise a coexistence regime that avoids the worst forms of double taxation and competitive distortion. Crucially, Peterson stressed that the side-by-side debate has injected new urgency into simplification efforts. He outlined work on a permanent safe harbour based on jurisdictional ETR calculations using consolidated reporting packages, with only minimal adjustments to accounting income and a defined subset of deferred taxes, eliminating the five-year recapture rule for certain items. For groups that meet the agreed ETR threshold under this safe harbour, Pillar Two compliance would effectively stop there for the year in question. Alongside rule design, the Amsterdam Dialogue between tax administrations is addressing the practical side of implementation: multilateral competent authority agreements and exchange relationships for GloBE information returns, IT verification tools, aligned filing and notification requirements, and best-practice models for risk assessment and compliance.

Professor Grinberg, who negotiated Pillar Two from inside the US Treasury during the Biden administration, offered a sobering geopolitical counterpoint. The grand ambition of using international tax cooperation to rebuild the international relationships and reinforce the liberal economic order, he argued, has essentially collapsed. Pillar Two is no longer a truly global project, it is an OECD-member-state regime from which the US has stepped back at the implementation stage, just as the UN process gathers momentum among non-OECD countries. What remains, in his view, are three more modest but still meaningful goals: (i) guardrails against stateless income, provided that principal jurisdictions maintain credible QDMTTs and resist a race to the bottom; (ii) the possibility of a future US administration re-engaging with the global minimum tax and rebuilding international cooperation through tax rather than trade – a scenario he considers speculative but not impossible; (iii) the role of Pillar Two as a driver of EU fiscal integration, which many in Brussels will be keen to preserve. Grinberg’s analysis resonated with business concerns. If robust QDMTTs are not sustained and if some jurisdictions specialise in attracting US multinationals with ultra-low-tax regimes, the result could be a persistent gap between the effective marginal tax rate for US and EU groups. In that setting, calls for a global ETR safe harbour, potentially temporary and aligned with political cycles, become understandable as a way to rebalance the system and relieve compliance pressure.

The business panel that followed was moderated by Mr. Marco Iuvinale (Director of the European and International Tax Affairs Directorate at the MEF) and brought together tax heads in Italian companies that are among the market leaders in their respective sectors:  EssilorLuxottica, Enel, Eni and Ariston. The discussion revolved around three issues that now dominate board-level conversations on Pillar Two: (i) how the US–EU coexistence regime actually works, (ii) what it means for investment incentives, and (iii) whether there is any serious scope for simplification.

On the side-by-side architecture, speakers stressed that this is not just a technical variation on Pillar Two but a structural asymmetry. Mr. Giacomo Soldani (EssilorLuxottica) underlined that US multinationals are subject to an entire ecosystem of rules – GILTI, Subpart F, CAMT – which rely heavily on global blending, while European groups face domestic CFC rules plus a strict, jurisdiction-by-jurisdiction minimum tax. In his view, this is a clear competitive disadvantage for EU-based companies and a rising risk of double or triple taxation within common group structures. He warned that, unless Europe introduces some form of blending or rethinks its CFC rules, the promised “level playing field” risks turning into a tilted pitch.

The panel noted that MNE Groups have initiated large-scale internal projects – new data systems, mapping exercises, internal training – to comply with Pillar Two, despite the fact that several of these groups already pay very high effective tax rates. For such profiles, the expected Pillar Two top-up is nil or marginal, yet the compliance burden is huge. This is why the panel backed the idea of a high-threshold global ETR safe harbour: if a group’s consolidated tax rate clearly exceeds, say, 20 per cent, it should not be forced into full GloBE calculations every year.

Ms. Silvia Sardi (Ariston) reminded that the project’s original promise was a single, coherent global rulebook. That vision, she argued, is being diluted as Pillar Two is layered on top of existing Controlled Foreign Company (CFC) regimes and then further complicated by side-by-side conditions, and constantly changing domestic rules. Using concrete group-structure examples, she showed how the same profits could be exposed to a Qualified Domestic Minimum Top-up Tax (QDMTT), to US rules like Global Intangible Low-Taxed Income (GILTI) and then to an income-inclusion rule at parent-company level.

