What changed, Council Directive (EU) 2022/2523 of 15 December 2022 on ensuring a global minimum level of…

+ ## CHAPTER I — GENERAL PROVISIONS
− ### art_1
+ ### Article 1 — Subject-matter
− Article 1
+ **1.** This Directive establishes common measures for the minimum effective taxation of multinational enterprise (MNE) groups and large-scale domestic groups in the form of:(a) an income inclusion rule (IIR) in accordance with which a parent entity of an MNE group or of a large-scale domestic group …
− 1. This Directive establishes common measures for the minimum effective taxation of multinational enterprise (MNE) groups and large-scale domestic groups in the form of:
+ **2.** Member States may elect to apply a qualified domestic top-up tax in accordance with which top-up tax shall be computed and paid on the excess profit of all the low-taxed constituent entities located in their jurisdiction pursuant to this Directive.
− | (a) | an income inclusion rule (IIR) in accordance with which a parent entity of an MNE group or of a large-scale domestic group computes and pays its allocable share of top-up tax in respect of the low-taxed constituent entities of the group; and |
− | --- | --- |
+ ### Article 2 — Scope
− | (b) | an undertaxed profit rule (UTPR) in accordance with which a constituent entity of an MNE group has an additional cash tax expense equal to its share of top-up tax that was not charged under the IIR in respect of the low-taxed constituent entities of the group. |
− | --- | --- |
− 
− 2. Member States may elect to apply a qualified domestic top-up tax in accordance with which top-up tax shall be computed and paid on the excess profit of all the low-taxed constituent entities located in their jurisdiction pursuant to this Directive.
+ **1.** This Directive applies to constituent entities located in a Member State that are members of an MNE group or of a large-scale domestic group which has an annual revenue of EUR 750 000 000 or more, including the revenue of the excluded entities referred to in paragraph 3, in its ultimate paren…
− ### art_2
+ **2.** Where one or more of the four fiscal years referred to in paragraph 1 is longer or shorter than 12 months, the revenue threshold referred to in that paragraph shall be adjusted proportionally for each of those fiscal years.
− Article 2
+ **3.** This Directive does not apply to the following entities (‘excluded entities’):(a) a governmental entity, an international organisation, a non-profit organisation, a pension fund, an investment fund that is an ultimate parent entity or a real estate investment vehicle that is an ultimate paren…
− 1. This Directive applies to constituent entities located in a Member State that are members of an MNE group or of a large-scale domestic group which has an annual revenue of EUR 750 000 000 or more, including the revenue of the excluded entities referred to in paragraph 3, in its ultimate parent en…
− 
− 2. Where one or more of the four fiscal years referred to in paragraph 1 is longer or shorter than 12 months, the revenue threshold referred to in that paragraph shall be adjusted proportionally for each of those fiscal years.
− 
− 3. This Directive does not apply to the following entities (‘excluded entities’):
− 
− | (a) | a governmental entity, an international organisation, a non-profit organisation, a pension fund, an investment fund that is an ultimate parent entity or a real estate investment vehicle that is an ultimate parent entity; |
− | --- | --- |
− | (b) | an entity where at least 95 % of the value of the entity is owned by one or more entities referred to in point (a), directly or through one or several excluded entities, except pension services entities, and that:(i)operates exclusively, or almost exclusively, to hold assets or invest funds …
− | --- | --- |
− | (i) | operates exclusively, or almost exclusively, to hold assets or invest funds for the benefit of the entity or entities referred to in point (a); or |
− | (ii) | exclusively carries out activities ancillary to those performed by the entity or entities referred to in point (a); |
− 
− | (c) | an entity where at least 85 % of the value of the entity is owned, directly or through one or several excluded entities, by one or more entities referred to in point (a), except pension services entities, provided that substantially all of its income is derived from dividends or equity gains…
− | --- | --- |
− 
+ ### Article 3 — Definitions
− ### art_3
− Article 3
− 
+ (1) ‘entity’ means any legal arrangement that prepares separate financial accounts or any legal person;
− | (1) | ‘entity’ means any legal arrangement that prepares separate financial accounts or any legal person; |
− | --- | --- |
+ (2) ‘constituent entity’ means: (a) any entity that is part of an MNE group or of a large-scale domestic group; and (b) any permanent establishment of a main entity that is part of an MNE group referred to in point (a);
− | (2) | ‘constituent entity’ means:(a)any entity that is part of an MNE group or of a large-scale domestic group; and(b)any permanent establishment of a main entity that is part of an MNE group referred to in point (a); |
− | --- | --- |
− | (a) | any entity that is part of an MNE group or of a large-scale domestic group; and |
− | (b) | any permanent establishment of a main entity that is part of an MNE group referred to in point (a); |
+ (3) ‘group’ means: (a) a collection of entities which are related through ownership or control as defined by the acceptable financial accounting standard for the preparation of consolidated financial statements by the ultimate parent entity, including any entity that may have been excluded from the …
− | (3) | ‘group’ means:(a)a collection of entities which are related through ownership or control as defined by the acceptable financial accounting standard for the preparation of consolidated financial statements by the ultimate parent entity, including any entity that may have been excluded from th…
− | --- | --- |
− | (a) | a collection of entities which are related through ownership or control as defined by the acceptable financial accounting standard for the preparation of consolidated financial statements by the ultimate parent entity, including any entity that may have been excluded from the consolidated fi…
− | (b) | an entity that has one or more permanent establishments, provided that it is not part of another group as defined in point (a); |
+ (4) ‘MNE group’ means any group that includes at least one entity or permanent establishment which is not located in the jurisdiction of the ultimate parent entity;
− | (4) | ‘MNE group’ means any group that includes at least one entity or permanent establishment which is not located in the jurisdiction of the ultimate parent entity; |
− | --- | --- |
+ (5) ‘large-scale domestic group’ means any group of which all constituent entities are located in the same Member State;
− | (5) | ‘large-scale domestic group’ means any group of which all constituent entities are located in the same Member State; |
− | --- | --- |
+ (6) ‘consolidated financial statements’ means: (a) the financial statements prepared by an entity in accordance with an acceptable financial accounting standard, in which the assets, liabilities, income, expenses and cash flows of that entity and of any entities in which it has a controlling interes…
− | (6) | ‘consolidated financial statements’ means:(a)the financial statements prepared by an entity in accordance with an acceptable financial accounting standard, in which the assets, liabilities, income, expenses and cash flows of that entity and of any entities in which it has a controlling inter…
− | --- | --- |
− | (a) | the financial statements prepared by an entity in accordance with an acceptable financial accounting standard, in which the assets, liabilities, income, expenses and cash flows of that entity and of any entities in which it has a controlling interest are presented as those of a single econom…
− | (b) | for groups defined in point (3)(b), the financial statements prepared by an entity in accordance with an acceptable financial accounting standard; |
− | (c) | the financial statements of the ultimate parent entity that are not prepared in accordance with an acceptable financial accounting standard and that have been subsequently adjusted to prevent any material competitive distortions; and |
− | (d) | where the ultimate parent entity does not prepare financial statements as described in point (a), (b) or (c), the financial statements that would have been prepared if the ultimate parent entity were required to prepare such financial statements in accordance with:(i)an acceptable financial …
− | (i) | an acceptable financial accounting standard; or |
− | (ii) | another financial accounting standard, and provided such financial statements have been adjusted to prevent any material competitive distortions; |
+ (7) ‘fiscal year’ means the accounting period with respect to which the ultimate parent entity of an MNE group or of a large-scale domestic group prepares its consolidated financial statements or, if the ultimate parent entity does not prepare consolidated financial statements, the calendar year;
− | (7) | ‘fiscal year’ means the accounting period with respect to which the ultimate parent entity of an MNE group or of a large-scale domestic group prepares its consolidated financial statements or, if the ultimate parent entity does not prepare consolidated financial statements, the calendar year…
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+ (8) ‘filing constituent entity’ means an entity filing a top-up tax information return in accordance with Article 44;
− | (8) | ‘filing constituent entity’ means an entity filing a top-up tax information return in accordance with Article 44; |
− | --- | --- |
+ (9) ‘governmental entity’ means an entity that meets all the following criteria: (a) it is part of, or wholly owned by, a government, including any political subdivision or local authority thereof; (b) it does not carry on a trade or business and has the principal purpose of: (i) fulfilling a govern…
− | (9) | ‘governmental entity’ means an entity that meets all the following criteria:(a)it is part of, or wholly owned by, a government, including any political subdivision or local authority thereof;(b)it does not carry on a trade or business and has the principal purpose of:(i)fulfilling a governme…
− | --- | --- |
