Finance (No. 2) Act 2023

Type Act

Publication 2023-12-18

State In force

Source Irish Statute Book

articles 102

(c) Where there is an adjustment to covered taxes in accordance with paragraph (b), the qualifying income for that fiscal year and any previous fiscal years shall be adjusted accordingly.

(d) On the making of an election by a filing constituent entity in accordance with section 111AAAD, where there is an aggregate decrease of less than €1,000,000 in the adjusted covered taxes determined for a jurisdiction for the fiscal year in accordance with paragraph (b), the decrease in covered taxes shall be treated as an adjustment to covered taxes in the fiscal year in which the adjustment is made.

(2) Where in a fiscal year the applicable domestic tax rate is reduced below the minimum tax rate, and such reduction results in a deferred tax expense in the financial accounts of a constituent entity for a fiscal year, the amount of the resulting deferred tax expense shall be treated as an adjustment to the constituent entity’s liability for covered taxes, that are taken into consideration pursuant to section 111U, for a previous fiscal year in accordance with subsection (1).

(3) (a) Where a deferred tax expense was recorded in the financial accounts of a constituent entity at a rate lower than the minimum tax rate, and the applicable tax rate is increased in a subsequent fiscal year, the amount of deferred tax expense that results from such increase shall be treated, upon payment of the related tax, as an adjustment to a constituent entity’s liability for covered taxes claimed for the previous fiscal year in which the deferred tax expense was recorded in accordance with subsection (1).

(b) The adjustment under paragraph (a) shall not exceed an amount equal to the deferred tax expense recalculated at the minimum tax rate.

(4) Where more than €1,000,000 of the amount accrued by a constituent entity as current tax expense, and included in adjusted covered taxes for a fiscal year, is not paid within 3 years after the end of that fiscal year, the effective tax rate and top-up tax for the fiscal year in which the unpaid amount was included as a covered tax shall be recalculated in accordance with section 111AF, by excluding such unpaid amount from the adjusted covered taxes.

CHAPTER 5

Calculation of the effective tax rate and the top-up tax

Determination of effective tax rate

111AC. (1) The effective tax rate of an MNE group or large-scale domestic group shall be calculated for—

(a) each fiscal year, and

(b) each jurisdiction,

provided that there is net qualifying income in the jurisdiction, as calculated in accordance with subsection (3).

(2) For the purpose of this Part, the effective tax rate of an MNE group or large-scale domestic group for a jurisdiction for a fiscal year, shall be calculated as follows:

ACJ / NQI

where—

ACJ is the aggregate adjusted covered taxes of all the constituent entities located in the jurisdiction, and

NQI is the positive amount, if any, of the net qualifying income of all the constituent entities located in the jurisdiction determined in accordance with subsection (3).

(3) The net qualifying income or loss of the constituent entities located in a jurisdiction for a fiscal year shall be calculated as follows:

AQI-AQL

where—

AQI is the positive sum, if any, of the qualifying income of all constituent entities located in the jurisdiction for a fiscal year, and

QL is the sum of the qualifying losses of all constituent entities located in the jurisdiction for a fiscal year.

(4) For the purposes of subsections (2) and (3), the adjusted covered taxes and net qualifying income or loss of constituent entities, that are investment entities, are excluded from the calculation of the effective tax rate in accordance with subsection (2) and the calculation of the net qualifying income in accordance with subsection (3).

(5) The effective tax rate of each stateless constituent entity shall be calculated, for each fiscal year, separately from the effective tax rate of all other constituent entities.

Calculation of top-up tax

111AD. (1) Where the effective tax rate of a jurisdiction in which a constituent entity is located is below the minimum tax rate for a fiscal year, the MNE group or large-scale domestic group shall calculate a top-up tax in accordance with this section separately for each of its constituent entities that has qualifying income included in the calculation of net qualifying income of that jurisdiction for the fiscal year.

(2) The top-up tax percentage for a jurisdiction for a fiscal year, shall be the positive percentage point difference, if any, calculated as follows:

MTR ETR

where—

MTR is the minimum tax rate, and

ETR is the effective tax rate of the jurisdiction for the fiscal year calculated in accordance with section 111AC.

(3) The jurisdictional top-up tax for a fiscal year shall be the positive amount, if any, calculated as follows:

(TUTP x EP) + ATUJ D

where—

TUTP is the top-up tax percentage for the jurisdiction for a fiscal year determined in accordance with subsection (2),

EP is the excess profit determined for the jurisdiction for a fiscal year in accordance with subsection (4),

ATUJ is the additional top-up tax for the jurisdiction for a fiscal year determined in accordance with section 111AF, and

D is the amount of qualified domestic top-up tax payable for the jurisdiction for the fiscal year.

(4) The excess profit for the jurisdiction for the fiscal year referred to in subsection (3), is the positive amount, if any, calculated as follows:

NQI SBIE

where—

NQI is the positive amount, if any, of the net qualifying income of all the constituent entities in the jurisdiction determined in accordance with section 111AC(3), and

SBIE is the substance-based income exclusion amount for the jurisdiction for the fiscal year determined in accordance with section 111AE.

(5) Subject to subsection (6), the top-up tax of a constituent entity for a fiscal year shall be calculated as follows:

JTUT x (QI / AQI)

where—

JTUT is the jurisdictional top-up tax for a fiscal year as determined by subsection (3),

QI is the qualifying income of the constituent entity for a jurisdiction for a fiscal year, and

AQI is the sum, if any, of the qualifying income of all the constituent entities for a fiscal year located in the jurisdiction.

(6) Where—

(a) the jurisdictional top-up tax for a fiscal year is a result of a recalculation to which section 111AF applies, and

(b) there is no net qualifying income in respect of the jurisdiction for the fiscal year,

the top-up tax shall be allocated to each constituent entity using the calculation provided for in subsection (5), based on the qualifying income of the constituent entities in the fiscal year, for which the recalculations pursuant to section 111AF are performed.

(7) The top-up tax of each stateless constituent entity shall be calculated, for each fiscal year, separately from the top-up tax of all other constituent entities.

Substance-based income exclusion 111AE. (1) In this section—

‘eligible employees’ means—

(a) full-time or part-time employees of a constituent entity, and

(b) independent contractors participating in the ordinary operating activities of the MNE group or large-scale domestic group under the direction and control of the MNE group or large-scale domestic group;

‘eligible payroll costs’ means employee compensation expenditures, including—

(a) salaries,

(b) wages,

(c) other expenditures that provide a direct and separate personal benefit to the employee, including health insurance, pension contributions and stock-based compensation,

(d) payroll and employment taxes, and

(e) employer social security contributions; ‘eligible tangible assets’ means—

(a) property, plant and equipment located in the jurisdiction,

(b) natural resources located in the jurisdiction,

(d) a licence or similar arrangement from the government for the use of immovable property or exploitation of natural resources that entails significant investment in tangible assets.

(2) (a) Subject to paragraph (b), for the purposes of calculating the top-up tax for a jurisdiction for a fiscal year, the net qualifying income for a jurisdiction shall be reduced by an amount not exceeding the sum of—

(i) the payroll carve-out calculated in accordance with subsection (3), and

(ii) the tangible asset carve-out calculated in accordance with subsection (4),

(in this Part referred to as the ‘substance-based income exclusion amount’) for each constituent entity located in the jurisdiction.

(b) Paragraph (a) shall not apply where a filing constituent entity elects, in accordance with section 111AAAD, not to apply the substance-based income exclusion for the fiscal year.

(3) (a) The payroll carve-out, referred to in subsection (2), of a constituent entity shall be equal to 5 per cent of its eligible payroll costs for a fiscal year, which relate to eligible employees, who perform activities for the MNE group or large-scale domestic group in the jurisdiction in which the constituent entity is located.

(b) For the purposes of paragraph (a), no account shall be taken of eligible payroll costs—

(i) capitalised and included in the carrying value of eligible tangible assets, or

(ii) attributable to income that is excluded in accordance with section 111Q.

(i) an eligible employee shall be considered to perform activities for the MNE group or large-scale domestic group, in the jurisdiction in which the constituent entity is located, where the eligible employee is located within that jurisdiction for greater than 50 per cent of their working time in a fiscal year, and

(ii) a constituent entity shall include only the proportionate share of the eligible payroll costs for a fiscal year for an eligible employee in the calculation of the payroll carve-out where that eligible employee is located within the jurisdiction of the constituent entity employer for 50 per cent, or less, of their working time in that fiscal year.

(4) (a) The tangible asset carve-out, referred to in subsection (2), of a constituent entity shall be equal to 5 per cent of the carrying value of its eligible tangible assets for a fiscal year located in the jurisdiction in which the constituent entity is located.

(b) For the purposes of paragraph (a)—

(i) no account shall be taken of—

(I) the carrying value of property, including land and buildings, that is held for sale, lease or investment, or

(II) the carrying value of tangible assets used to derive income that is excluded in accordance with section 111Q,

(ii) an eligible tangible asset shall be considered to be located in the jurisdiction in which the constituent entity is located where the eligible tangible asset is located within that jurisdiction more than 50 per cent of the time in a fiscal year, and

(iii) a constituent entity shall include only the proportionate share of the carrying value of the eligible tangible asset for a fiscal year in the calculation of the tangible asset carve-out where the eligible tangible asset is located in the jurisdiction of the constituent entity for 50 per cent, or less, of the time in that fiscal year.