On incentives, the panel converged on the need to protect strategic tax measures rather than neutralise them through top-up tax. Speakers contrasted the US approach – where key tax credits are excluded from the base of the minimum tax. Speakers all argued for a broader, substance-based concept of “good” incentives that recognises support for decarbonisation, innovation and high-value R&D, regardless of whether relief takes the form of a deduction, a credit or an income-based regime such as a patent box. Otherwise, Europe risks undermining the very policies it is using to drive the green and digital transitions. Finally, the panel called for credible simplification and legal certainty: safe harbours must be designed for permanent use and must neutralise temporary distortions. On sanctions and transitional years, it was noted the urgency for tax authorities to spell out what “all reasonable measures” means in practice and to adopt cooperative approaches – including flexible deadlines and a form of “freeze period” while the side-by-side regime is still bedding in. Their closing message to policymakers was clear: the minimum tax is politically settled, but its implementation still needs to be adjusted so that European multinationals face a predictable, genuinely competitive framework rather than a patchwork of overlapping obligations.

A broader, more political tax agenda for the EU

The afternoon session was opened by Mr. Gerassimos Thomas (Director-General for Taxation and Customs Union), who sketched how EU tax policy is being reshaped by a tougher macro environment. Growth forecasts have stabilised, but Europe now operates under intense scrutiny of its relative position in a world of trade frictions, defence spending and green-transition costs. Mr. Thomas noted that the Commission’s work revolves around five priorities: (i) corporate taxation and competitiveness (with Pillar Two acting as a catalyst for higher effective rates and ending tax competition below 15% inside the EU), (ii) VAT in the Digital Age and a single EU registration, (iii) tax measures for capital markets and investment, (iv) behavioural and excise taxes (notably energy) and (v) a much stronger focus on tax gaps, using better data to steer reform. He stressed that DG TAXUD is moving away from a purely legislative reflex: roughly half of its resources now go into recommendations, analysis, peer reviews and coordination of tax administrations, rather than new directives alone. On simplification, Mr. Thomas was blunt: even if Brussels radically trimmed EU tax legislation, around 85% of the administrative burden would remain, because it is created by national rules and by how Member States implement EU directives. Any realistic strategy to cut red tape must therefore be a joint EU-plus-national effort, not just a Brussels exercise. He also underlined the new approach of the Commission which is to cancel proposals once it is clear that it is not possible to reach unanimity.

Europe between tariffs, digital taxes and legal constraints

Following the keynote, Mr. Alberto Trabucchi and Professor Dennis Weber (Founder and Director of the CPT-project of the University of Amsterdam) introduced the panel discussion on “Key Tax Challenges for Europe”.

Mr. Trabucchi started by noting that in 2024, Europe recorded a sizeable goods surplus with the United States (around Euro 200 billion), but a significant deficit in services (around Euro 150 billion). This divergence helps explain why the US is tempted to use tariffs to address its goods deficit, while Europe’s export-oriented manufacturing base is vulnerable to such measures. At the same time, the spread of source-based taxes worldwide risks fragmenting the tax landscape, making it harder for the EU to defend the interests of its own MNEs. Mr. Trabucchi argued that Europe’s limited tax sovereignty and representation,  with tax policy constrained by unanimity and a patchwork of national systems, leave it ill-equipped to respond coherently to these pressures. What is needed, in his view, is a more coordinated European strategy on digital and ESG-related taxation, rather than 27 parallel experiments.

Professor Weber shifted the focus to EU law. His central point was that the proportionality principle, enshrined in Article 5 of Protocol No. 2 to the EU Treaty, may impact on recent direct tax directives. Under that principle, any disadvantages caused by EU law must not be disproportionate to the aims pursued: the legislator must explain why a particular measure is necessary, why lighter alternatives would not work and why compliance costs remain within reasonable bounds. In practice,  for the ATAD there is however little analysis of whether the measures go beyond what is strictly required. He warned that the European Court of Justice will sooner or later address these issues and cited case law in which the Court applied “proportionality stricto sensu” to EU acts, and recalled cases where a measure was annulled because the European Council could not demonstrate that it had genuinely exercised its broad discretion and considered relevant alternatives. Transposed to tax, this raises difficult questions: if the European Council cannot show that it properly weighed options when adopting directives such as ATAD - or, in future, legislation implementing elements of Pillar Two - some provisions may prove vulnerable in court. The message was not to roll back integration, but rather to embed proportionality and impact assessment.