− | (a) | it is part of, or wholly owned by, a government, including any political subdivision or local authority thereof; |
− | (b) | it does not carry on a trade or business and has the principal purpose of:(i)fulfilling a government function; or(ii)managing or investing that government’s or jurisdiction’s assets through the making and holding of investments, asset management, and related investment activities for that go…
− | (i) | fulfilling a government function; or |
− | (ii) | managing or investing that government’s or jurisdiction’s assets through the making and holding of investments, asset management, and related investment activities for that government’s or jurisdiction’s assets; |
− | (c) | it is accountable to a government on its overall performance, and provides annual information reporting to that government; and |
− | (d) | its assets vest in a government upon dissolution and, to the extent it distributes net earnings, such net earnings are distributed solely to that government with no portion of its net earnings inuring to the benefit of any private person; |
+ (10) ‘international organisation’ means any intergovernmental organisation, including a supranational organisation, or wholly-owned agency or instrumentality thereof that meets all the following criteria: (a) it is comprised primarily of governments; (b) it has in effect a headquarters or substantia…
− | (10) | ‘international organisation’ means any intergovernmental organisation, including a supranational organisation, or wholly-owned agency or instrumentality thereof that meets all the following criteria:(a)it is comprised primarily of governments;(b)it has in effect a headquarters or substantia…
− | --- | --- |
− | (a) | it is comprised primarily of governments; |
− | (b) | it has in effect a headquarters or substantially similar agreement with the jurisdiction in which it is established, for example arrangements that entitle the organisation’s offices or establishments in that jurisdiction to privileges and immunities; and |
− | (c) | law or its governing documents prevent its income inuring to the benefit of private persons; |
+ (11) ‘non-profit organisation’ means an entity that meets all the following criteria: (a) it is established and operated in its jurisdiction of residence: (i) exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational or other similar purposes; or (ii) as a professi…
− | (11) | ‘non-profit organisation’ means an entity that meets all the following criteria:(a)it is established and operated in its jurisdiction of residence:(i)exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational or other similar purposes; or(ii)as a profession…
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− | (a) | it is established and operated in its jurisdiction of residence:(i)exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational or other similar purposes; or(ii)as a professional organisation, business league, chamber of commerce, labour organisation, agricult…
− | (i) | exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational or other similar purposes; or |
− | (ii) | as a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare; |
− | (b) | substantially all the income from the activities mentioned in point (a) is exempt from income tax in its jurisdiction of residence; |
− | (c) | it has no shareholders or members who have a proprietary or beneficial interest in its income or assets; |
− | (d) | the income or assets of the entity may not be distributed to, or applied for the benefit of, a private person or non-charitable entity other than:(i)pursuant to the conduct of the entity’s charitable activities;(ii)as payment of reasonable compensation for services rendered or for the use of…
− | (i) | pursuant to the conduct of the entity’s charitable activities; |
− | (ii) | as payment of reasonable compensation for services rendered or for the use of property or capital; or |
− | (iii) | as payment representing the fair market value of property which the entity has purchased; and |
− | (e) | upon termination, liquidation or dissolution of the entity, all of its assets are to be distributed to or revert to a non-profit organisation or to the government, including any governmental entity, of the entity’s jurisdiction of residence or any political subdivision thereof; |
− | (f) | it does not carry on a trade or business that is not directly related to the purposes for which it was established; |
+ (12) ‘flow-through entity’ means an entity to the extent it is fiscally transparent with respect to its income, expenditure, profit or loss in the jurisdiction where it was created unless it is tax resident and subject to a covered tax on its income or profit in another jurisdiction; a flow-through …
− | (12) | ‘flow-through entity’ means an entity to the extent it is fiscally transparent with respect to its income, expenditure, profit or loss in the jurisdiction where it was created unless it is tax resident and subject to a covered tax on its income or profit in another jurisdiction;a flow-throu…
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− | (a) | a tax-transparent entity with respect to its income, expenditure, profit or loss to the extent that it is fiscally transparent in the jurisdiction in which its owner is located; |
− | (b) | a reverse hybrid entity with respect to its income, expenditure, profit or loss to the extent that it is not fiscally transparent in the jurisdiction in which its owner is located; |
− | (a) | its owners are located in a jurisdiction that treats the entity as fiscally transparent; |
− | (b) | it does not have a place of business in the jurisdiction where it was created; and |
− | (c) | the income, expenditure, profit or loss is not attributable to a permanent establishment; |
+ (13) ‘permanent establishment’ means: (a) a place of business or a deemed place of business located in a jurisdiction where it is treated as a permanent establishment in accordance with an applicable tax treaty, provided that such jurisdiction taxes the income attributable to it in accordance with a…
− | (13) | ‘permanent establishment’ means:(a)a place of business or a deemed place of business located in a jurisdiction where it is treated as a permanent establishment in accordance with an applicable tax treaty, provided that such jurisdiction taxes the income attributable to it in accordance with…
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− | (a) | a place of business or a deemed place of business located in a jurisdiction where it is treated as a permanent establishment in accordance with an applicable tax treaty, provided that such jurisdiction taxes the income attributable to it in accordance with a provision similar to Article 7 of…
− | (b) | if there is no applicable tax treaty, a place of business or a deemed place of business located in a jurisdiction which taxes the income attributable to such place of business on a net basis in a manner similar to which it taxes its own tax residents; |
− | (c) | if a jurisdiction has no corporate income tax system, a place of business or a deemed place of business located in such jurisdiction that would be treated as a permanent establishment in accordance with the OECD Model Tax Convention on Income and Capital, as amended, provided that such juris…
− | (d) | a place of business or a deemed place of business that is not described in points (a) to (c) through which operations are conducted outside the jurisdiction where the entity is located, provided that such jurisdiction exempts the income attributable to such operations; |
+ (14) ‘ultimate parent entity’ means: (a) an entity that owns, directly or indirectly, a controlling interest in any other entity and that is not owned, directly or indirectly, by another entity with a controlling interest in it; or (b) the main entity of a group as defined in point (3)(b);
− | (14) | ‘ultimate parent entity’ means:(a)an entity that owns, directly or indirectly, a controlling interest in any other entity and that is not owned, directly or indirectly, by another entity with a controlling interest in it; or(b)the main entity of a group as defined in point (3)(b); |
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− | (a) | an entity that owns, directly or indirectly, a controlling interest in any other entity and that is not owned, directly or indirectly, by another entity with a controlling interest in it; or |
− | (b) | the main entity of a group as defined in point (3)(b); |
+ (15) ‘minimum tax rate’ means fifteen percent (15 %);
− | (15) | ‘minimum tax rate’ means fifteen percent (15 %); |
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+ (16) ‘top-up tax’ means the top-up tax computed for a jurisdiction or a constituent entity pursuant to Article 27;
− | (16) | ‘top-up tax’ means the top-up tax computed for a jurisdiction or a constituent entity pursuant to Article 27; |
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+ (17) ‘controlled foreign company tax regime’ means a set of tax rules, other than a qualified IIR, under which a direct or indirect shareholder of a foreign entity, or the main entity of a permanent establishment, is subject to taxation on its share of part or all of the income earned by that foreig…
− | (17) | ‘controlled foreign company tax regime’ means a set of tax rules, other than a qualified IIR, under which a direct or indirect shareholder of a foreign entity, or the main entity of a permanent establishment, is subject to taxation on its share of part or all of the income earned by that fo…
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+ (18) ‘qualified IIR’ means a set of rules that is implemented in the domestic law of a jurisdiction, provided that such jurisdiction does not provide any benefits that are related to those rules, and that is: (a) equivalent to the rules laid down in this Directive or, as regards third-country jurisd…
− | (18) | ‘qualified IIR’ means a set of rules that is implemented in the domestic law of a jurisdiction, provided that such jurisdiction does not provide any benefits that are related to those rules, and that is:(a)equivalent to the rules laid down in this Directive or, as regards third-country juri…
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− | (a) | equivalent to the rules laid down in this Directive or, as regards third-country jurisdictions, the Tax Challenges Arising from the Digitalisation of the Economy Global Anti-Base Erosion Model Rules (Pillar Two) (‘OECD Model Rules’), in accordance with which the parent entity of an MNE group…