(5) For the purpose of subsection (4), and subject to subsection (11), the carrying value of eligible tangible assets shall be the average of the carrying value of eligible tangible assets—

(a) at the beginning of the fiscal year, and

(b) at the end of the fiscal year, reduced by any accumulated depreciation, amortisation and depletion and increased by any amount attributable to the capitalisation of payroll expenses, as recorded for the purposes of preparing the consolidated financial statements of the ultimate parent entity.

(6) (a) For the purpose of subsections (3) and (4), the eligible payroll costs and eligible tangible assets, as the case may be, of a constituent entity which is a permanent establishment, shall be those that are included in its separate financial accounts in accordance with section 111R(1), provided that the eligible payroll costs and eligible tangible assets, as the case may be, are located in the same jurisdiction as the permanent establishment.

(b) The eligible payroll costs and eligible tangible assets of a permanent establishment shall not be taken into account in the calculation of eligible payroll costs and eligible tangible assets of the main entity.

(c) Where the income of a permanent establishment was wholly or partially reduced pursuant to section 111S(1) or 111AQ(5) as the case may be, the eligible payroll costs and eligible tangible assets of such permanent establishment shall be reduced in the same proportion from the calculation of the substance-based income exclusion amount for a jurisdiction for a fiscal year under this section for the MNE group or large-scale domestic group.

(7) (a) For the purpose of subsections (3) and (4)—

(i) eligible payroll costs of eligible employees paid by a flow-through entity, and

(ii) eligible tangible assets owned by a flow-through entity, that are not allocated under subsection (6), shall be allocated to—

(I) the constituent entity-owners of the flow-through entity, in proportion to the amount allocated to them pursuant to section 111S(4), provided that the eligible employees and eligible tangible assets, as the case may be, are located in the jurisdiction of the constituent entity-owners, and

(II) the flow-through entity if it is the ultimate parent entity, reduced in proportion to the income excluded from the calculation of the qualifying income of the flow-through entity pursuant to subsections (1) and (2) of section 111AQ, provided that the eligible employees and eligible tangible assets, as the case may be, are located in the jurisdiction of the flow-through entity.

(b) All eligible payroll costs and eligible tangible assets of a flow- through entity that are not allocated for a fiscal year under subsection (6) or paragraph (a) shall be excluded from the calculation of the substance-based income exclusion amount of the MNE group or large-scale domestic group.

(8) The substance-based income exclusion amount of each stateless constituent entity shall be calculated for each fiscal year separately from the substance-based income exclusion amount of all other constituent entities.

(9) The substance-based income exclusion amount calculated under this section shall not include the payroll carve-out and the tangible asset carve-out, as the case may be, of constituent entities that are investment entities in that jurisdiction.

(10) (a) Subject to subsection (11), for the purposes of subsection (4) and notwithstanding section (4)(b)(i), a constituent entity that is the lessor of property, plant or equipment leased under an operating lease may calculate a tangible asset carve-out in respect of the leased property, plant or equipment in accordance with paragraph (b) where the property, plant or equipment is located in the same jurisdiction as the constituent entity.

(b) The amount of tangible asset carve-out referred to in paragraph (a) is an amount equal to the excess, if any, of the constituent entity’s average carrying value of the property, plant or equipment concerned determined at the beginning and end of the fiscal year over the average amount of the lessee’s right-of-use asset in respect of the property, plant or equipment determined at the beginning and end of the fiscal year.

(c) For the purposes of paragraph (b) and subject to paragraph (d), where the lessee is not a constituent entity, the lessee’s right-of-use asset shall be equal to the undiscounted amount of payments remaining due under the operating lease, including any extensions that would be taken into account in determining a right-of-use asset under the financial accounting standard used to determine the qualifying income of the constituent entity.

(d) For the purposes of paragraph (c), the value of the lessee’s right-of-use asset shall be deemed to be nil where the property, plant or equipment subject to the operating lease is regularly leased several times to different lessees during the fiscal year and the average lease period, including any renewals and extensions, with respect to lessees is 30 days, or less.

(11) For the purposes of subsections (5) and (10), where a lessor leases a part of an eligible tangible asset to a lessee whilst retaining the residual part of the asset for its own use, then the carrying value of the asset shall be allocated between the different uses of the asset on a just and reasonable basis.

(12) (a) Where an adjustment to the computation of qualifying income or loss of a constituent entity for a fiscal year has been made in accordance with section 111AR, the payroll carve-out for that constituent entity shall be reduced by the amount calculated in accordance with the formula:

A x B/C

where—

A is the total eligible payroll costs of the constituent entity for the fiscal year,

B is the total qualifying income of the constituent entity excluded by section 111AR for the fiscal year, and

C is the total qualifying income of the constituent entity for the fiscal year as calculated under Chapter 3.

(b) Where an adjustment to the computation of qualifying income or loss of a constituent entity for a fiscal year has been made in accordance with section 111AR then the tangible asset carve-out for that constituent entity shall be reduced by the amount calculated in accordance with the formula:

A x B/C

where—

A is the total eligible tangible assets of the constituent entity for the fiscal year,

B is the total qualifying income of the constituent entity excluded by section 111AR for the fiscal year, and

C is the total qualifying income of the constituent entity for the fiscal year as calculated under Chapter 3.

Additional top-up tax

111AF. (1) (a) Where, pursuant to—

(i) section 111K(1),

(ii) section 111P(7)(g),

(iii) section 111X(9),

(iv) section 111AB(1)(b) and (4), and

(v) section 111AS(5),

an adjustment to covered taxes or qualifying income or loss results in the recalculation of the effective tax rate and top-up tax of the MNE group or large-scale domestic group for a jurisdiction for a prior fiscal year, the effective tax rate and top-up tax shall be recalculated in accordance with sections 111AC, 111AD and 111AE.

(b) Any amount of incremental top-up tax arising from the recalculation referred to in paragraph (a) shall be treated as an additional top-up tax for the purpose of section 111AD(3) for the fiscal year in which the relevant adjustment is made.

(2) Where, for a fiscal year and a jurisdiction—

(a) there is an additional top-up tax, and

(b) no net qualifying income,

the qualifying income of a constituent entity located in that jurisdiction for the purposes of section 111I(2) shall be an amount calculated as—

TUTA / MTR

where—

TUTA is the top-up tax allocated to the constituent entity pursuant to subsections (5) and (6) of section 111AD, and

MTR is the minimum tax rate.

(3) (a) Where, pursuant to subsections (5) and (6) of section 111U, an additional top-up tax is due for a jurisdiction, the qualifying income of a constituent entity located in that jurisdiction for the purposes of section 111I(2), shall be an amount calculated as—

TUTACE / MTR

where—

TUTACE is the additional top-up tax allocated to the constituent entity, and

MTR is the minimum tax rate.

(b) For the purposes of paragraph (a), the allocation of the additional top-up tax to a constituent entity shall be made pro-rata, to each constituent entity located in the jurisdiction, based on the following formula—

(QIQL x MTR) - ACT

where—

QIQL is the qualifying income or loss of the constituent entity for the fiscal year,

MTR is the minimum tax rate, and

ACT is the adjusted covered taxes of the constituent entity for the fiscal year.

(c) For the purposes of paragraph (a), the additional top-up tax for a jurisdiction for a fiscal year shall only be allocated to constituent entities that record an amount of adjusted covered tax that is—

(i) less than zero, and

(ii) less than the qualifying income or loss of such constituent entities multiplied by the minimum tax rate.

(4) Where a constituent entity is allocated additional top-up tax in accordance with this section or subsection (5) or (6) of section 111AD, such constituent entity shall be treated as a low-taxed constituent entity for the purposes of Chapter 2.

De minimis exclusion

111AG. (1) Notwithstanding anything in this Chapter, at the election of the filing constituent entity, the top-up tax due for a constituent entity of an MNE group or large-scale domestic group located in a jurisdiction, other than a stateless constituent entity or an investment entity, shall be equal to zero for a fiscal year, if for that fiscal year—

(a) the average qualifying revenue of all constituent entities of an MNE group or large-scale domestic group located in that jurisdiction is less than €10,000,000, and

(b) the average qualifying income or loss of all constituent entities of an MNE group or large-scale domestic group in that jurisdiction is a loss or is less than €1,000,000.

(2) (a) For the purpose of subsection (1), the average qualifying revenue, or the average qualifying income or loss, as the case may be, shall be the average of the qualifying revenue or qualifying income or loss of the constituent entities of an MNE group or large-scale domestic group located in the jurisdiction for the fiscal year and the 2 preceding fiscal years.

(b) If there are no constituent entities of an MNE group or large-scale domestic group with qualifying revenue, or qualifying income or loss, as the case may be, located in the jurisdiction in the first or second preceding fiscal years, or both, such fiscal year or years shall be excluded from the calculation of the average qualifying revenue, or average qualifying income or loss, as the case may be, of that jurisdiction.

(3) Subject to subsection (5), for the purposes of this section, the qualifying revenue of the constituent entities of an MNE group or large-scale domestic group located in a jurisdiction for a fiscal year shall be the sum of all the revenues of the constituent entities of an MNE group or large-scale domestic group located in that jurisdiction in arriving at the financial accounting net income or loss of the constituent entities for the fiscal year reduced, or increased, by any adjustment carried out pursuant to Chapter 3.

(4) Subject to subsection (5), for the purposes of this section, the qualifying income or loss of the constituent entities of an MNE group or large-scale domestic group located in a jurisdiction for a fiscal year shall be the net qualifying income or loss of that jurisdiction as calculated pursuant to section 111AC(3).

(5) The qualifying revenue and qualifying income or loss of stateless constituent entities or investment entities shall be excluded from the calculations of the average qualifying revenue and average qualifying income or loss of the constituent entities of an MNE group or large-scale domestic group for the purposes of subsection (1).

