Transfer Pricing Secondary Adjustments in the GloBE Era

Secondary transfer pricing adjustments remain one of the most uncoordinated areas of international taxation. Following a primary adjustment, domestic law may characterize the resulting excess payment as a deemed dividend, capital contribution or, for example, as a deemed loan. The secondary transaction may trigger withholding tax, imputed interest or other tax consequences. Some countries consider this a purely domestic matter and consequently that double tax treaties do not necessarily apply or, if they do apply, they should not provide any relief as the matter is not covered by the articles of the treaties. As of October 2026, out of the 83 transfer pricing country profiles available on the OECD website, 40 jurisdictions reported that secondary adjustments may be applied, illustrating both their practical relevance and the divergence in national approaches. Pillar Two does not resolve these difficulties. It introduces additional questions concerning characterization and allocation with implications for Pillar Two purposes. This article, while considering the existing transfer pricing issues of secondary adjustments, tries to highlight their undefined place in Pillar Two architecture.