− | (b) | administered in a way that is consistent with the rules laid down in this Directive or, as regards third-country jurisdictions, with the OECD Model Rules; |
+ (19) ‘low-taxed constituent entity’ means: (a) a constituent entity of an MNE group or of a large-scale domestic group that is located in a low-tax jurisdiction; or (b) a stateless constituent entity that, in respect of a fiscal year, has qualifying income and an effective tax rate which is lower th…
− | (19) | ‘low-taxed constituent entity’ means:(a)a constituent entity of an MNE group or of a large-scale domestic group that is located in a low-tax jurisdiction; or(b)a stateless constituent entity that, in respect of a fiscal year, has qualifying income and an effective tax rate which is lower th…
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− | (a) | a constituent entity of an MNE group or of a large-scale domestic group that is located in a low-tax jurisdiction; or |
− | (b) | a stateless constituent entity that, in respect of a fiscal year, has qualifying income and an effective tax rate which is lower than the minimum tax rate; |
+ (20) ‘intermediate parent entity’ means a constituent entity that owns, directly or indirectly, an ownership interest in another constituent entity in the same MNE group or large-scale domestic group and that does not qualify as an ultimate parent entity, a partially-owned parent entity, a permanent…
− | (20) | ‘intermediate parent entity’ means a constituent entity that owns, directly or indirectly, an ownership interest in another constituent entity in the same MNE group or large-scale domestic group and that does not qualify as an ultimate parent entity, a partially-owned parent entity, a perma…
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+ (21) ‘controlling interest’ means an ownership interest in an entity whereby the interest holder is required, or would have been required, to consolidate the assets, liabilities, income, expenses and cash flows of the entity on a line-by-line basis, in accordance with an acceptable financial account…
− | (21) | ‘controlling interest’ means an ownership interest in an entity whereby the interest holder is required, or would have been required, to consolidate the assets, liabilities, income, expenses and cash flows of the entity on a line-by-line basis, in accordance with an acceptable financial acc…
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+ (22) ‘partially-owned parent entity’ means a constituent entity that owns, directly or indirectly, an ownership interest in another constituent entity of the same MNE group or large-scale domestic group, and for which more than 20 % of the ownership interest in its profits is held, directly or indir…
− | (22) | ‘partially-owned parent entity’ means a constituent entity that owns, directly or indirectly, an ownership interest in another constituent entity of the same MNE group or large-scale domestic group, and for which more than 20 % of the ownership interest in its profits is held, directly or i…
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+ (23) ‘ownership interest’ means any equity interest that carries rights to the profits, capital or reserves of an entity or of a permanent establishment;
− | (23) | ‘ownership interest’ means any equity interest that carries rights to the profits, capital or reserves of an entity or of a permanent establishment; |
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+ (24) ‘parent entity’ means an ultimate parent entity which is not an excluded entity, an intermediate parent entity or a partially-owned parent entity;
− | (24) | ‘parent entity’ means an ultimate parent entity which is not an excluded entity, an intermediate parent entity or a partially-owned parent entity; |
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+ (25) ‘acceptable financial accounting standard’ means International Financial Reporting Standards (IFRS or IFRS as adopted by the Union pursuant to Regulation (EC) No 1606/2002 of the European Parliament and of the Council (1)) and the generally accepted accounting principles of Australia, Brazil, C…
− | (25) | ‘acceptable financial accounting standard’ means International Financial Reporting Standards (IFRS or IFRS as adopted by the Union pursuant to Regulation (EC) No 1606/2002 of the European Parliament and of the Council (8)) and the generally accepted accounting principles of Australia, Brazi…
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+ (26) ‘authorised financial accounting standard’ means, in respect of an entity, a set of generally acceptable accounting principles permitted by an authorised accounting body in the jurisdiction where that entity is located; for the purposes of this definition, ‘authorised accounting body’ means the…
− | (26) | ‘authorised financial accounting standard’ means, in respect of an entity, a set of generally acceptable accounting principles permitted by an authorised accounting body in the jurisdiction where that entity is located; for the purposes of this definition, ‘authorised accounting body’ means…
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+ (27) ‘material competitive distortion’ means, in respect of the application of a specific principle or procedure under a set of generally acceptable accounting principles, an application that results in an aggregate variation of income or expense of more than EUR 75 000 000 in a fiscal year as compa…
− | (27) | ‘material competitive distortion’ means, in respect of the application of a specific principle or procedure under a set of generally acceptable accounting principles, an application that results in an aggregate variation of income or expense of more than EUR 75 000 000 in a fiscal year as c…
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+ (28) ‘qualified domestic top-up tax’ means a top-up tax that is implemented in the domestic law of a jurisdiction provided that such jurisdiction does not provide any benefits that are related to those rules, and that: (a) provides for the determination of the excess profits of the constituent entit…
− | (28) | ‘qualified domestic top-up tax’ means a top-up tax that is implemented in the domestic law of a jurisdiction provided that such jurisdiction does not provide any benefits that are related to those rules, and that:(a)provides for the determination of the excess profits of the constituent ent…
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− | (a) | provides for the determination of the excess profits of the constituent entities located in that jurisdiction in accordance with the rules laid down in this Directive or, as regards third-country jurisdictions, the OECD Model Rules and the application of the minimum tax rate to those excess …
− | (b) | is administered in a way that is consistent with the rules laid down in this Directive or, as regards third-country jurisdictions, the OECD Model Rules; |
+ (29) ‘net book value of tangible assets’ means the average of the beginning and end values of tangible assets after taking into account accumulated depreciation, depletion and impairment, as recorded in the financial statements;
− | (29) | ‘net book value of tangible assets’ means the average of the beginning and end values of tangible assets after taking into account accumulated depreciation, depletion and impairment, as recorded in the financial statements; |
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+ (30) ‘investment entity’ means: (a) an investment fund or a real estate investment vehicle; (b) an entity that is at least 95 % owned directly by an entity referred to in point (a) or through a chain of such entities and that operates exclusively or almost exclusively to hold assets or invest funds …
− | (30) | ‘investment entity’ means:(a)an investment fund or a real estate investment vehicle;(b)an entity that is at least 95 % owned directly by an entity referred to in point (a) or through a chain of such entities and that operates exclusively or almost exclusively to hold assets or invest funds …
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− | (a) | an investment fund or a real estate investment vehicle; |
− | (b) | an entity that is at least 95 % owned directly by an entity referred to in point (a) or through a chain of such entities and that operates exclusively or almost exclusively to hold assets or invest funds for their benefit; or |
− | (c) | an entity where a minimum of 85 % of the value of the entity is owned by an entity referred to in point (a), provided that substantially all of its income is derived from dividends or equity gains or losses that are excluded from the computation of the qualifying income or loss for the purpo…
+ (31) ‘investment fund’ means an entity or arrangement that meets all the following conditions: (a) it is designed to pool financial or non-financial assets from a number of investors, some of which are non-connected; (b) it invests in accordance with a defined investment policy; (c) it allows invest…
− | (31) | ‘investment fund’ means an entity or arrangement that meets all the following conditions:(a)it is designed to pool financial or non-financial assets from a number of investors, some of which are non-connected;(b)it invests in accordance with a defined investment policy;(c)it allows investor…
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− | (a) | it is designed to pool financial or non-financial assets from a number of investors, some of which are non-connected; |
− | (b) | it invests in accordance with a defined investment policy; |
− | (c) | it allows investors to reduce transaction, research and analytical costs or to spread risk collectively; |
− | (d) | it is primarily designed to generate investment income or gains, or protection against a particular or general event or outcome; |
− | (e) | its investors have a right to return from the assets of the fund or income earned on those assets, based on the contribution they made; |
− | (f) | it, or its management, is subject to the regulatory regime, including appropriate anti-money laundering and investor protection regulation, for investment funds in the jurisdiction in which it is established or managed; and |
− | (g) | it is managed by investment fund management professionals on behalf of the investors; |
+ (32) ‘real estate investment vehicle’ means a widely held entity that holds predominantly immovable property and that is subject to a single level of taxation, either in its hands or in the hands of its interest holders, with at most one year of deferral;