(6) The election referred to in this section shall be made annually in accordance with section 111AAAD and shall apply to all constituent entities located in the same jurisdiction.

Minority owned constituent entities

111AH. (1) In this section—

‘minority-owned constituent entity’ means a constituent entity in which the ultimate parent entity has a direct or indirect ownership interest of 30 per cent or less of the total ownership interests of the constituent entity;

‘minority-owned parent entity’ means a minority-owned constituent entity that holds, directly or indirectly, the controlling interests in another minority-owned constituent entity, except where the controlling interests in the former entity are held, directly or indirectly, by another minority-owned constituent entity;

‘minority-owned subgroup’ means a minority-owned parent entity and its minority-owned subsidiaries;

‘minority-owned subsidiary’ means a minority-owned constituent entity whose controlling interests are held, directly or indirectly, by a minority-owned parent entity.

(2) (a) The calculation of the effective tax rate and the top-up tax for a jurisdiction, with respect to members of a minority-owned subgroup, shall apply as if each minority-owned subgroup was a separate MNE group or large-scale domestic group.

(b) The adjusted covered taxes and qualifying income or loss of members of a minority-owned subgroup shall be excluded from—

(i) the determination of the residual amount of the effective tax rate for the jurisdiction of the MNE group or large-scale domestic group, calculated in accordance with section 111AC(2), and

(ii) the net qualifying income or loss for the jurisdiction of the MNE group or large-scale domestic group calculated in accordance with section 111AC(3).

(3) (a) The effective tax rate and top-up tax of a minority-owned constituent entity that is not a member of a minority-owned subgroup shall be calculated on an entity basis.

(b) The adjusted covered taxes and qualifying income or loss of the minority-owned constituent entity referred to in paragraph (a), shall be excluded from—

(i) the determination of the residual amount of the effective tax rate of the MNE group or large-scale domestic group for the jurisdiction, calculated in accordance with section 111AC(2), and

(ii) the net qualifying income or loss of the MNE group or large-scale domestic group for the jurisdiction calculated in accordance with section 111AC(3).

Qualified domestic top-up tax safe harbour

111AI. (1) In this section—

‘OECD peer review process’ means the review process developed, and undertaken, under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, in respect of the domestic top-up tax of a jurisdiction;

‘QDTT Safe Harbour’ shall be construed in accordance with subsection (2);

‘QDTT Safe Harbour standards’ means the standards referred to as ‘Standards for a QDMTT Safe Harbour’ set out in the document referred to in paragraph (e) of the definition, in section 111B, of ‘OECD Pillar Two guidance’;

‘QDTT subgroup’ means a group, constituent entity, joint venture or joint venture affiliate that is subject to a separate qualified domestic top-up tax calculation under the tax law of the jurisdiction implementing that qualified domestic top-up tax;

‘specified return date’ has the meaning assigned to it in section 111AAF.

(2) Notwithstanding section 111AD(3), and subject to subsections (3) to (6), on the making of an election by a filing constituent entity in respect of a QDTT subgroup for a fiscal year, jurisdictional top-up tax in respect of the QDTT subgroup for the fiscal year concerned shall be deemed to be zero (in this section, referred to as the ‘QDTT Safe

Harbour’) where the qualified domestic top-up tax implemented under the tax law of that jurisdiction is determined to have met the QDTT Safe Harbour standards under an OECD peer review process prior to the specified return date in respect of that fiscal year.

(3) The QDTT Safe Harbour for a jurisdiction shall not apply where a qualified domestic top-up tax in respect of that jurisdiction—

(a) is subject, directly or indirectly, to a challenge by the MNE group in judicial or administrative proceedings, or

(b) has been determined as not assessable or collectible by the tax authority of the jurisdiction implementing the qualified domestic top-up tax,

based on—

(i) constitutional grounds,

(ii) other superior law, or

(iii) a specific agreement with the government of the jurisdiction limiting the MNE group’s tax liability.

(4) The QDTT Safe Harbour for a jurisdiction shall not apply in respect of an MNE group where—

(a) the ultimate parent entity of the MNE group is—

(i) a flow-through entity, and

(ii) located in a jurisdiction where qualified domestic top-up tax is not charged under the laws of that jurisdiction on an ultimate parent entity that is a flow-through entity,

(b) the members of the MNE group include a flow-through entity that is required to apply an IIR top-up tax and is located in the jurisdiction where qualified domestic top-up tax is not charged under the laws of that jurisdiction on that flow-through entity, or

(c) a transitional exclusion consistent with the rules laid down in Article 49 of the Directive applies to qualified domestic top-up tax applied by that jurisdiction and that exclusion is not limited to where a qualified IIR does not apply in respect of the constituent entities located in that jurisdiction.

(5) The QDTT Safe Harbour for a jurisdiction shall not apply in respect of an investment entity, that is not an excluded entity, of an MNE group where qualified domestic top-up tax is not charged under the laws of that jurisdiction on that investment entity.

(6) The QDTT Safe Harbour for a jurisdiction shall not apply in respect of a joint venture group where qualified domestic top-up tax is not charged under the laws of that jurisdiction on the members of the joint venture group.

(7) All relevant information concerning the application of the QDTT Safe Harbour shall be included in the top-up tax information return for the fiscal year in accordance with section 111AAI.

Transitional CbCR safe harbour

111AJ. (1) In this section—

‘country-by-country report’ has the same meaning as in section 891H and references in this section to ‘CbC report’ shall be construed accordingly;

‘investment entity jurisdiction’ means the jurisdiction in which an investment entity is resident for the purposes of a CbC report;

‘multi-parented MNE group’ has the meaning assigned to it in section 111AP;

‘net unrealised fair value loss’ means the sum of all losses, as reduced by any gains, which arise from changes in fair value of ownership interests (other than portfolio shareholdings) included in an MNE group’s profit or loss before income tax in respect of a jurisdiction for a fiscal year as reported in its qualified CbC report;

‘profit or loss before income tax’ means an MNE group’s profit or loss before income tax in respect of a jurisdiction for a fiscal year as reported in its qualified CbC report;

‘qualified CbC report’ means a CbC report prepared and provided using qualified financial statements;

‘qualified financial statements’ means—

(a) the accounts used to prepare the consolidated financial statements of the ultimate parent entity before any consolidation adjustments eliminating intra-group transactions,

(b) separate financial statements of each constituent entity, joint venture or joint venture affiliate provided they are prepared in accordance with—

(i) an acceptable financial accounting standard, or

(ii) an authorised financial accounting standard and the information contained in the financial statements is reliable,

(c) in the case of a constituent entity that is not included in an MNE group’s consolidated financial statements on a line-by-line basis solely due to size or materiality grounds, the financial accounts of that constituent entity that are used for preparation of the MNE group’s CbC report;

‘qualified person’ means—

(a) in respect of an ultimate parent entity that is a flow-through entity, an ownership holder referred to in subsection (1) or (2) of section 111AQ, and

(b) in respect of an ultimate parent entity that is subject to a deductible dividend regime, a dividend recipient referred to in subsection (3) of section 111AR;

‘simplified covered taxes’ means the aggregate income tax expense of all constituent entities, or joint venture and joint venture affiliates, as the case may be, of an MNE group in a jurisdiction for a fiscal year, as reported in the MNE group’s qualified financial statements, excluding—

(a) any tax that is not a covered tax in accordance with section 111T, and

(b) uncertain tax positions reported in the MNE group’s qualified financial statements;

‘simplified ETR’ has the meaning assigned to it in subsection (3);

‘total revenue’ means an MNE group’s total revenues in respect of a jurisdiction for a fiscal year as reported in its qualified CbC report;

‘transitional CbCR safe harbour’ shall be construed in accordance with subsection (2);

‘transition period’ means any fiscal year beginning on or before 31 December 2026 but shall not include a fiscal year that ends after 30 June 2028;

‘transition rate’ means—

(a) for fiscal years beginning during the year 2023 or 2024, 15 per cent;

(b) for fiscal years beginning during the year 2025, 16 per cent;

(2) Notwithstanding section 111AD(3), and subject to subsections (4), (7) to (11) and (14), on the making of an election by a filing constituent entity, the jurisdictional top-up tax for an MNE group in respect of a jurisdiction for a fiscal year during the transition period shall be deemed to be zero (referred to in this section as the ‘transitional CbCR safe harbour’) where, in respect of the fiscal year concerned—

(a) subject to subsection (5), the MNE group reports—

(i) total revenue of less than €10,000,000, and

(ii) profit or loss before income tax of less than €1,000,000, in respect of that jurisdiction (in this section referred to as ‘the de minimis test’),

(b) the MNE group has a simplified ETR, as determined under subsection (3), in respect of that jurisdiction that is equal to or greater than the transition rate for the fiscal year, or

(c) subject to subsection (6), the MNE group reports profit or loss before income tax in that jurisdiction that is equal to or less than the substance-based income exclusion amount as calculated in accordance with section 111AE and 111AX (in this section referred to as the ‘routine profits test’) in respect of constituent entities that are both—

(i) resident in that jurisdiction for the purposes of the qualified CbC report, and

(ii) located in that jurisdiction in accordance with section 111D.

(3) The simplified ETR of an MNE group in respect of a jurisdiction for a fiscal year shall be equal to an amount, expressed as a percentage, calculated in accordance with the formula:

(A/B) x 100

where—

A is the simplified covered taxes, and

B is the profit or loss before income tax.

