Finance (No. 2) Act 2023

Adjustments

6 (1) Sub-paragraph (2) applies where the adjusted profits of the ultimate parent of a multinational group for an accounting period would be reduced as a result of section 171(1) (ultimate parent subject to deductible dividend regime).

(2) Where this sub-paragraph applies the profit (loss) before income tax of the ultimate parent for that period is to be reduced (but not below nil) by the amount referred to in section 171(1).

(3) Sub-paragraph (4) applies where—

(a) the standard members of a multinational group in a territory have a net unrealised fair value loss for an accounting period, and

(b) that loss exceeds 50 million euros.

(4) Where this sub-paragraph applies, those losses are to be excluded from the aggregate profit (loss) before income tax of those members.

(5) For the purposes of sub-paragraph (3), the standard members of a multinational group in a territory have a net unrealised fair value loss for an accounting period to the extent their losses that arise from changes in fair value of relevant ownership interests exceed gains arising from changes in fair value of relevant ownership interests.

(6) An ownership interest in an entity is relevant if, at the end of the accounting period, the members of the multinational group do not between them have ownership interests that entitle them to 10% or more of the entity’s —

(a) profits,

(b) capital,

(c) reserves, and

(d) voting rights.

(7) Amounts of profits and qualifying tax expense allocated, for the purposes of Part 3, to a member of a multinational group from an investment entity as a result of an election under section 213 (investment entity tax transparency election) are to be reflected (to the extent they are not already) in the member’s profit (loss) before income tax and qualifying tax expense used for the purposes of applying the tests in paragraphs 7 to 9.

(8) Amounts that are to be included or otherwise taken account of, for the purposes of Part 3, in the adjusted profits and covered tax balance of a member of a multinational group as a result of an election under section 214 (taxable distribution method election) are to be reflected (to the extent they are not already) in the member’s profit (loss) before income tax and qualifying tax expense used for the purposes of applying the tests in paragraphs 7 to 9.