− | (32) | ‘real estate investment vehicle’ means a widely held entity that holds predominantly immovable property and that is subject to a single level of taxation, either in its hands or in the hands of its interest holders, with at most one year of deferral; |
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+ (33) ‘pension fund’ means: (a) an entity that is established and operated in a jurisdiction exclusively or almost exclusively to administer or provide retirement benefits and ancillary or incidental benefits to individuals where: (i) that entity is regulated as such by that jurisdiction or one of it…
− | (33) | ‘pension fund’ means:(a)an entity that is established and operated in a jurisdiction exclusively or almost exclusively to administer or provide retirement benefits and ancillary or incidental benefits to individuals where:(i)that entity is regulated as such by that jurisdiction or one of it…
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− | (a) | an entity that is established and operated in a jurisdiction exclusively or almost exclusively to administer or provide retirement benefits and ancillary or incidental benefits to individuals where:(i)that entity is regulated as such by that jurisdiction or one of its political subdivisions …
− | (i) | that entity is regulated as such by that jurisdiction or one of its political subdivisions or local authorities; or |
− | (ii) | those benefits are secured or otherwise protected by national regulations and funded by a pool of assets held through a fiduciary arrangement or trustor to secure the fulfilment of the corresponding pension obligations against a case of insolvency of the MNE group and large-scale domestic g…
− | (b) | a pension services entity; |
+ (34) ‘pension services entity’ means an entity that is established and operated exclusively or almost exclusively to invest funds for the benefit of entities referred to in point (33)(a) or to carry out activities that are ancillary to the regulated activities referred to in point (33)(a), provided …
− | (34) | ‘pension services entity’ means an entity that is established and operated exclusively or almost exclusively to invest funds for the benefit of entities referred to in point (33)(a) or to carry out activities that are ancillary to the regulated activities referred to in point (33)(a), provi…
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+ (35) ‘low-tax jurisdiction’ means, in respect of an MNE group or a large-scale domestic group in any fiscal year, a Member State or a third-country jurisdiction in which the MNE group or the large-scale domestic group has a qualifying income and is subject to an effective tax rate which is lower tha…
− | (35) | ‘low-tax jurisdiction’ means, in respect of an MNE group or a large-scale domestic group in any fiscal year, a Member State or a third-country jurisdiction in which the MNE group or the large-scale domestic group has a qualifying income and is subject to an effective tax rate which is lower…
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+ (36) ‘qualifying income or loss’ means the financial accounting net income or loss of a constituent entity adjusted in accordance with the rules set out in Chapters III, VI and VII;
− | (36) | ‘qualifying income or loss’ means the financial accounting net income or loss of a constituent entity adjusted in accordance with the rules set out in Chapters III, VI and VII; |
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+ (37) ‘disqualified refundable imputation tax’ means any tax, other than a qualified imputation tax, accrued or paid by a constituent entity that is: (a) refundable to the beneficial owner of a dividend distributed by such constituent entity in respect of that dividend or creditable by the beneficial…
− | (37) | ‘disqualified refundable imputation tax’ means any tax, other than a qualified imputation tax, accrued or paid by a constituent entity that is:(a)refundable to the beneficial owner of a dividend distributed by such constituent entity in respect of that dividend or creditable by the benefici…
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− | (a) | refundable to the beneficial owner of a dividend distributed by such constituent entity in respect of that dividend or creditable by the beneficial owner against a tax liability other than a tax liability in respect of such dividend; or |
− | (b) | refundable to the distributing company upon distribution of a dividend to a shareholder; |
− | (a) | by a jurisdiction other than the jurisdiction which imposed the covered taxes; |
− | (b) | to a beneficial owner of the dividend that is subject to tax at a nominal rate that equals or exceeds the minimum tax rate on the dividend received under the domestic law of the jurisdiction which imposed the covered taxes on the constituent entity; |
− | (c) | to an individual who is the beneficial owner of the dividend and tax resident in the jurisdiction which imposed the covered taxes on the constituent entity and who is subject to tax at a nominal rate that equals or exceeds the standard tax rate applicable to ordinary income; or |
− | (d) | to a governmental entity, an international organisation, a resident non-profit organisation, a resident pension fund, a resident investment entity that is not part of the MNE group or the large-scale domestic group, or a resident life insurance company to the extent that the dividend is rece…
− | (i) | a non-profit organisation or pension fund is resident in a jurisdiction if it is created and managed in that jurisdiction; |
− | (ii) | an investment entity is resident in a jurisdiction if it is created and regulated in that jurisdiction; |
− | (iii) | a life insurance company is resident in the jurisdiction in which it is located; |
+ (38) ‘qualified refundable tax credit’ means: (a) a refundable tax credit designed in such a way that it is to be paid as a cash payment or a cash equivalent to a constituent entity within four years from the date when the constituent entity is entitled to receive the refundable tax credit under the…
− | (38) | ‘qualified refundable tax credit’ means:(a)a refundable tax credit designed in such a way that it is to be paid as a cash payment or a cash equivalent to a constituent entity within four years from the date when the constituent entity is entitled to receive the refundable tax credit under t…
− | --- | --- |
− | (a) | a refundable tax credit designed in such a way that it is to be paid as a cash payment or a cash equivalent to a constituent entity within four years from the date when the constituent entity is entitled to receive the refundable tax credit under the laws of the jurisdiction granting the cre…
− | (b) | if the tax credit is refundable in part, the portion of the refundable tax credit that is payable as a cash payment or a cash equivalent to a constituent entity within four years from the date when the constituent entity is entitled to receive the partial refundable tax credit; |
+ (39) ‘non-qualified refundable tax credit’ means a tax credit that is a not a qualified refundable tax credit but that is refundable in whole or in part;
− | (39) | ‘non-qualified refundable tax credit’ means a tax credit that is a not a qualified refundable tax credit but that is refundable in whole or in part; |
− | --- | --- |
+ (40) ‘main entity’ means an entity that includes the financial accounting net income or loss of a permanent establishment in its financial statements;
− | (40) | ‘main entity’ means an entity that includes the financial accounting net income or loss of a permanent establishment in its financial statements; |
− | --- | --- |
+ (41) ‘constituent entity-owner’ means a constituent entity that owns, directly or indirectly, an ownership interest in another constituent entity of the same MNE group or large-scale domestic group;
− | (41) | ‘constituent entity-owner’ means a constituent entity that owns, directly or indirectly, an ownership interest in another constituent entity of the same MNE group or large-scale domestic group; |
− | --- | --- |
+ (42) ‘eligible distribution tax system’ means a corporate income tax system that: (a) imposes income tax on profits only when those profits are distributed or deemed to be distributed to shareholders, or when the company incurs certain non-business expenses; (b) imposes tax at a rate equal to, or in…
− | (42) | ‘eligible distribution tax system’ means a corporate income tax system that:(a)imposes income tax on profits only when those profits are distributed or deemed to be distributed to shareholders, or when the company incurs certain non-business expenses;(b)imposes tax at a rate equal to, or in…
− | --- | --- |
− | (a) | imposes income tax on profits only when those profits are distributed or deemed to be distributed to shareholders, or when the company incurs certain non-business expenses; |
− | (b) | imposes tax at a rate equal to, or in excess of, the minimum tax rate; and |
− | (c) | was in force on or before 1 July 2021; |
+ (43) ‘qualified UTPR’ means a set of rules implemented in the domestic law of a jurisdiction, provided that such jurisdiction does not provide any benefits that are related to those rules, and that: (a) is equivalent to the rules laid down in this Directive or, as regards third-country jurisdictions…
− | (43) | ‘qualified UTPR’ means a set of rules implemented in the domestic law of a jurisdiction, provided that such jurisdiction does not provide any benefits that are related to those rules, and that:(a)is equivalent to the rules laid down in this Directive or, as regards third-country jurisdictio…
− | --- | --- |
− | (a) | is equivalent to the rules laid down in this Directive or, as regards third-country jurisdictions, the OECD Model Rules, in accordance with which a jurisdiction collects its allocable share of top-up tax of an MNE group that was not charged under the IIR in respect of the low-taxed constitue…
− | (b) | is administered in a way that is consistent with the rules laid down in this Directive or, as regards third-country jurisdictions, the OECD Model Rules; |
+ (44) ‘designated filing entity’ means the constituent entity, other than the ultimate parent entity, that has been appointed by the MNE group or large-scale domestic group to fulfil the filing obligations set out in Article 44 on behalf of the MNE group or the large-scale domestic group.