(4) For the purposes of subsection (2), a net unrealised fair value loss shall be excluded from profit or loss before income tax if that loss exceeds €50,000,000 in respect of a jurisdiction for a fiscal year.

(5) For the purposes of the de minimis test, where a constituent entity is held for sale, its revenue for a fiscal year shall be aggregated with the revenue of the MNE group reported in its qualified CbC report for that fiscal year in respect of the jurisdiction in which the constituent entity is resident.

(6) For the purposes of subsection (2)(c), the routine profits test shall be deemed to be satisfied in a jurisdiction where the MNE group reports profit or loss before income tax that is zero or less than zero.

(7) Subsection (2) shall apply to a joint venture and joint venture affiliates as if they were constituent entities of a separate MNE group, subject to the profit or loss before income tax and total revenue of the joint venture and joint venture affiliates in respect of the fiscal year, and jurisdiction, concerned being the profit or loss before income tax and total revenue reported in their qualified financial statements.

(8) For the purposes of subsection (2)—

(a) subject to subsection (9), where an ultimate parent entity is a flow-through entity then the profit or loss before income tax and any associated taxes of the ultimate parent entity shall be reduced to the extent that such amount is attributable to an ownership interest held by a qualified person, and

(b) where an ultimate parent entity is subject to a deductible dividend regime within the meaning of section 111AR, then the profit or loss before income tax and any associated taxes of the ultimate parent entity shall be reduced to the extent that such amount is distributed in respect of an ownership interest held by a qualified person.

(9) Where an ultimate parent entity is a flow-through entity, subsection (2) shall not apply to an MNE group in respect of a jurisdiction where that ultimate parent entity is located unless all the ownership interests in the ultimate parent entity are held by qualified persons.

(10) Where an MNE group has not made an election to apply the transitional CbCR safe harbour in respect of a jurisdiction for a fiscal year where there is a constituent entity, joint venture or joint venture affiliate, as the case may be, of the MNE group located in that jurisdiction, then that MNE group shall not be permitted to elect to apply the transitional CbCR safe harbour in respect of that jurisdiction in any subsequent fiscal year.

(11) Notwithstanding anything in this section, the transitional CbCR safe harbour shall not apply to the following:

(a) a stateless constituent entity;

(b) a multi-parented MNE group where a single qualified CbC report does not include the information of the combined groups;

(12) Where the transitional CbCR safe harbour applies to an MNE group in respect of a jurisdiction for a fiscal year then—

(a) the transition year referred to in section 111AW(2) for an MNE group in respect of a jurisdiction shall be the first fiscal year where the transitional CbCR safe harbour no longer applies to that MNE group in respect of that jurisdiction,

(b) section 111AW(3) shall continue to apply to a constituent entity, joint venture or joint venture affiliates, as the case may be, of an MNE group located in that jurisdiction for that fiscal year, and

(c) the transition year referred to in section 111AW(4) for a transferring entity shall be the first fiscal year where the transitional CbCR safe harbour no longer applies to that transferring entity.

(13) (a) Subject to paragraph (b), for the purposes of subsection (2), an MNE group shall exclude from a jurisdiction an investment entity, and top-up tax in respect of such entity shall be calculated in accordance with Chapter 7.

(b) Paragraph (a) shall not apply where—

(i) the investment entity has not made an election in accordance with section 111AU(1) or 111AV(1), and

(ii) all the constituent entity owners of that entity are resident in the investment entity jurisdiction.

(c) Where paragraph (a) applies, an MNE group may apply the transitional CbCR safe harbour in respect of a jurisdiction in accordance with subsection (2) having regard to a constituent entity, joint venture or joint venture affiliate, as the case may be, that are not an investment entity.

(d) Where paragraph (a) does not apply, for the purposes of subsection (2)—

(i) the profit or loss before income tax and total revenue of an investment entity, and any associated taxes, shall be reflected only in the jurisdiction of its direct constituent entity-owners in proportion to their ownership interest in such entity, and

(ii) where a portion of the ownership interests of the investment entity is held by owners that are not members of the MNE group, the profit or loss before income tax attributable to such owners shall be excluded.

(14) All relevant information concerning the application of the transitional CbCR safe harbour shall be included in the top-up tax information return for the fiscal year in accordance with section 111AAI.

Transitional UTPR safe harbour

111AK. (1) In this section—

‘corporate income tax rate’ means the nominal rate of corporate income tax (including any sub-national corporate income taxes) generally imposed on income in a jurisdiction;

‘transition period fiscal year’ means a fiscal year not exceeding twelve months that begins on or before 31 December 2025 and ends before 31 December 2026.

(2) For the purposes of section 111N(3), on the making of an election by a filing constituent entity, the top-up tax calculated for each low-taxed constituent entity of an MNE group or member of a joint venture group located in the jurisdiction of the ultimate parent entity of the MNE group or joint venture group concerned shall, where that jurisdiction has a corporate income tax rate that is equal to, or greater than, 20 per cent, be zero for a transition period fiscal year.

(3) A filing constituent entity shall not make an election in accordance with—

(a) section 111AJ(2), and

(b) subsection (2),

in respect of the same jurisdiction for a particular fiscal year.

CHAPTER 6

Corporate restructuring and holding structures

Application of consolidated revenue threshold to group mergers and demergers

111AL. (1) In this Chapter—

‘merger’ means any arrangement where—

(a) the controlling interest in the entities of all or substantially all of 2 or more separate groups are brought under the ownership of a single entity or group to form a single group, or

(b) the controlling interest in an entity that is not a member of any group is brought under the ownership of another entity or group to form a single group;

‘demerger’ means any arrangement where the entities of a group are separated into 2 or more groups that are no longer consolidated by the same ultimate parent entity in its consolidated financial statements.

(2) Where 2 or more groups merge to form a single group (in this subsection referred to as a ‘merged group’) in any of the 4 consecutive fiscal years immediately preceding a fiscal year, for the purposes of the consolidated revenue test the revenue of the merged group shall be deemed to be greater than the consolidated revenue threshold for any fiscal year prior to the merger if the sum of the revenue included in each of their consolidated financial statements for that fiscal year is equal to or greater than the consolidated revenue threshold.

(3) Where an entity that is not a member of a group (in this subsection referred to as the ‘new member entity’) merges with an entity or a group (referred to in this subsection to as the ‘acquiring entity’) in a fiscal year, and either the new member entity or the acquiring entity did not have consolidated financial statements in any of the last 4 consecutive fiscal years immediately preceding that fiscal year, the consolidated revenue threshold shall be deemed to be satisfied for that fiscal year if the sum of the revenue included in each of their financial statements or consolidated financial statements for that fiscal year is equal to or greater than the consolidated revenue threshold.

(4) Where an MNE group or large-scale domestic group to which this Part applies demerges into 2 or more groups (each referred to in this subsection as a ‘demerged group’), the consolidated revenue test shall be deemed to be satisfied by a demerged group—

(a) with respect to the first tested fiscal year ending after the demerger, where the demerged group has revenue recorded in the group’s consolidated financial statements equal to or greater than the consolidated revenue threshold in that fiscal year, and

(b) with respect to the second to fourth tested fiscal years ending after the demerger, where the demerged group has revenue recorded in the group’s consolidated financial statements equal to or greater than the consolidated revenue threshold in at least 2 of the fiscal years following the year of the demerger.

Constituent entities joining and leaving MNE group or large-scale domestic group

111AM. (1)Where during a fiscal year (in this section referred to as an ‘acquisition year’), an entity (in this section referred to as a ‘target entity’)—

(a) becomes or ceases to be a constituent entity of an MNE group or of a large-scale domestic group as a result of a transfer of direct or indirect ownership interests in the target entity, or

(b) becomes the ultimate parent entity of a new group,

the target entity shall be treated as a member of an MNE group or large-scale domestic group for the purposes of this Part provided that a portion of its assets, liabilities, income, expenses and cash flows is included on a line-by-line basis in the consolidated financial statements of the ultimate parent entity in the acquisition year.

(2) For the purposes of this Part—

(a) in an acquisition year, an MNE group or large-scale domestic group shall take into account only the financial accounting net income or loss and adjusted covered taxes of the target entity that are included in the consolidated financial statements of the ultimate parent entity;

(b) in an acquisition year and in each subsequent fiscal year, the qualifying income or loss and adjusted covered taxes of the target entity shall be based on the historical carrying value of its assets and liabilities;

(c) in an acquisition year, the calculation of the eligible payroll costs of the target entity pursuant to section 111AE shall take into account only the costs that are reflected in the consolidated financial statements of the ultimate parent entity;

(d) the calculation of the carrying value of the eligible tangible assets of the target entity pursuant to section 111AE shall be adjusted, where applicable, in proportion to the period in which the target entity was a member of the MNE group or large-scale domestic group during the acquisition year.

(3) Subject to subsection (4), the deferred tax assets and deferred tax liabilities of a target entity that are transferred between MNE groups or large-scale domestic groups shall be taken into account by the acquiring MNE group or large-scale domestic group in the same manner and to the same extent as if the acquiring MNE group or large-scale domestic group held a controlling interest in the target entity when such assets and liabilities arose.

(4) Subsection (3) shall not apply to a qualifying loss deferred tax asset referred to in section 111Y.

(5) (a) For the purposes of section 111X(9), where a deferred tax liability of a target entity has previously been included in its total deferred tax adjustment amount, it shall be treated as reversed by the disposing MNE group or large-scale domestic group and shall be treated as arising from the acquiring MNE group or large-scale domestic group in the acquisition year.

