Finance (No. 2) Act 2023

158 Ancillary international shipping profits U.K.

(1) A member’s ancillary international shipping profits for a period are the member’s ancillary international shipping revenue for the period, less—

(a) the member’s ancillary international shipping costs for the period, and

(b) the member’s ancillary international shipping profit cap adjustment for the period.

(2) A member’s ancillary international shipping revenue is all revenue earned by the member in consideration for the member’s performance of ancillary international shipping activities.

(3) A member’s ancillary international shipping costs are the sum of—

(a) all costs incurred by the member that are directly attributable to the member’s performance of ancillary international shipping activities, and

(b) all costs incurred by the member that are indirectly attributable to the member’s performance of ancillary international shipping activities multiplied by the ancillary international shipping factor.

(4) The ancillary international shipping factor is the ancillary international shipping revenue divided by all revenue earned by the member from any source.

(5) An activity is an ancillary international shipping activity if—

(a) it is of a type referred to in subsection (6), and

(b) it is performed primarily in connection with international shipping.

(6) The types of activity are—

(a) leasing as lessor a ship to be used for international shipping, where—

(i) the ship is not leased fully equipped, crewed and supplied,

(ii) the lessee is a third party, and

(iii) the lease has not been in effect for a period exceeding three years, or entered into on terms that would result in the lease being in effect for such a period;

(b) selling tickets for a domestic leg of an international voyage carried out by a third party;

(c) leasing as lessor a container of a kind used for international shipping;

(d) storing such a container for a short period, including by leasing as lessor space for the storage of such a container by another person;

(e) providing support services (see subsection (7)(e)) to persons engaged in international shipping;

(f) holding assets necessary for the member to carry out a core international shipping activity;

(g) the disposal of emissions allowances it is necessary for the member to hold in order to carry out international shipping.

(7) For the purposes of subsection (6)—

(a) “third party”, in relation to a member of a multinational group, means a person that is not—

(i) the member, or

(ii) a member of the same multinational group;

(b) “domestic leg of an international voyage” means the transportation of passengers or cargo by ship between two locations in a single territory in circumstances where the ship’s overall voyage has proceeded from or will continue to a different territory;

(c) a lease of a ship is in effect for the period in which the practical effect of that lease and any associated arrangements (including any other lease) is that a person is in the position of a lessee of the ship, whether or not the lease or any other document expressly provides that the person is a lessee of the ship for the whole of that period;

(d) “lessee”, in relation to a ship, means the person referred to in paragraph (c);

(e) “support services” means engineering, maintenance, cargo handling, catering and customer relations services.

(8) The member’s ancillary international shipping profit cap adjustment is to be calculated by taking the following steps—

• Step 1

  Determine the “cap threshold” in accordance with Steps 2 to 5.

• Step 2

  Calculate the core international shipping profits for each member of the group in the territory.

• Step 3

  Add together the amounts calculated at Step 2.

• Step 4

  If the result of Step 3 is nil or less, the cap threshold is nil. Otherwise, proceed to Step 5.

• Step 5

  Divide the result of Step 3 by two. This is the cap threshold.

• Step 6

  Calculate the ancillary international shipping profits for each member of the group in the territory (ignoring the requirement to subtract the ancillary international shipping profit cap adjustment).

• Step 7

  Add together the amounts calculated at Step 6.

• Step 8

  Subtract the cap threshold from the result of Step 7. If the result is nil or less, the member’s ancillary international shipping profit cap adjustment is nil. Otherwise, proceed to Step 9.

• Step 9

  If the ancillary international shipping profits for the member calculated at Step 6 are nil or less, the member’s ancillary international shipping profit cap adjustment is nil. Otherwise, proceed to Step 10.

• Step 10

  Add together any positive ancillary international shipping profits calculated at Step 6.

• Step 11

  Divide the ancillary international shipping profits for the member calculated at Step 6 by the result of Step 10.

• Step 12

  Multiply the result of Step 8 by the result of Step 11. This is the member’s ancillary international shipping profit cap adjustment.