− | (44) | ‘designated filing entity’ means the constituent entity, other than the ultimate parent entity, that has been appointed by the MNE group or large-scale domestic group to fulfil the filing obligations set out in Article 44 on behalf of the MNE group or the large-scale domestic group. |
− | --- | --- |
+ ### Article 4 — Location of a constituent entity
− ### art_4
+ **1.** For the purposes of this Directive, an entity other than a flow-through entity shall be determined to be located in the jurisdiction where it is considered to be resident for tax purposes based on its place of management, its place of creation or similar criteria.
− Article 4
− 1. For the purposes of this Directive, an entity other than a flow-through entity shall be determined to be located in the jurisdiction where it is considered to be resident for tax purposes based on its place of management, its place of creation or similar criteria.
− 
+ **2.** A flow-through entity shall be considered to be stateless, unless it is the ultimate parent entity of an MNE group or of a large-scale domestic group or it is required to apply an IIR in accordance with Articles 5, 6, 7 and 8, in which case the flow-through entity shall be deemed to be locate…
− 2. A flow-through entity shall be considered to be stateless, unless it is the ultimate parent entity of an MNE group or of a large-scale domestic group or it is required to apply an IIR in accordance with Articles 5, 6, 7 and 8, in which case the flow-through entity shall be deemed to be located in…
+ **3.** A permanent establishment as defined in Article 3, point (13)(a), shall be determined to be located in the jurisdiction where it is treated as a permanent establishment and is liable to tax under the applicable tax treaty.
− 3. A permanent establishment as defined in Article 3, point (13)(a), shall be determined to be located in the jurisdiction where it is treated as a permanent establishment and is liable to tax under the applicable tax treaty.
+ **4.** Where a constituent entity is located in two jurisdictions and those jurisdictions have an applicable tax treaty, the constituent entity shall be deemed to be located in the jurisdiction where it is considered to be resident for tax purposes under that tax treaty.
− 4. Where a constituent entity is located in two jurisdictions and those jurisdictions have an applicable tax treaty, the constituent entity shall be deemed to be located in the jurisdiction where it is considered to be resident for tax purposes under that tax treaty.
+ **5.** Where a constituent entity is located in two jurisdictions and those jurisdictions do not have an applicable tax treaty, the constituent entity shall be deemed to be located in the jurisdiction which charged the higher amount of covered taxes for the fiscal year.
− 5. Where a constituent entity is located in two jurisdictions and those jurisdictions do not have an applicable tax treaty, the constituent entity shall be deemed to be located in the jurisdiction which charged the higher amount of covered taxes for the fiscal year.
+ **6.** Where, as a result of applying paragraphs 4 and 5, a parent entity is located in a jurisdiction where it is not subject to a qualified IIR, it shall be deemed to be subject to the qualified IIR of the other jurisdiction, unless an applicable tax treaty prohibits the application of such rule.
− 6. Where, as a result of applying paragraphs 4 and 5, a parent entity is located in a jurisdiction where it is not subject to a qualified IIR, it shall be deemed to be subject to the qualified IIR of the other jurisdiction, unless an applicable tax treaty prohibits the application of such rule.
+ **7.** Where a constituent entity changes its location in the course of a fiscal year, it shall be deemed to be located in the jurisdiction where it was deemed to be located under this Article at the beginning of that fiscal year.
− 7. Where a constituent entity changes its location in the course of a fiscal year, it shall be deemed to be located in the jurisdiction where it was deemed to be located under this Article at the beginning of that fiscal year.
+ ## CHAPTER II — IIR AND UTPR
− ### art_5
+ ### Article 5 — Ultimate parent entity in the Union
− Article 5
+ **1.** Member States shall ensure that an ultimate parent entity that is a constituent entity located in a Member State is subject to the top-up tax (the ‘IIR top-up tax’) for the fiscal year in respect of its low-taxed constituent entities that are located in another jurisdiction or that are statel…
− 1. Member States shall ensure that an ultimate parent entity that is a constituent entity located in a Member State is subject to the top-up tax (the ‘IIR top-up tax’) for the fiscal year in respect of its low-taxed constituent entities that are located in another jurisdiction or that are stateless.
+ **2.** Member States shall ensure that, where a constituent entity that is the ultimate parent entity of an MNE group or of a large-scale domestic group is located in a Member State that is a low-tax jurisdiction, it is subject to the IIR top-up tax in respect of itself and of all low-taxed constitu…
− 2. Member States shall ensure that, where a constituent entity that is the ultimate parent entity of an MNE group or of a large-scale domestic group is located in a Member State that is a low-tax jurisdiction, it is subject to the IIR top-up tax in respect of itself and of all low-taxed constituent …
+ ### Article 6 — Intermediate parent entity in the Union
− ### art_6
+ **1.** Member States shall ensure that an intermediate parent entity located in a Member State and held by an ultimate parent entity that is located in a third-country jurisdiction is subject to the IIR top-up tax for the fiscal year in respect of its low-taxed constituent entities that are located …
− Article 6
+ **2.** Member States shall ensure that, where an intermediate parent entity is located in a Member State that is a low-tax jurisdiction and held by an ultimate parent entity that is located in a third-country jurisdiction, it is subject to the IIR top-up tax in respect of itself and of its low-taxed…
− 1. Member States shall ensure that an intermediate parent entity located in a Member State and held by an ultimate parent entity that is located in a third-country jurisdiction is subject to the IIR top-up tax for the fiscal year in respect of its low-taxed constituent entities that are located in a…
+ **3.** Paragraphs 1 and 2 shall not apply where:(a) the ultimate parent entity is subject to a qualified IIR for that fiscal year; or(b) another intermediate parent entity is located in a jurisdiction where it is subject to a qualified IIR for that fiscal year and owns, directly or indirectly, a con…
− 2. Member States shall ensure that, where an intermediate parent entity is located in a Member State that is a low-tax jurisdiction and held by an ultimate parent entity that is located in a third-country jurisdiction, it is subject to the IIR top-up tax in respect of itself and of its low-taxed con…
+ ### Article 7 — Intermediate parent entity located in the Union and held by an excluded ultimate parent entity
− 3. Paragraphs 1 and 2 shall not apply where:
+ **1.** Member States shall ensure that, where an intermediate parent entity located in a Member State is held by an ultimate parent entity that is an excluded entity, it is subject to the IIR top-up tax for the fiscal year in respect of its low-taxed constituent entities that are located in another …
− | (a) | the ultimate parent entity is subject to a qualified IIR for that fiscal year; or |
− | --- | --- |
+ **2.** Member States shall ensure that, where an intermediate parent entity located in a Member State that is a low-tax jurisdiction is held by an ultimate parent entity that is an excluded entity, it is subject to the IIR top-up tax in respect of itself and its low-taxed constituent entities that a…
− | (b) | another intermediate parent entity is located in a jurisdiction where it is subject to a qualified IIR for that fiscal year and owns, directly or indirectly, a controlling interest in the intermediate parent entity. |
− | --- | --- |
+ **3.** Paragraphs 1 and 2 shall not apply where another intermediate parent entity is located in a jurisdiction where it is subject to a qualified IIR for that fiscal year and owns, directly or indirectly, a controlling interest in the intermediate parent entity referred to in paragraphs 1 and 2.
− ### art_7
+ ### Article 8 — Partially-owned parent entity in the Union
− Article 7
+ **1.** Member States shall ensure that a partially-owned parent entity located in a Member State is subject to the IIR top-up tax for the fiscal year in respect of its low-taxed constituent entities that are located in another jurisdiction or that are stateless.