(b) Where paragraph (a) applies, any subsequent reduction of covered taxes pursuant to section 111X(9) shall have effect in the fiscal year in which the amount is recaptured.

(6) Where during an acquisition year a target entity is—

(a) a parent entity, and

(b) a member of 2 or more MNE groups or large-scale domestic groups,

it shall apply separately the provisions of this Part to its allocable shares of the top-up tax of low-taxed constituent entities determined for each MNE group or large-scale domestic group.

(7) Notwithstanding subsections (1) to (6), where the jurisdiction in which the target entity is located or, in the case of a tax transparent entity, the jurisdiction in which the assets are located—

(a) treats the acquisition or disposal of a controlling interest in the target entity in the same, or in a similar, manner as an acquisition or disposal of assets and liabilities, and

(b) imposes a covered tax on the seller based on the difference between—

(i) the tax basis, and

(ii) either—

(I) the consideration paid in exchange for the controlling interest, or

(II) the fair value of the assets and liabilities,

then the acquisition or disposal of that controlling interest in a target entity shall be treated as an acquisition or disposal of assets and liabilities.

Transfer of assets and liabilities

111AN. (1) In this section—

‘non-qualifying gain or loss’ means the lesser of—

(a) the gain or loss of the disposing constituent entity arising in connection with a reorganisation that is subject to tax in the disposing constituent entity’s location, and

(b) the gain or loss arising in connection with the reorganisation recorded in the disposing constituent entity’s financial accounting net income or loss;

‘reorganisation’ means a transformation or transfer of assets and liabilities such as in a merger, demerger, liquidation or similar transaction—

(a) where—

(i) the consideration for the transfer is, in whole or in significant part, equity interests issued by the constituent entity acquiring the assets and liabilities (in this section referred to as the ‘acquiring constituent entity’) or by a person connected with the acquiring constituent entity,

(ii) in the case of a liquidation, the consideration for the transfer is the cancellation of the holding of the equity interests of the entity being liquidated, or

(iii) no consideration is provided and the issuance of an equity interest would have no economic significance,

(b) where the gain or loss of the constituent entity disposing of the assets and liabilities (in this section referred to as the ‘disposing constituent entity’) on the disposal of the assets and liabilities is not subject to tax, in whole or in part, and

(c) where the tax laws of the jurisdiction in which the acquiring constituent entity is located require the acquiring constituent entity to calculate taxable income after the disposal or acquisition using the value of the assets for tax purposes of the disposing constituent entity under the tax laws of the jurisdiction in which the disposing constituent entity is located at the date of the transfer, adjusted for any non-qualifying gain or loss on the disposal or acquisition.

(2) Subject to subsections (4) and (5), a disposing constituent entity shall include the gain or loss arising from the disposal of its assets and liabilities in the calculation of its qualifying income or loss for a fiscal year.

(3) Subject to subsections (4) and (5), an acquiring constituent entity shall determine its qualifying income or loss on the basis of its carrying value of the acquired assets and liabilities determined under the financial accounting standard used in preparing consolidated financial statements of its ultimate parent entity.

(4) Subject to subsection (5), on the happening of a reorganisation—

(a) the disposing constituent entity shall exclude any gain or loss arising on the disposal of its assets or liabilities from the calculation of its qualifying income or loss, and

(b) the acquiring constituent entity shall determine its qualifying income or loss on the basis of the carrying value of the acquired assets and liabilities of the disposing constituent entity upon disposal.

(5) On the happening of a reorganisation that results in a non-qualifying gain or loss for the disposing constituent entity—

(a) the disposing constituent entity shall include the gain or loss on the disposal of its assets and liabilities in the calculation of its qualifying income or loss to the extent of the non-qualifying gain or loss, and

(b) the acquiring constituent entity shall determine its qualifying income or loss after the acquisition of its assets and liabilities using the disposing constituent entity’s carrying value of the acquired assets and liabilities upon disposal, as adjusted consistently with the tax law in the jurisdiction where the acquiring constituent entity is located to account for the non-qualifying gain or loss.

(6) On the making of an election by a filing constituent entity, where a constituent entity is required or permitted to adjust the basis of its assets and the amount of its liabilities to fair value for tax purposes under the tax law in the jurisdiction where it is located (in this section referred to as the ‘tax adjustment’) then such constituent entity shall—

(a) subject to subsection (7), include in the calculation of its qualifying income or loss for a fiscal year an amount of gain or loss in respect of each of its assets and liabilities, which shall be—

(i) equal to the difference between the carrying value for financial accounting purposes of the asset or liability immediately before the date of the event that triggered the tax adjustment (hereinafter referred to as the ‘triggering event’) and the fair value of the asset or liability immediately after the triggering event as determined under the tax law in the jurisdiction where it is located, and

(ii) decreased or increased, as the case may be, by the non-qualifying gain or loss, if any, arising in connection with the triggering event,

and

(b) use the fair value for financial accounting purposes of the asset or liability immediately after the triggering event to calculate qualifying income or loss in the fiscal years ending after the triggering event.

(7) Where an election is made in accordance with subsection (6), a constituent entity may include—

(a) the net total of the amounts determined in accordance with subsection (6)(a) in the constituent entity’s qualifying income or loss in the fiscal year in which the triggering event occurs, or

(b) an amount equal to the net total of the amounts determined in accordance with subsection (6)(a) divided by 5 in the fiscal year in which the triggering event occurs and in each of the immediate 4 subsequent fiscal years, but where the constituent entity leaves the MNE group or large-scale domestic group in a fiscal year within that period, the remaining amount shall be included in that fiscal year.

Joint ventures

111AO. (1) In this section—

‘joint venture’ means an entity of which at least 50 per cent of its ownership interests are held directly or indirectly by its ultimate parent entity and whose financial results are reported under the equity method in the consolidated financial statements of the ultimate parent entity but shall not include—

(a) an ultimate parent entity of an MNE group or of a large-scale domestic group to which a qualified IIR applies,

(b) an excluded entity,

(c) an entity whose ownership interests held by the MNE group or large-scale domestic group are held directly through an excluded entity and which—

(i) operates exclusively or almost exclusively to hold assets or invest funds for the benefit of its investors,

(ii) carries out activities that are ancillary to those carried out by the excluded entity, or

(iii) has substantially all of its income excluded from the calculation of qualifying income or loss in accordance with paragraphs (b) and (c) of section 111P(2),

(d) an entity that is held by an MNE group or large-scale domestic group composed exclusively of excluded entities, or

(e) a joint venture affiliate; ‘joint venture affiliate’ means—

(a) an entity whose assets, liabilities, income, expenses and cash flows are consolidated by a joint venture under an acceptable financial accounting standard or would have been consolidated had the joint venture been required to consolidate such assets, liabilities, income, expenses and cash flows under an acceptable financial accounting standard, or

(b) a permanent establishment whose main entity is a joint venture or an entity referred to in paragraph (a);

‘joint venture group’ means a joint venture and its joint venture affiliates.

(2) For the purposes of this Part, a permanent establishment referred to in paragraph (b) of the definition, in subsection (1), of ‘joint venture affiliate’, shall be treated as a separate joint venture affiliate.

(3) Sections 111E to 111J shall apply to a parent entity that holds a direct or indirect ownership interest in a joint venture or a joint venture affiliate with respect to its allocable share of the top-up tax of that joint venture or joint venture affiliate for a fiscal year.

(4) This Part shall apply to the calculation of the top-up tax of a joint venture group for a fiscal year as if the joint venture and its joint venture affiliates were constituent entities of a separate MNE group or large-scale domestic group and the joint venture was the ultimate parent entity of that group.

(5) The top-up tax of a joint venture group for a fiscal year shall be reduced by each parent entity’s allocable share of the top-up tax under subsection (3) of each member of the joint venture group that is brought into charge under subsection (4) and any remaining amount of top-up tax shall be added to the total UTPR top-up tax amount pursuant to section 111N(3).

Multi-parented MNE and large-scale domestic groups

111AP. (1) In this section—

‘consolidated financial statements of the multi-parented MNE group or multi-parented large-scale domestic group’ means the combined consolidated financial statements referred to in the definition in this subsection of a ‘stapled structure’ or a ‘dual-listed arrangement’, prepared under an acceptable financial accounting standard, which is deemed to be the accounting standard of the ultimate parent entity;

‘dual-listed arrangement’ means an arrangement entered into by 2 or more ultimate parent entities of separate groups under which—

(a) the ultimate parent entities agree to combine their business by contract alone,

(b) pursuant to contractual arrangements the ultimate parent entities will make distributions, with respect to dividends and in liquidation, to their shareholders based on a fixed ratio,

(c) the ultimate parent entities’ activities are managed as a single economic unit under contractual arrangements while retaining their separate legal identities,

(d) the ownership interests of the ultimate parent entities that comprise the agreement are quoted, traded or transferred independently in different capital markets, and

(e) the ultimate parent entities prepare consolidated financial statements—

(i) in which the assets, liabilities, income, expenses and cash flows of entities in all of the groups are presented together as those of a single economic unit, and

(ii) that are required by a regulatory regime to be audited by an external independent auditor;

‘multi-parented large-scale domestic group’ means 2 or more groups where the ultimate parent entities enter into an arrangement that is a stapled structure or a dual-listed arrangement that does not include an entity or permanent establishment of either group subject to the arrangement which is located in a different jurisdiction with respect to the location of the other entities of the 2 groups;

‘multi-parented MNE group’ means 2 or more groups where the ultimate parent entities enter into an arrangement that is a stapled structure or a dual-listed arrangement that includes at least one entity or permanent establishment of either group subject to the arrangement which is located in a different jurisdiction with respect to the location of the other entities of the 2 groups;

‘stapled structure’ means an arrangement entered into by 2 or more ultimate parent entities of separate groups under which—

(a) 50 per cent or more of the ownership interests in the ultimate parent entities of separate groups are—

(i) if they are listed, quoted at a single price, and

(ii) by reason of form of ownership, restrictions on transfer, or other terms or conditions, combined with each other, and cannot be transferred or traded independently,

and

(b) one of the ultimate parent entities prepares consolidated financial statements—

(i) in which the assets, liabilities, income, expenses and cash flows of all the entities of the groups concerned are presented together as those of a single economic unit, and

(ii) that are required by a regulatory regime to be audited by an external independent auditor.