The roundtable moderated by Professor Guglielmo Maisto Honorary President of the International Fiscal Association featured Mr. Massimo Ferrari (Group Tax Director, Pirelli & C. S.p.A.), Mr. Giuseppe Nicosia (Tax Director, Snam S.p.A.) and Mr. Paolo Ricca (Tax Director Southern/Eastern Europe, Unilever Italy Holdings S.r.l.). The debate focus around three issues:

(i) what stance should the EU adopt on Pillar Two in a rapidly changing world?  Mr. Ferrari noted that what was meant to be a global minimum tax increasingly looks like a European-only project, with the United States, China and India either not implementing, or doing so in a very different way. This raises questions about Europe’s competitiveness if it is effectively the only major bloc fully applying the new rules. In that context, he suggested a safe harbour for genuinely high-taxed groups, based on broad-brush measures such as cash taxes and accounting profit over a multi-year period, so that businesses comfortably above the minimum rate are spared the full complexity of GloBE computations. Mr. Nicosia reinforced the point by referring to the OECD work on implementation costs: even on a limited sample, the one-off and recurrent compliance burden is substantial and involves significant opportunity costs for tax teams and management. These costs, he stressed, cut directly into the EU’s competitiveness agenda and should be factored more explicitly into EU-level decisions on how far to go beyond the global standard.

(ii) which existing EU tax rules should be revisited, suspended or simplified to strengthen competitiveness?  Mr. Ferrari’s answer was not to scrap everything, but to rationalise overlapping regimes. An Italian multinational dealing with its foreign income may face CFC rules, hybrid mismatch provisions, reporting obligations under DAC6 and now an additional Pillar Two layer. Many of these instruments pursue similar policy objectives—combating profit shifting and aggressive tax planning—yet they coexist without any coherent simplification strategy. Mr. Nicosia broadened the discussion by sketching what he called the current “European tax framework” through five flagship initiatives: Pillar Two, digital services taxes, the proposed Corporate Income Tax Reform (CORE), the Business in Europe: Framework for Income Taxation (BeFIT) and the Carbon Border Adjustment Mechanism (CBAM). Each, he argued, has its own logic, but together they make for an increasingly complex landscape. In Mr. Nicosia’s view, is that the EU must now focus on two types of simplification: reducing pure compliance complexity and reducing legal uncertainty, in order to avoid misinterpretations and cascading disputes that are “not worth it” for taxpayers or administrations. Mr. Ricca brought the discussion down to the day-to-day reality of multinationals operating across many EU jurisdictions and described a familiar cycle: parallel transfer-pricing audits launched by several tax authorities on the same business model, followed by multilateral controls where administrations meet, exchange information—and then often go back home and issue divergent assessments, leaving the taxpayer facing multiple layers of double taxation. For Ricca, the EU should do more front-load work on dispute prevention, designing procedures and tools that encourage coordinated risk assessment and early agreement between tax authorities, rather than relying on arbitration as a last-resort fix. Against that background, he expressed disappointment at the abandonment of a planned tax dispute (TBD) directive on the grounds of duplication, insisting that there is still ample room for EU-level innovation on procedures that would be very welcome to business.

(iii) How should the EU approach new initiatives such as CORE and BeFIT?  On CORE, Mr. Ferrari noted that on paper its main virtue is simplicity. However, a tax on turnover, he cautioned, risks divorcing taxation from real value creation. Businesses with high volumes but structurally low margins, such as contract manufacturers, could find themselves heavily exposed. By contrast, Mr. Ferrari saw BeFIT as conceptually sound and potentially positive, but was wary of its implementation risk. If Member States are allowed to customise the common base with numerous national adjustments, the result could be another layer of complexity reminiscent of Pillar Two, rather than a genuine simplification. Mr. Ricca echoed this ambivalence: “instinctively in favour” of BeFIT because a truly common base could virtually eliminate transfer-pricing disputes inside the EU, shifting the political debate to the allocation of the consolidated tax base between Member States. But the value of the project hinges on keeping the system harmonised and simple. On CORE, he also warned that a blunt turnover tax could be particularly punitive for low-margin or start-up businesses and create distortions if layered on top of existing corporate income taxes. Mr. Nicosia underlined the different DNA of the two projects. CORE, he noted, is explicitly revenue-raising: Commission estimates put the expected additional revenues at around Euro 6.8 billion a year. BeFIT, by contrast, is not designed to increase the tax take but to “collect it better” by streamlining bases and lowering compliance costs. In his view, this difference explains why CORE has encountered strong political resistance and is now effectively off the table, while BeFIT, though still evolving, continues to be discussed as a central plank of the future corporate tax architecture.