− 1. Member States shall ensure that, where an intermediate parent entity located in a Member State is held by an ultimate parent entity that is an excluded entity, it is subject to the IIR top-up tax for the fiscal year in respect of its low-taxed constituent entities that are located in another juri…
+ **2.** Member States shall ensure that, where a partially-owned parent entity is located in a Member State that is a low-tax jurisdiction, it is subject to the IIR top-up tax in respect of itself and of its low-taxed constituent entities located in the same Member State for the fiscal year.
− 2. Member States shall ensure that, where an intermediate parent entity located in a Member State that is a low-tax jurisdiction is held by an ultimate parent entity that is an excluded entity, it is subject to the IIR top-up tax in respect of itself and its low-taxed constituent entities that are l…
+ **3.** Paragraphs 1 and 2 shall not apply where the ownership interests of the partially-owned parent entity are wholly held, directly or indirectly, by another partially-owned parent entity that is subject to a qualified IIR for that fiscal year.
− 3. Paragraphs 1 and 2 shall not apply where another intermediate parent entity is located in a jurisdiction where it is subject to a qualified IIR for that fiscal year and owns, directly or indirectly, a controlling interest in the intermediate parent entity referred to in paragraphs 1 and 2.
+ ### Article 9 — Allocation of the top-up tax under the IIR
− ### art_8
+ **1.** The IIR top-up tax due by a parent entity in respect of a low-taxed constituent entity pursuant to Article 5(1), Article 6(1), Article 7(1) and Article 8(1) shall be equal to the top-up tax of the low-taxed constituent entity, as computed in accordance with Article 27, multiplied by the paren…
− Article 8
− 
− 1. Member States shall ensure that a partially-owned parent entity located in a Member State is subject to the IIR top-up tax for the fiscal year in respect of its low-taxed constituent entities that are located in another jurisdiction or that are stateless.
− 
− 2. Member States shall ensure that, where a partially-owned parent entity is located in a Member State that is a low-tax jurisdiction, it is subject to the IIR top-up tax in respect of itself and of its low-taxed constituent entities located in the same Member State for the fiscal year.
− 
− 3. Paragraphs 1 and 2 shall not apply where the ownership interests of the partially-owned parent entity are wholly held, directly or indirectly, by another partially-owned parent entity that is subject to a qualified IIR for that fiscal year.
+ **2.** A parent entity’s allocable share in the top-up tax with respect to a low-taxed constituent entity shall be the proportion of the parent entity’s ownership interest in the qualifying income of the low-taxed constituent entity. That proportion shall be equal to the qualifying income of the low…
− ### art_9
− 
− Article 9
− 
− 1. The IIR top-up tax due by a parent entity in respect of a low-taxed constituent entity pursuant to Article 5(1), Article 6(1), Article 7(1) and Article 8(1) shall be equal to the top-up tax of the low-taxed constituent entity, as computed in accordance with Article 27, multiplied by the parent en…
− 
− 2. A parent entity’s allocable share in the top-up tax with respect to a low-taxed constituent entity shall be the proportion of the parent entity’s ownership interest in the qualifying income of the low-taxed constituent entity. That proportion shall be equal to the qualifying income of the low-tax…
+ (a) the parent entity had prepared consolidated financial statements in accordance with that accounting standard (the ‘hypothetical consolidated financial statements’);
− | (a) | the parent entity had prepared consolidated financial statements in accordance with that accounting standard (the ‘hypothetical consolidated financial statements’); |
− | --- | --- |
+ (b) the parent entity owned a controlling interest in the low-taxed constituent entity such that all of the income and expenses of the low-taxed constituent entity were consolidated on a line-by-line basis with those of the parent entity in the hypothetical consolidated financial statements;
− | (b) | the parent entity owned a controlling interest in the low-taxed constituent entity such that all of the income and expenses of the low-taxed constituent entity were consolidated on a line-by-line basis with those of the parent entity in the hypothetical consolidated financial statements; |
− | --- | --- |
+ (c) all of the low-taxed constituent entity’s qualifying income were attributable to transactions with persons that are not group entities; and
− | (c) | all of the low-taxed constituent entity’s qualifying income were attributable to transactions with persons that are not group entities; and |
− | --- | --- |
+ (d) all ownership interests not directly or indirectly held by the parent entity were held by persons other than group entities.
− | (d) | all ownership interests not directly or indirectly held by the parent entity were held by persons other than group entities. |
− | --- | --- |
+ **3.** In addition to the amount allocated to a parent entity in accordance with paragraph 1 of this Article, the IIR top-up tax due by a parent entity pursuant to Article 5(2), Article 6(2), Article 7(2) and Article 8(2) shall include, for the fiscal year, in accordance with Article 27:(a) the full…
− 3. In addition to the amount allocated to a parent entity in accordance with paragraph 1 of this Article, the IIR top-up tax due by a parent entity pursuant to Article 5(2), Article 6(2), Article 7(2) and Article 8(2) shall include, for the fiscal year, in accordance with Article 27:
+ ### Article 10 — IIR offset mechanism
− | (a) | the full amount of top-up tax computed for that parent entity; and |
− | --- | --- |
− 
− | (b) | the amount of top-up tax computed for its low-taxed constituent entities located in the same Member State multiplied by the parent entity’s allocable share in such top-up tax for the fiscal year. |
− | --- | --- |
− 
− ### art_10
− 
− Article 10
+ ### Article 11 — Election to apply a qualified domestic top-up tax
− ### art_11
+ **1.** Member States may elect to apply a qualified domestic top-up tax.
− Article 11
− 1. Member States may elect to apply a qualified domestic top-up tax.
− 
+ **2.** Where a parent entity of an MNE group or of a large-scale domestic group is located in a Member State, and its directly or indirectly held constituent entities located either in that Member State or in another jurisdiction are subject to a qualified domestic top-up tax for the fiscal year in …
− 2. Where a parent entity of an MNE group or of a large-scale domestic group is located in a Member State, and its directly or indirectly held constituent entities located either in that Member State or in another jurisdiction are subject to a qualified domestic top-up tax for the fiscal year in thos…
+ **3.** Where the amount of qualified domestic top-up tax for a fiscal year has not been paid within the four fiscal years following the fiscal year in which it was due, the amount of qualified domestic top-up tax that was not paid shall be added to the jurisdictional top-up tax computed in accordanc…
− 3. Where the amount of qualified domestic top-up tax for a fiscal year has not been paid within the four fiscal years following the fiscal year in which it was due, the amount of qualified domestic top-up tax that was not paid shall be added to the jurisdictional top-up tax computed in accordance wi…
+ **4.** Member States that elect to apply a qualified domestic top-up tax shall notify the Commission of that election within four months following the adoption of their national laws, regulations and administrative provisions introducing a qualified domestic top-up tax. Such election shall be valid …
− 4. Member States that elect to apply a qualified domestic top-up tax shall notify the Commission of that election within four months following the adoption of their national laws, regulations and administrative provisions introducing a qualified domestic top-up tax. Such election shall be valid and …
+ ### Article 12 — Application of a UTPR across the MNE group
− ### art_12
+ **1.** Where the ultimate parent entity of an MNE group is located in a third-country jurisdiction that does not apply a qualified IIR, or where the ultimate parent entity of an MNE group is an excluded entity, Member States shall ensure that the constituent entities located in the Union are subject…
− Article 12
− 1. Where the ultimate parent entity of an MNE group is located in a third-country jurisdiction that does not apply a qualified IIR, or where the ultimate parent entity of an MNE group is an excluded entity, Member States shall ensure that the constituent entities located in the Union are subject, in…
− 
+ **2.** Where a Member State applies the adjustment pursuant to paragraph 1 of this Article in the form of a denial of deduction against taxable income, such adjustment shall apply to the extent possible with respect to the taxable year in which the fiscal year for which the UTPR top-up tax amount wa…
− 2. Where a Member State applies the adjustment pursuant to paragraph 1 of this Article in the form of a denial of deduction against taxable income, such adjustment shall apply to the extent possible with respect to the taxable year in which the fiscal year for which the UTPR top-up tax amount was co…
+ **3.** Constituent entities that are investment entities shall not be subject to this Article.
− 3. Constituent entities that are investment entities shall not be subject to this Article.