(2) Where entities and constituent entities of 2 or more groups form part of a multi-parented MNE group or multi-parented large-scale domestic group, the entities and constituent entities of each group shall be treated as members of one multi-parented MNE group or multi-parented large-scale domestic group, as the case may be.

(3) For the purposes of subsection (2) an entity, other than an excluded entity, shall be treated as a constituent entity if it is consolidated on a line-by-line basis in the consolidated financial statements of the multi-parented MNE group or multi-parented large-scale domestic group, or if its controlling interests are held by entities in the multi-parented MNE group or multi-parented large-scale domestic group, as the case may be.

(4) The ultimate parent entities of the separate groups that compose the multi-parented MNE group or multi-parented large-scale domestic group, as the case may be, shall be the ultimate parent entities of the multi-parented MNE group or multi-parented large-scale domestic group and in the application of this Part in respect of a multi-parented MNE group or multi-parented large-scale domestic group any references to an ultimate parent entity shall apply, as required, as if they are references to multiple ultimate parent entities.

(5) Sections 111E to 111J shall apply to the parent entities and ultimate parent entities of the multi-parented MNE group or multi-parented large-scale domestic group, as the case may be, with respect to their allocable share of the top-up tax of the low-taxed constituent entities.

(6) Sections 111L to 111N and section 111AZ shall apply to constituent entities of a multi-parented MNE group or multi-parented large-scale domestic group, as the case may be, taking into account the top-up tax of each low-taxed constituent entity that is a member of the multi-parented MNE group or multi-parented large-scale domestic group.

(7) The ultimate parent entities of the multi-parented MNE group or multi-parented large-scale domestic group shall be required to file the top-up tax information return in respect of the information concerning each of the groups that compose the multi-parented MNE group or multi-parented large-scale domestic group in accordance with section 111AAI, unless they appoint a designated filing entity.

CHAPTER 7

Tax neutrality and distribution regimes

Ultimate parent entity that is a flow-through entity

111AQ. (1) The qualifying income of a flow-through entity that is an ultimate parent entity shall be reduced, for a fiscal year, by the amount of qualifying income that is attributable to the holder of an ownership interest (in this section referred to as an ‘ownership holder’) in the flow-through entity where—

(a) the ownership holder is subject to tax on such income, for a taxable period that ends within 12 months after the end of that fiscal year, at a nominal rate of tax that equals or exceeds the minimum tax rate, or

(b) it can be reasonably expected that the sum of the covered taxes paid by the ultimate parent entity and other entities that are part of the tax transparent structure and taxes paid by the ownership holder on such income within 12 months after the end of the fiscal year equals or exceeds an amount equal to that income multiplied by the minimum tax rate.

(2) The qualifying income of a flow-through entity that is an ultimate parent entity shall be reduced, for a fiscal year, by the amount of qualifying income that is allocated to the ownership holder in the flow-through entity provided that the ownership holder is—

(a) an individual who—

(i) is tax resident in the jurisdiction where the ultimate parent entity is located, and

(ii) holds ownership interests representing a right to 5 per cent or less of the profits and assets of the ultimate parent entity,

(b) a governmental entity, an international organisation, a non-profit organisation or a pension fund that—

(i) is tax resident in the jurisdiction where the ultimate parent entity is located, and

(ii) holds ownership interests representing a right to 5 per cent or less of the profits and assets of the ultimate parent entity.

(3) (a) Subject to paragraph (b), the qualifying loss of a flow-through entity that is an ultimate parent entity shall be reduced, for a fiscal year, by the amount of qualifying loss that is attributable to the ownership holder in the flow-through entity.

(b) Paragraph (a) shall not apply to the extent that the ownership holder is not permitted to use the qualifying loss for the calculation of its taxable income.

(4) The covered taxes of a flow-through entity that is an ultimate parent entity shall be reduced in the same proportion as the amount of qualifying income of that flow-through entity is reduced in accordance with subsections (1) and (2).

(5) Subsections (1) to (4) shall apply to a permanent establishment through which—

(a) a flow-through entity that is an ultimate parent entity wholly or partly carries out its business, or

(b) the business of a tax transparent entity is wholly or partly carried out, where the ultimate parent entity’s ownership interest in that tax transparent entity is held directly or through one or more tax transparent entities.

Ultimate parent entity subject to a deductible dividend regime

111AR. (1) In this section—

‘cooperative’ means an entity that collectively markets or acquires goods or services on behalf of its members and that is subject to a tax regime in the jurisdiction where it is located that ensures tax neutrality in respect of goods or services that are sold or acquired by its members through the cooperative;

‘deductible dividend’ means, with respect to a constituent entity that is subject to a deductible dividend regime—

(a) a distribution of profits to the holder of an ownership interest in the constituent entity that is deductible from the taxable income of the constituent entity under the laws of the jurisdiction in which it is located, or

(b) a patronage dividend to a member of a cooperative;

‘deductible dividend regime’ means a tax regime that applies a single level of taxation on the income of the owners of an entity by deducting or excluding from the income of the entity the profits distributed to the owners or by exempting a cooperative from taxation;

‘patronage dividend’ means a distribution by a cooperative to its members;

‘supply cooperative’ means a cooperative that purchases goods or services and resells them to its members and whose profits are distributed to its members.

(2) Subject to subsection (3), an ultimate parent entity of an MNE group or of a large-scale domestic group that is subject to a deductible dividend regime shall reduce its qualifying income for the fiscal year by the amount that is distributed as deductible dividend within 12 months after the end of the fiscal year, but such a reduction shall not exceed the amount of qualifying income for the fiscal year.

(3) Subsection (2) shall apply where—

(a) the recipient of the dividend referred to in subsection (2) is subject to tax in respect of that dividend for a taxable period that ends within 12 months after the end of the fiscal year at a nominal rate of tax that equals or exceeds the minimum tax rate,

(b) it can be reasonably expected that the aggregate amount of covered taxes paid by the ultimate parent entity and taxes paid by the recipient on such dividend equals or exceeds that income multiplied by the minimum tax rate, or

(i) an individual, and the dividend received is a patronage dividend from a supply cooperative,

(ii) an individual who is tax resident in the same jurisdiction where the ultimate parent entity is located and who holds ownership interests representing a right to 5 per cent or less of the profits and assets of the ultimate parent entity, or

(iii) a governmental entity, an international organisation, a non-profit organisation or a pension fund other than a pension services entity, that is tax resident in the jurisdiction where the ultimate parent entity is located.

(4) The covered taxes of an ultimate parent entity, other than the taxes for which a dividend deduction was allowed under a deductible dividend regime, shall be reduced in the same proportion as the amount of qualifying income of the ultimate parent entity is reduced in accordance with subsections (2) and (3).

(5) Where the ultimate parent entity holds an ownership interest in another constituent entity that is subject to a deductible dividend regime, directly or through a chain of such constituent entities, subsections (2), (3) and (4) shall apply to any other constituent entity located in the jurisdiction of the ultimate parent entity that is subject to the deductible dividend regime, to the extent that its qualifying income is further distributed by the ultimate parent entity to recipients that meet the requirements set out in subsections (2) and (3).

(6) For the purposes of subsection (3), the recipient of a patronage dividend distributed by a supply cooperative shall be treated as subject to tax in respect of such dividend insofar as that dividend reduces a deductible expense or cost in the calculation of the recipient’s taxable income or loss.

Eligible distribution tax systems

111AS. (1) On the making of an election by a filing constituent entity, a constituent entity that is subject to an eligible distribution tax system shall include the amount, determined in accordance with subsection (2) as deemed distribution tax, in the adjusted covered taxes of that constituent entity for the fiscal year.

(2) The amount of the deemed distribution tax referred to in subsection (1) shall be the lesser of—

(a) the amount necessary to increase the effective tax rate as calculated in accordance with section 111AC for the jurisdiction of the constituent entity referred to in subsection (1) for the fiscal year to the minimum tax rate, and

(b) the amount of distribution tax that would have been due if the constituent entities located in the jurisdiction referred to in paragraph (a) had distributed all of their income that is subject to the eligible distribution tax system during the fiscal year.

(3) (a) Where an election is made under subsection (1), a deemed distribution tax recapture account shall be established for each fiscal year in which such an election applies.

(b) The amount of deemed distribution tax determined in accordance with subsection (2) for the jurisdiction shall be added to the deemed distribution tax recapture account for the fiscal year in which it was established.

(c) At the end of each subsequent fiscal year, the outstanding balances in the deemed distribution tax recapture accounts established for prior fiscal years shall be reduced in chronological order by the taxes paid by the constituent entities during the fiscal year in relation to actual or deemed distributions, but such reduction shall not exceed the amount of the outstanding balances.

(d) Any residual amount in the deemed distribution tax recapture accounts remaining after the application of paragraph (c) shall be reduced in chronological order by an amount equal to the net qualifying loss of a jurisdiction for the fiscal year multiplied by the minimum tax rate but such reduction shall not exceed the residual amount.

