Revenue Note for Guidance

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Revenue Note for Guidance

CHAPTER 6

Corporate restructuring and holding structures

Overview

This Chapter contains special rules dealing with corporate restructurings (including mergers, acquisitions, and demergers) as well as addressing the application of the top-up tax rules to certain holding structures such as joint ventures and multi-parented MNE Groups.

111AL Application of consolidated revenue threshold to group mergers and demergers

Summary

This section provides for the application of the consolidated revenue threshold after a merger and a demerger. In the case of a merger, this section sets out special rules for measuring the consolidated revenue of the entities or Groups involved in the merger for purposes of the four-year revenue threshold test. In the case of a demerger, the section includes an additional rule that supplements the revenue threshold test.

Details

Definitions

(1) Introduces definitions relating to the treatment of the consolidated revenue threshold in relation to mergers and demergers:

“merger” means any arrangement where:

  • the controlling interest in the entities of all or substantially all of two or more separate groups are brought under the ownership of a single entity or group to form a single group, or
  • 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 two or more groups that are no longer consolidated by the same ultimate parent entity in its consolidated financial statements.

Merger

(2) This subsection applies where two or more groups merge into a single group. For the purposes of the consolidated revenue test, where 2 or more groups merge to form a single group in any of the 4 consecutive fiscal years immediately preceding a fiscal year, the revenue of the merged group shall be deemed to be greater than the consolidated revenue threshold (€750,000,000) 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) This subsection applies where an entity that is not a member of a group merges with an entity or a group and either the new member entity or the acquiring entity did not have consolidated financial statements in any of the last four consecutive fiscal years immediately preceding that fiscal year. The consolidated revenue threshold is deemed to be satisfied where 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 (i.e., €750,000,000).

Demerger

(4) This subsection applies where an MNE group demerges into two or more groups during a fiscal year. The consolidated revenue test shall be deemed to be satisfied by a demerged group:

  • (4)(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 €750,000,000 in that fiscal year, and
  • (4)(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 €750,000,000 in at least two of the fiscal years following the year of the demerger.

Relevant Date: Finance Act 2024