+ ### Article 13 — Application of the UTPR in the jurisdiction of an ultimate parent entity
− ### art_13
+ **1.** Where the ultimate parent entity of an MNE group is located in a low-tax third country jurisdiction, Member States shall ensure that the constituent entities located in the Union are subject, in the Member State in which they are located, to an adjustment equal to the UTPR top-up tax amount a…
− Article 13
− 
− 1. Where the ultimate parent entity of an MNE group is located in a low-tax third country jurisdiction, Member States shall ensure that the constituent entities located in the Union are subject, in the Member State in which they are located, to an adjustment equal to the UTPR top-up tax amount alloc…
+ **2.** Where a Member State applies the adjustment pursuant to paragraph 1 of this Article in the form of a denial of deduction against taxable income, such adjustment shall apply to the extent possible with respect to the taxable year in which the fiscal year for which the UTPR top-up tax amount wa…
− 2. Where a Member State applies the adjustment pursuant to paragraph 1 of this Article in the form of a denial of deduction against taxable income, such adjustment shall apply to the extent possible with respect to the taxable year in which the fiscal year for which the UTPR top-up tax amount was co…
+ **3.** Constituent entities that are investment entities shall not be subject to this Article.
− 3. Constituent entities that are investment entities shall not be subject to this Article.
+ ### Article 14 — Computation and allocation of the UTPR top-up tax amount
− ### art_14
+ **1.** The UTPR top-up tax amount allocated to a Member State shall be computed by multiplying the total UTPR top-up tax, as determined in accordance with paragraph 2, by the Member State’s UTPR percentage, as determined in accordance with paragraph 5.
− Article 14
+ **2.** The total UTPR top-up tax for a fiscal year shall be equal to the sum of the top-up tax computed for each low-taxed constituent entity of the MNE group for that fiscal year in accordance with Article 27, subject to the adjustments set out in paragraphs 3 and 4 of this Article.
− 1. The UTPR top-up tax amount allocated to a Member State shall be computed by multiplying the total UTPR top-up tax, as determined in accordance with paragraph 2, by the Member State’s UTPR percentage, as determined in accordance with paragraph 5.
+ **3.** The UTPR top-up tax of a low-taxed constituent entity shall be equal to zero where, for the fiscal year, all of the ultimate parent entity’s ownership interests in such low-taxed constituent entity are held directly or indirectly by one or more parent entities that are required to apply a qua…
− 2. The total UTPR top-up tax for a fiscal year shall be equal to the sum of the top-up tax computed for each low-taxed constituent entity of the MNE group for that fiscal year in accordance with Article 27, subject to the adjustments set out in paragraphs 3 and 4 of this Article.
+ **4.** Where paragraph 3 does not apply, the UTPR top-up tax of a low-taxed constituent entity shall be reduced by a parent entity’s allocable share of the top-up tax of that low-taxed constituent entity that is brought into charge under qualified IIR.
− 3. The UTPR top-up tax of a low-taxed constituent entity shall be equal to zero where, for the fiscal year, all of the ultimate parent entity’s ownership interests in such low-taxed constituent entity are held directly or indirectly by one or more parent entities that are required to apply a qualifi…
+ **5.** A Member State’s UTPR percentage shall be computed, for each fiscal year and for each MNE group, according to the following formula:where:(a) the number of employees in the Member State is the total number of employees of all the constituent entities of the MNE group located in that Member St…
− 4. Where paragraph 3 does not apply, the UTPR top-up tax of a low-taxed constituent entity shall be reduced by a parent entity’s allocable share of the top-up tax of that low-taxed constituent entity that is brought into charge under qualified IIR.
+ **6.** The number of employees shall be the number of employees on a full-time equivalent basis of all constituent entities located in the relevant jurisdiction, including independent contractors provided that they participate in the ordinary operating activities of the constituent entity.
− 5. A Member State’s UTPR percentage shall be computed, for each fiscal year and for each MNE group, according to the following formula:
− 
− where:
− 
− | (a) | the number of employees in the Member State is the total number of employees of all the constituent entities of the MNE group located in that Member State; |
− | --- | --- |
− 
− | (b) | the number of employees in all UTPR jurisdictions is the total number of employees of all the constituent entities of the MNE group located in a jurisdiction that has a qualified UTPR in force for the fiscal year; |
− | --- | --- |
− 
− | (c) | the total value of tangible assets in the Member State is the sum of the net book value of tangible assets of all the constituent entities of the MNE group located in that Member State; |
− | --- | --- |
− 
− | (d) | the total value of tangible assets in all UTPR jurisdictions is the sum of the net book value of tangible assets of all the constituent entities of the MNE group located in a jurisdiction that has a qualified UTPR in force for the fiscal year. |
− | --- | --- |
− 6. The number of employees shall be the number of employees on a full-time equivalent basis of all constituent entities located in the relevant jurisdiction, including independent contractors provided that they participate in the ordinary operating activities of the constituent entity.
− 
+ **7.** The employees whose payroll costs are included in the separate financial accounts of a permanent establishment as determined by Article 18(1) and adjusted in accordance with Article 18(2) shall be allocated to the jurisdiction in which the permanent establishment is located.
− 7. The employees whose payroll costs are included in the separate financial accounts of a permanent establishment as determined by Article 18(1) and adjusted in accordance with Article 18(2) shall be allocated to the jurisdiction in which the permanent establishment is located.
+ **8.** By way of derogation from paragraph 5, a jurisdiction’s UTPR percentage for an MNE group shall be deemed to be zero for a fiscal year as long as the UTPR top-up tax amount allocated to that jurisdiction in a prior fiscal year has not resulted in the constituent entities of that MNE group loca…
− 8. By way of derogation from paragraph 5, a jurisdiction’s UTPR percentage for an MNE group shall be deemed to be zero for a fiscal year as long as the UTPR top-up tax amount allocated to that jurisdiction in a prior fiscal year has not resulted in the constituent entities of that MNE group located …
+ **9.** Paragraph 8 shall not apply for a fiscal year if all jurisdictions with a qualified UTPR in force for the fiscal year have a UTPR percentage of zero for the MNE group for that fiscal year.
− 9. Paragraph 8 shall not apply for a fiscal year if all jurisdictions with a qualified UTPR in force for the fiscal year have a UTPR percentage of zero for the MNE group for that fiscal year.