(4) Any residual amount of net qualifying loss multiplied by the minimum tax rate after the application of subsection (3)(d), for the jurisdiction, shall be carried forward to the following fiscal years and shall reduce in chronological order any residual amount in the deemed distribution tax recapture accounts remaining after the application of subsection (3) but such reduction shall not exceed the residual amount.

(5) The outstanding balance, if any, of the deemed distribution tax recapture account, on the last day of the fourth fiscal year after the fiscal year for which such account was established shall be treated as a reduction to the adjusted covered taxes previously determined for such fiscal year in respect of which the deemed distribution tax recapture account was established and the effective tax rate and top-up tax for that fiscal year shall be recalculated in accordance with section 111AF.

(6) Taxes that are paid during the fiscal year in relation to actual or deemed distributions shall not be included in adjusted covered taxes to the extent that they reduce a deemed distribution tax recapture account in accordance with subsections (3) and (4).

(7) (a) Where a constituent entity, that is subject to an election under subsection (1)—

(i) leaves the MNE group or large-scale domestic group, or

(ii) substantially all of its assets are transferred to a person that is not a constituent entity of the same MNE group or large-scale domestic group located in the same jurisdiction,

any outstanding balance of the deemed distribution tax recapture accounts in previous fiscal years in which such an account was established shall be treated as a reduction to the adjusted covered taxes for each of those fiscal years in accordance with section 111AF.

(b) Any additional top-up tax amount that would be due pursuant to paragraph (a) shall be multiplied by the following ratio to determine the additional top-up tax due for the jurisdiction:

A/B

where—

A is the qualifying income of the constituent entity for each fiscal year in which there is an outstanding balance of the deemed distribution tax recapture accounts for the jurisdiction, and

B is the net qualifying income of the jurisdiction determined in accordance with section 111AC(3) for each fiscal year in which there is an outstanding balance of the deemed distribution tax recapture accounts for the jurisdiction.

(8) The election referred to in subsection (1) shall be made in accordance with section 111AAAD, and shall apply to all constituent entities located in the same jurisdiction for the fiscal year in which the election is made.

Determination of effective tax rate and top-up tax of investment entity

111AT. (1) Where a constituent entity of an MNE group or large-scale domestic group—

(a) is an investment entity,

(b) is not a tax transparent entity, and

the effective tax rate of such an investment entity (in this section referred to as a ‘relevant investment entity’) shall be calculated separately from the effective tax rate of the jurisdiction in which it is located.

(2) (a) The effective tax rate of a relevant investment entity shall be equal to the relevant investment entity’s adjusted covered taxes, as determined in accordance with subsection (3), divided by an amount equal to the allocable share of the MNE group or large-scale domestic group in the qualifying income or loss of the relevant investment entity, as determined in accordance with subsection (5).

(b) Where more than one relevant investment entity is located in a jurisdiction, their effective tax rate shall be calculated by combining their adjusted covered taxes as well as the allocable share of the MNE group or large-scale domestic group in their qualifying income or loss.

(3) The adjusted covered taxes of a relevant investment entity shall be the sum of the adjusted covered taxes that are attributable to the allocable share of the MNE group or large-scale domestic group in the qualifying income of the relevant investment entity and the covered taxes allocated to the relevant investment entity in accordance with section 111Z, but shall not include any covered taxes accrued by the relevant investment entity attributable to income that is not part of the MNE group or large-scale domestic group’s allocable share of the relevant investment entity’s income.

(4) (a) The top-up tax of a relevant investment entity shall be an amount determined by the formula—

(A x (B-C)) - D

where—

A is the top-up tax percentage of the relevant investment entity, being a positive amount equal to the difference between the minimum tax rate and effective tax rate of the relevant investment entity,

B is the qualifying income of the relevant investment entity,

C is the substance-based income exclusion calculated for the relevant investment entity as determined in accordance with paragraph (c), and

D is the amount of qualified domestic top-up tax payable for the relevant investment entity for the fiscal year.

(b) Where more than one relevant investment entity of an MNE group or large-scale domestic group is located in a jurisdiction, the qualifying income or loss and substance-based income exclusion amounts of each relevant investment entity shall be combined to compute the effective tax rate of all of the relevant investment entities.

(c) The substance-based income exclusion amount of a relevant investment entity shall be determined in accordance with subsections (1) to (7) and (10) to (12) of section 111AE, taking into account only eligible tangible assets and eligible payroll costs of eligible employees of the relevant investment entity.

(5) For the purposes of this section, the allocable share of the MNE group or large-scale domestic group in the qualifying income or loss of a relevant investment entity shall be determined in accordance with section 111I taking into account only interests that are not subject to an election in accordance with section 111AU or 111AV.

Election to treat investment entity as tax transparent entity

111AU. (1) On the making of an election by a filing constituent entity, a constituent entity that is an investment entity shall be treated as a tax transparent entity for the purposes of this Part if—

(a) the constituent entity-owner is subject to tax in the jurisdiction in which it is located under a fair market value or a similar regime based on the annual changes in the fair value of its ownership interest in such entity, and

(b) the tax rate applicable to the constituent entity-owner on the annual changes in the fair value of its ownership interest referred to in paragraph (a) equals or exceeds the minimum tax rate.

(2) For the purposes of subsection (1), a constituent entity that indirectly owns an ownership interest in an investment entity (in this subsection referred to as the ‘first-mentioned investment entity’) through a direct ownership interest in another investment entity (in this subsection referred to as the ‘second-mentioned investment entity’) shall be considered to be subject to tax under a fair market value or similar regime with respect to its indirect ownership interest in the first-mentioned investment entity if it is subject to a fair market value or similar regime with respect to its direct ownership interest in the second-mentioned investment entity.

(3) The election referred to in subsection (1) shall be made in accordance with section 111AAAD.

(4) Where the election referred to in subsection (1) is withdrawn, any gain or loss from the disposal of an asset or a liability held by the investment entity shall be determined on the basis of the fair market value of the asset or liability on the first day of the fiscal year the withdrawal is made.

Election to apply taxable distribution method

111AV. (1) On the making of an election by a filing constituent entity, a constituent entity-owner of an investment entity shall apply a taxable distribution method with respect to its ownership interest in the investment entity where the constituent entity-owner—

(a) is not an investment entity, and

(b) can be reasonably expected to be subject to tax on distributions from that investment entity at a tax rate that equals or exceeds the minimum tax rate.

(2) Under the taxable distribution method—

(a) distributions and deemed distributions of the qualifying income of an investment entity shall be included in the qualifying income of the constituent entity-owner that received the distribution, provided that it is not an investment entity,

(b) the amount of covered taxes incurred by the investment entity that is creditable against the tax liability of the constituent entity-owner arising from the distribution of the investment entity shall be included in the qualifying income and adjusted covered taxes of the constituent entity-owner that received the distribution,

(c) the share of the constituent-entity owner in the undistributed net qualifying income of the investment entity arising in the third year preceding the fiscal year (in this section referred to as the ‘tested year’) shall be treated as qualifying income of that investment entity for the fiscal year and the amount equal to such qualifying income multiplied by the minimum tax rate shall be treated as top-up tax of a low-taxed constituent entity for the fiscal year for the purposes of Chapter 2, and

(d) the qualifying income or loss of an investment entity and the adjusted covered taxes attributable to such income for the fiscal year shall be excluded from the calculation of the effective tax rate in accordance with Chapter 5 and subsections (1) to (4) of section 111AT, except for the amount of covered taxes referred to in paragraph (b).

(3) For the purposes of subsection (2)(c), the undistributed net qualifying income of an investment entity for the tested year shall be the amount of qualifying income of that investment entity for a tested year reduced by the amount, if any, of—

(a) the covered taxes of the investment entity,

(b) distributions and deemed distributions to shareholders that are not investment entities during the period starting with the first day of the third year preceding the fiscal year and ending with the last day of the current fiscal year in which the ownership interest was held (in this section referred to as the ‘testing period’),

(d) any residual amount of qualifying losses that has not already reduced the undistributed net qualifying income of that investment entity for a previous tested year,

but such reduction shall not exceed the amount of qualifying income and the undistributed net qualifying income of that investment entity shall not be reduced by—

(i) distributions or deemed distributions that already reduced the undistributed net qualifying income of that investment entity for a previous tested year in the application of paragraph (b), or

(ii) the amount of qualifying losses that already reduced the undistributed net qualifying income of that investment entity for a previous tested year in the application of paragraph (c).

(4) For the purposes of this section, a deemed distribution shall arise when a direct or indirect ownership interest in the investment entity is transferred to an entity that is not a member of the MNE group or large-scale domestic group and is equal to the share of undistributed net qualifying income attributable to such ownership interest on the date of such transfer, determined without regard to the deemed distribution.

(5) (a) Where an election referred to in subsection (1) is withdrawn, the constituent entity-owner’s share in the undistributed net qualifying income of the investment entity for the tested year at the end of the fiscal year preceding the fiscal year the withdrawal is made shall be treated as qualifying income of the investment entity for the fiscal year.

(b) The amount equal to the qualifying income referred to in paragraph

(a) multiplied by the minimum tax rate shall be treated as top-up tax of a low-taxed constituent entity for the fiscal year for the purposes of Chapter 2.

(6) The election referred to in subsection (1) shall be made in accordance with section 111AAAD.

