Tax treatment of deferred tax assets, deferred tax liabilities and transferred assets upon transition
1. For the purposes of this Article, a ‘transition year’ for a jurisdiction’ means the first fiscal year in which an MNE group or a large-scale domestic group falls within the scope of this Directive in respect of that jurisdiction.
2. When determining the effective tax rate for a jurisdiction in a transition year, and 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.
Deferred tax assets and deferred tax liabilities shall be taken into account at the lower of the minimum tax rate and the applicable domestic tax rate. However, a deferred tax asset that has been recorded at a tax rate lower than the minimum tax rate may be taken into account at the minimum tax rate if the taxpayer is able to demonstrate that the deferred tax asset is attributable to a qualifying loss.
The impact of any valuation adjustment or accounting recognition adjustment with respect to a deferred tax asset shall be disregarded.
3. Deferred tax assets arising from items excluded from the computation of qualifying income or loss in accordance with Chapter III shall be excluded from the computation referred to in paragraph 2 when such deferred tax assets are generated in a transaction that takes place after 30 November 2021.
4. In the case of a transfer of assets between constituent entities after 30 November 2021 and before the commencement of a transition year, the basis in the acquired assets, other than inventory, shall be based upon the disposing constituent entity’s carrying value of the transferred assets upon disposal with deferred tax assets and liabilities determined on that basis.
Transitional relief for the substance-based income exclusion
1. For the purpose of applying Article 28(3), the value of 5 % shall be replaced, for each fiscal year beginning from 31 December of the following calendar years, with the values set out in the following table:
2023
10 %
2024
9,8 %
2025
9,6 %
2026
9,4 %
2027
9,2 %
2028
9,0 %
2029
8,2 %
2030
7,4 %
2031
6,6 %
2032
5,8 %
2. For the purpose of applying Article 28(4), the value of 5 % shall be replaced, for each fiscal year beginning from 31 December of the following calendar years, with the values set out in the following table:
2023
8 %
2024
7,8 %
2025
7,6 %
2026
7,4 %
2027
7,2 %
2028
7,0 %
2029
6,6 %
2030
6,2 %
2031
5,8 %
2032
5,4 %
Initial phase of exclusion from the IIR and UTPR of MNE groups and large-scale domestic groups
1. The top-up tax due by an ultimate parent entity located in a Member State in accordance with Article 5(2), or by an intermediate parent entity located in a Member State in accordance with Article 7(2) when the ultimate parent entity is an excluded entity, shall be reduced to zero:
(a)
in the first five years of the initial phase of the international activity of the MNE group, notwithstanding the requirements laid down in Chapter V;
(b)
in the first five years, starting from the first day of the fiscal year in which the large-scale domestic group falls within the scope of this Directive 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 a Member State in accordance with Article 14(2) shall be reduced to zero in the first five years of the initial phase of the international activity of that MNE group, notwithstanding the requirements laid down in Chapter V.
3. An MNE group shall be considered to be in the initial phase of its international activity if, for a fiscal year:
(a)
it has constituent entities in no more than six jurisdictions; and
(b)
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 EUR 50 000 000.
For the purposes of the first subparagraph, point (b), ‘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 Directive. The total value of tangible assets in a jurisdiction shall be 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. The period of five years referred to in paragraph 1, point (a), and in paragraph 2 shall start from the beginning of the fiscal year in which the MNE group originally falls within the scope of this Directive.
For MNE groups that are within the scope of this Directive when it enters into force, the five-year period referred to in paragraph 1, point (a), shall start on 31 December 2023.
For MNE groups that are within the scope of this Directive when it enters into force, the five-year period referred to in paragraph 2 shall start on 31 December 2024.
For large-scale domestic groups that are within the scope of this Directive when it enters into force, the five-year period referred to in paragraph 1, point (b), shall start on 31 December 2023.
5. The designated filing entity referred to in Article 44 shall inform the tax administration of the Member State in which it is located of the start of the initial phase of the MNE group’s international activity.
Election for a delayed application of the IIR and UTPR
1. By way of derogation from Articles 5 to 14, Member States in which no more than twelve ultimate parent entities of groups within the scope of this Directive are located may elect not to apply the IIR and the UTPR for six consecutive fiscal years beginning from 31 December 2023. Member States that make such election shall notify the Commission by 31 December 2023.
2. Where the ultimate parent entity of an MNE group is located in a Member State that has made an election pursuant to paragraph 1 of this Article, the Member States, other than the one in which the ultimate parent entity is located, shall ensure that the constituent entities of that MNE group are subject, in the Member State in which they are located, to the UTPR top-up tax amount allocated to that Member State for the fiscal years beginning from 31 December 2023 in accordance with Article 14.
The ultimate parent entity referred to in the first subparagraph 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.
In such cases, the designated filing entity shall file a top-up tax information return in accordance with the requirements set out in Article 44(5). The constituent entities located in the Member State that has made an election pursuant to paragraph 1 of this Article shall provide the designated filing entity with information necessary to comply with Article 44(5) and shall be exempted from the filing obligation referred to in Article 44(2).
3. The UTPR percentage determined for a Member State that has made an election pursuant to paragraph 1 shall be deemed to be zero for the fiscal year.
Transitional relief for filing obligations
Notwithstanding Article 44(7), the top-up tax information return and the notifications referred to in Article 44 shall be filed with the tax administration of the Member States no later than 18 months after the last day of the reporting fiscal year that is the transition year referred to in Article 47.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