+ ## CHAPTER III — COMPUTATION OF THE QUALIFYING INCOME OR LOSS
− ### art_15
+ ### Article 15 — Determination of the qualifying income or loss
− Article 15
+ **1.** The qualifying income or loss of a constituent entity shall be computed by making the adjustments set out in Articles 16 to 19 to the financial accounting net income or loss of the constituent entity for the fiscal year before any consolidation adjustments for eliminating intra-group transact…
− 1. The qualifying income or loss of a constituent entity shall be computed by making the adjustments set out in Articles 16 to 19 to the financial accounting net income or loss of the constituent entity for the fiscal year before any consolidation adjustments for eliminating intra-group transactions…
+ **2.** Where it is not reasonably practicable to determine the financial accounting net income or loss of a constituent entity based on the acceptable financial accounting standard or authorised financial accounting standard used in the preparation of the consolidated financial statements of the ult…
− 2. Where it is not reasonably practicable to determine the financial accounting net income or loss of a constituent entity based on the acceptable financial accounting standard or authorised financial accounting standard used in the preparation of the consolidated financial statements of the ultimat…
+ **3.** Where an ultimate parent entity has not prepared its consolidated financial statements in accordance with an acceptable financial accounting standard as referred to in Article 3, point (6)(c), the consolidated financial statements of the ultimate parent entity shall be adjusted to prevent any…
− | (a) | the financial accounts of the constituent entity are maintained based on that accounting standard; |
− | --- | --- |
+ **4.** Where an ultimate parent entity does not prepare consolidated financial statements as referred to in Article 3, points (6)(a), (b) and (c), the consolidated financial statements of the ultimate parent entity referred to in Article 3, point (6)(d), shall be those that would have been prepared …
− | (b) | the information contained in the financial accounts is reliable; and |
− | --- | --- |
+ **5.** Where a qualified domestic top-up tax is applied by a Member State or a third-country jurisdiction, the financial accounting net income or loss of the constituent entities located in that Member State or third-country jurisdiction may be determined in accordance with an acceptable financial a…
− | (c) | permanent differences in excess of EUR 1 000 000 that arise from the application of a particular principle or standard to items of income or expense or transactions, where that principle or standard differs from the financial standard used in the preparation of the consolidated financial sta…
− | --- | --- |
+ **6.** Where the application of a specific principle or procedure under a set of generally accepted accounting principles results in a material competitive distortion, the accounting treatment of any item or transaction subject to that principle or procedure shall be adjusted to conform to the treat…
− 3. Where an ultimate parent entity has not prepared its consolidated financial statements in accordance with an acceptable financial accounting standard as referred to in Article 3, point (6)(c), the consolidated financial statements of the ultimate parent entity shall be adjusted to prevent any mat…
+ ### Article 16 — Adjustments to determine the qualifying income or loss
− 4. Where an ultimate parent entity does not prepare consolidated financial statements as referred to in Article 3, points (6)(a), (b) and (c), the consolidated financial statements of the ultimate parent entity referred to in Article 3, point (6)(d), shall be those that would have been prepared if t…
+ **1.** For the purposes of this Article, the following definitions apply:(a) ‘net taxes expense’ means the net amount of the following items:(i) covered taxes accrued as an expense and any current and deferred covered taxes included in the income tax expense, including covered taxes on income that i…
− | (a) | an acceptable financial accounting standard; or |
− | --- | --- |
+ **2.** The financial accounting net income or loss of a constituent entity shall be adjusted by the amount of the following items to determine its qualifying income or loss:(a) net taxes expenses;(b) excluded dividends;(c) excluded equity gains or losses;(d) included revaluation method gains or loss…
− | (b) | an authorised financial accounting standard, provided that such consolidated financial statements are adjusted to prevent any material competitive distortion. |
− | --- | --- |
− 
− 5. Where a qualified domestic top-up tax is applied by a Member State or a third-country jurisdiction, the financial accounting net income or loss of the constituent entities located in that Member State or third-country jurisdiction may be determined in accordance with an acceptable financial accou…
+ **3.** At the election of the filing constituent entity, a constituent entity may substitute the amount allowed as a deduction for the computation of its taxable income in its location for the amount expensed in its financial accounts for a cost or expense of such constituent entity that was paid wi…
− 6. Where the application of a specific principle or procedure under a set of generally accepted accounting principles results in a material competitive distortion, the accounting treatment of any item or transaction subject to that principle or procedure shall be adjusted to conform to the treatment…
− 
− ### art_16
− Article 16
− 
− 1. For the purposes of this Article, the following definitions apply:
− 
− | (a) | ‘net taxes expense’ means the net amount of the following items:(i)covered taxes accrued as an expense and any current and deferred covered taxes included in the income tax expense, including covered taxes on income that is excluded from the qualifying income or loss computation;(ii)deferred…
− | --- | --- |
− | (i) | covered taxes accrued as an expense and any current and deferred covered taxes included in the income tax expense, including covered taxes on income that is excluded from the qualifying income or loss computation; |
− | (ii) | deferred tax assets attributable to a loss for the fiscal year; |
− | (iii) | qualified domestic top-up taxes accrued as an expense; |
− | (iv) | taxes arising pursuant to the rules of this Directive or, as regards third-country jurisdictions, the OECD Model Rules, accrued as an expense; and |
− | (v) | disqualified refundable imputation taxes accrued as an expense; |
− 
− | (b) | ‘excluded dividend’ means a dividend or other distribution received or accrued in respect of an ownership interest, except a dividend or other distribution received or accrued in respect of:(i)an ownership interest:—held by the group in an entity, that carries rights to less than 10 % of the…
− | --- | --- |
− | (i) | an ownership interest:—held by the group in an entity, that carries rights to less than 10 % of the profits, capital or reserves, or voting rights of that entity at the date of the distribution or disposition (a ‘portfolio shareholding’); and—that is economically owned by the constituent ent…
− | — | held by the group in an entity, that carries rights to less than 10 % of the profits, capital or reserves, or voting rights of that entity at the date of the distribution or disposition (a ‘portfolio shareholding’); and |
− | — | that is economically owned by the constituent entity that receives or accrues the dividend or other distribution for less than one year at the date of the distribution; |
− | (ii) | an ownership interest in an investment entity that is subject to an election pursuant to Article 43; |
− 
− | (c) | ‘excluded equity gain or loss’ means a gain, profit or loss, included in the financial accounting net income or loss of the constituent entity, arising from:(i)gains and losses arising from changes in the fair value of an ownership interest, except for a portfolio shareholding;(ii)profits or…
− | --- | --- |
− | (i) | gains and losses arising from changes in the fair value of an ownership interest, except for a portfolio shareholding; |
− | (ii) | profits or losses in respect of an ownership interest that is included under the equity method of accounting; and |
− | (iii) | gains and losses from the disposal of an ownership interest, except for the disposal of a portfolio shareholding; |
− 
− | (d) | ‘included revaluation method gain or loss’ means a net gain or loss, increased or decreased by any associated covered taxes for the fiscal year, arising from the application of an accounting method or practice that, in respect of all property, plant and equipment:(i)periodically adjusts the …
− | --- | --- |
− | (i) | periodically adjusts the carrying value of such property, plant and equipment to its fair value; |
− | (ii) | records the changes in value in other comprehensive income; and |
− | (iii) | does not subsequently report the gain or loss accrued in other comprehensive income through profit and loss; |
− 
− | (e) | ‘asymmetric foreign currency gain or loss’ means a foreign currency gain or loss of an entity whose accounting and tax functional currencies are different and that is:(i)included in the computation of the taxable income or loss of a constituent entity and that is attributable to fluctuations…
− | --- | --- |
− | (i) | included in the computation of the taxable income or loss of a constituent entity and that is attributable to fluctuations in the exchange rate between the accounting functional currency and the tax functional currency of the constituent entity; |
− | (ii) | included in the computation of the financial accounting net income or loss of a constituent entity and that is attributable to fluctuations in the exchange rate between the accounting functional currency and the tax functional currency of the constituent entity; |
− | (iii) | included in the computation of the financial accounting net income or loss of a constituent entity and that is attributable to fluctuations in the exchange rate between a third foreign currency and the accounting functional currency of the constituent entity; and |
− | (iv) | attributable to fluctuations in the exchange rate between a third foreign currency and the tax functional currency of the constituent entity, irrespective of whether such third foreign currency gain or loss is included in the taxable income; |
− 
− | (f) | ‘policy disallowed expense’ means:(i)an expense accrued by the constituent entity for illegal payments, including bribes and kickbacks; and(ii)an expense accrued by the constituent entity for fines and penalties that equal or exceed EUR 50 000 or an equivalent amount in the functional curren…
− | --- | --- |
− | (i) | an expense accrued by the constituent entity for illegal payments, including bribes and kickbacks; and |
− | (ii) | an expense accrued by the constituent entity for fines and penalties that equal or exceed EUR 50 000 or an equivalent amount in the functional currency in which the financial accounting net income or loss of the constituent entity is computed; |
− 
− | (g) | ‘prior period errors and changes in accounting principles’ means a change in the opening equity of a constituent entity at the beginning of a fiscal year that is attributable to:(i)a correction of an error in the determination of the financial accounting net income or loss in a previous fisc…
− | --- | --- |
− | (i) | a correction of an error in the determination of the financial accounting net income or loss in a previous fiscal year that affected the income or expenses able to be included in the computation of the qualifying income or loss in that previous fiscal year, except to the extent such correcti…
− | (ii) | a change in accounting principles or policy that affected the income or expenses included in the computation of the qualifying income or loss; |
− 
− | (h) | ‘accrued pension expense’ means the difference between the amount of pension liability expense included in the financial accounting net income or loss and the amount contributed to a pension fund for the fiscal year. |
− | --- | --- |
− 
− 2. The financial accounting net income or loss of a constituent entity shall be adjusted by the amount of the following items to determine its qualifying income or loss:
− 
− | (a) | net taxes expenses; |
− | --- | --- |
− 
− | (b) | excluded dividends; |
… diff truncated at 500 changed lines …