The UN process and ICC role

Looking beyond the OECD framework, Ms. Luisa Scarcella, Global Policy Lead of Taxation and Trade at the International Chamber of Commerce (ICC) offered an update on the UN Framework Convention process. She recalled that the recent history of the UN process on the Multilateral Tax Convention. She noted that recent draft texts have deepened business concerns. A proposed Article 4 on “fair allocation of taxing rights” in practice could be read as an unlimited expansion of source-based taxation, granting taxing rights wherever activities, markets or revenues are located, with no clear nexus threshold and no explicit protection against double or multiple taxation. Another draft article on tax practices would favour only substance-based incentives and touches on minimum taxes, without explaining how this will interact with Pillar Two or existing regimes. Equally unclear, so far, is how the convention will coexist with current treaties, a gap she flagged as a major source of potential fragmentation. What makes the process difficult is that three texts are being negotiated in parallel: the framework convention and two protocols, one on cross-border services and one on dispute prevention and resolution. The services protocol is particularly sensitive, given recent UN model provisions that broaden source taxation of services without economic impact analysis and are already being copied into domestic law, sometimes even overriding treaties. For business, the danger is a proliferation of gross-basis withholding and overlapping charges, hitting trade in services and investment flows. By contrast, the dispute-prevention and resolution protocol could be a positive development if it offers a full toolbox with strong preventive mechanisms and addresses developing countries’ concerns about arbitration.

Italy’s national perspective: digital service tax and tax compliance

The conference closed with a distinctly Italian perspective, with Mr. Giovanni Spalletta, Director General of Finance at the Ministry of Economy and Finance , and Mr. Vincenzo Carbone, Head of the Italian tax Authority.

Mr. Spalletta revisited the rationale for Italy’s digital services tax and noted that, while the government still hopes for a shared solution at European or OECD level, political difficulties are evident. Several member states that have not yet introduced a digital service tax remain wary of provoking US reactions, especially given Washington’s past readiness to threaten trade counter-measures. At national level, there appears to be no intention to repeal the DST, given also the tax revenue it generates. In parallel, Italy continues to look to the G7 statement on the coexistence of Pillar Two and the US regime as a potential springboard for reopening the multilateral conversation on digital taxation in a different political climate. On Pillar Two, Mr. Spalletta struck a pragmatic tone. Proposals floated in some quarters to suspend the EU directive, he argued, are politically unrealistic given the need for unanimity. A more viable approach would be to discuss extensions or phasing-in of key obligations to give both taxpayers and administrations a softer landing.

Mr. Carbone then detailed how the Italian tax authority is preparing for the new regime. Since 2022, it has created a multidisciplinary working group and worked closely with the Finance Department on secondary legislation, the design of tax returns and payment codes, and the development of new digital systems to handle declarations, data exchanges and internal controls. The goal, he said, is to align with international standards while making the system as user-friendly as possible for compliant taxpayers. In parallel, the Italian tax authority is strengthening its cooperation with other tax administrations to provide multinational enterprises with a more certain operating framework and to prevent cases of double taxation. In particular, it has recently concluded significant multilateral advance pricing agreements (BAPAs) with the Chinese and Korean tax authorities, and has expanded the number of such agreements with other European and Non-European administrations. These developments help foster a cooperative framework among tax authorities at a time when States appear unable to establish a global dialogue on taxation. Lastly, Mr. Carbone shared some reflections on the journey that led to the Report “Towards a common approach to tax gap estimation in the EU”, recently released by the European Commission and coordinated by the Italian Revenue Agency. The Project Group led by Italy was launched in 2020 with a clear and ambitious goal: to develop a shared methodological framework for estimating tax gaps across the European Union. The findings included in the Report already offer concrete tools to improve tax compliance and strengthen the analytical capacity of tax administrations but, Mr Carbone said, more work is needed to transform these methodologies into operational practices.

• 1Associate (Chiomenti)
• 2Junior Associate (Chiomenti)