CHAPTER 8

Transition Rules

Tax treatment of deferred tax assets, deferred tax liabilities and transferred assets upon transition

111AW. (1) For the purpose of this section, ‘transition year’, for a jurisdiction, means the first fiscal year in which an MNE group or large-scale domestic group falls within the scope of a qualified IIR, qualified UTPR or qualified domestic top-up tax, in respect of that jurisdiction.

(2) (a) When determining the effective tax rate for a jurisdiction in accordance with section 111AC—

(i) in a transition year, and

(ii) for each subsequent fiscal year,

the MNE group or a large-scale domestic group shall take into account all the deferred tax assets and deferred tax liabilities, reflected or disclosed in the financial accounts of all the constituent entities in a jurisdiction for the transition year.

(b) For the purposes of paragraph (a), deferred tax assets and deferred tax liabilities shall be taken into account at the lower of—

(i) the minimum tax rate, or

(ii) the applicable domestic tax rate.

(i) is attributable to a qualifying loss, and

(ii) has been recorded at a tax rate lower than the minimum tax rate,

the deferred tax asset shall be taken into account at the minimum tax rate for the purposes of paragraph (a).

(d) For the purposes of paragraph (a), the impact of any valuation adjustment or accounting recognition adjustment, with respect to a deferred tax asset, shall be disregarded.

(3) For the purposes of subsection (2)(a), deferred tax assets—

(a) arising from items excluded from the calculation of qualifying income or loss in accordance with Chapter 3, and

(b) generated in a transaction that takes place after 30 November 2021,

shall not be taken into account when determining the effective rate for a jurisdiction.

(4) Where—

(a) after 30 November 2021, and

(b) before the commencement of a transition year in respect of the transferring entity,

assets, other than inventory, are transferred between constituent entities, the acquirer’s basis in the acquired assets for the purposes of this Part shall be equal to the transferring entity’s carrying value of the transferred assets at the time immediately before disposal, with deferred tax assets and deferred tax liabilities determined accordingly.

Transitional relief for substance-based income exclusion

111AX. (1) For the purpose of applying section 111AE(3), the value of 5 per cent shall be replaced, for each fiscal year beginning in the calendar year set out in column (1) of the Table to this subsection, with the values set out in the column (2) of that Table:

(1)	(2)
2023	10 per cent
2024	9.8 per cent
2025	9.6 per cent
2026	9.4 per cent
2027	9.2 per cent
2028	9.0 per cent
2029	8.2 per cent
2030	7.4 per cent
2031	6.6 per cent
2032	5.8 per cent

(2) For the purpose of applying section 111AE(4), the value of 5 per cent, shall be replaced, for each fiscal year beginning in the calendar year set out in column (1) of the Table to this subsection, with the values set out in column (2) of that Table:

(1)	(2)
2023	8 per cent
2024	7.8 per cent
2025	7.6 per cent
2026	7.4 per cent
2027	7.2 per cent
2028	7.0 per cent
2029	6.6 per cent
2030	6.2 per cent
2031	5.8 per cent
2032	5.4 per cent

Initial phase of exclusion from IIR and UTPR of MNE groups and large-scale domestic groups

111AY. (1) The top-up tax due by—

(a) an ultimate parent entity located in the State in accordance with—

(i) section 111E(1), in respect of constituent entities located in the State, or

(ii) section 111E(2),

(b) an intermediate parent entity located in the State in accordance with—

(i) section 111F(1), in respect of constituent entities located in the State, or

(ii) section 111F(2),

when the ultimate parent entity is an excluded entity, shall be reduced to zero where—

(I) the ultimate parent entity or the intermediate parent entity are a member of an MNE group, in the first 5 years of the initial phase of the international activity of the MNE group, notwithstanding the requirements laid down in Chapter 5, or

(II) the ultimate parent entity or the intermediate parent entity are a member of a large-scale domestic group, in the first 5 years, starting from the first day of the fiscal year in which the large- scale domestic group falls within the scope of this Part for the first time.

(2) Where the ultimate parent entity of an MNE group is located in a third country jurisdiction, the top-up tax due by a constituent entity located in the State in accordance with section 111N(1), shall be reduced to zero in the first 5 years of the initial phase of the international activity of that MNE group, notwithstanding the requirements laid down in Chapter 5.

(3) (a) An MNE group shall be considered to be in the initial phase of its international activity if—

(i) it has constituent entities in no more than 6 jurisdictions, and

(ii) the sum of the net book value of the tangible assets of all the constituent entities of the MNE group located in all jurisdictions other than the reference jurisdiction does not exceed €50,000,000.

(b) For the purpose of paragraph (a)(ii)—

(i) ‘reference jurisdiction’ means the jurisdiction in which the constituent entities of the MNE group have the highest total value of tangible assets in the fiscal year in which the MNE group originally falls within the scope of this Part, and

(ii) the total value of the tangible assets in a jurisdiction is the sum of the net book values of all tangible assets of all the constituent entities of the MNE group that are located in that jurisdiction.

(4) (a) Subject to paragraph (b), (c) and (d), the period of 5 years referred to in subsections (1)(I) and (2), shall start from the beginning of the fiscal year in which the MNE group first comes within the scope of this Part.

(b) For MNE groups that are within the scope of this Part when it comes into operation, the period of 5 years referred to in subsection (1)(I) shall start on 31 December 2023.

(c) For MNE groups that are within the scope of this Part when it comes into operation, the period of 5 years referred to in subsection (2) shall start on 31 December 2024.

(d) For large-scale domestic groups that are within the scope of this Part when it comes into operation, the period of 5 years referred to in subsection (1)(II) shall start on 31 December 2023.

(5) Where subsection (1) or (2) applies for a fiscal year and the filing constituent entity is located in the State for the fiscal year, the filing constituent entity shall inform the Revenue Commissioners of the start date of the initial phase of the international activity of the MNE group.

Delayed application of IIR and UTPR by Member States

111AZ. (1) Subject to section 111AAL, where the ultimate parent entity of an MNE group is located in a Member State that has made an election pursuant to Article 50.1 of the Directive, a constituent entity of that MNE group that is located in the State shall be subject to a top-up tax (in this section referred to as ‘UTPR top-up tax’) for the fiscal years beginning on or after 31 December 2023 calculated in accordance with section 111N.

(2) (a) The ultimate parent entity referred to in subsection (1) shall nominate a designated filing entity in a Member State other than the Member State in which the ultimate parent entity is located or, if the MNE group has no constituent entity in another Member State, in a third country jurisdiction that has, for the reporting fiscal year, a qualifying competent authority agreement in effect with the Member State in which the ultimate parent entity is located.

(b) Where the designated filing entity referred to in paragraph (a) is located in the State it shall file a top-up tax information return in accordance with the requirements set out in section 111AAI and the constituent entities located in the Member State that has made an election pursuant to Article 50.1 of the Directive shall provide the designated filing entity with information necessary to comply with section 111AAI(3).

CHAPTER 9

Domestic Top-up Tax

Interpretation (Chapter 9)

111AAA. In this Chapter—

‘foreign IIR election’ means an election made in respect of an MNE group in connection with a tax equivalent to IIR top-up tax or UTPR top-up tax in another jurisdiction that is contained in a top-up tax information return submitted to—

(a) a tax authority in that jurisdiction, and in relation to which information in the return about the election has been provided to the Revenue Commissioners under a qualifying competent authority agreement, or

(b) the Revenue Commissioners;

‘local accounting standard’ means a financial accounting standard permitted or required to be used in the preparation of financial accounts under the law of the State that is an—

(a) acceptable financial accounting standard, or

(b) authorised financial accounting standard adjusted to prevent material competitive distortions;

‘qualifying entity’ shall be construed in accordance with section 111AAB; ‘standalone financial statements’ means—

(a) financial statements of an entity prepared in accordance with a local accounting standard, or

(b) where no such statements were prepared, the statements that would have been prepared (whether or not the entity was required to prepare such statements) in accordance with a local accounting standard.

Qualifying entities

111AAB. (1) An entity or permanent establishment shall be a qualifying entity for a fiscal year, or an accounting period where paragraph (c) applies, if it is located in the State in accordance with section 111D, or would be if it was a constituent entity, and it is—

(a) a constituent entity to which this Part applies in accordance with section 111C,

(b) a joint venture or a joint venture affiliate in respect of which sections 111E to 111J apply to an entity with respect to its allocable share of the top-up tax of that joint venture or joint venture affiliate for a fiscal year in accordance with section 111AO(3), or would apply if that entity was located in the State, or

(i) has revenue that exceeds the entity revenue threshold, as determined in accordance with subsection (2), for an accounting period in at least 2 previous accounting periods of the immediately previous 4 accounting periods determined by reference to its standalone financial statements, and

(ii) is not an excluded entity by virtue of section 111C(2),

but shall not include an investment entity.

(2) For the purposes of subsection (1)(c)(i), the entity revenue threshold shall be calculated as follows:

€750,000,000 x A/365

where—

A is the number of days in the accounting period concerned.

Chargeable entities

111AAC. (1) Subject to section 111AAO, a qualifying entity within the meaning of paragraphs (a) and (b) of section 111AAB(1) shall be chargeable to domestic top-up tax in respect of a fiscal year.

(2) A qualifying entity within the meaning of section 111AAB(1)(c) shall be chargeable to domestic top-up tax in respect of an accounting period.

(3) Where a flow-through entity that is not a body corporate is chargeable to domestic top-up tax by virtue of subsection (1) or (2), the persons who hold an ownership interest in the flow-through entity at any time during the fiscal year or accounting period, as the case may be, are jointly and severally liable to pay the domestic top-up tax.

Determining top-up amounts of qualifying entity

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