Revenue Note for Guidance

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Revenue Note for Guidance

111AY Initial phase of exclusion from IIR and UTPR of MNE groups and large-scale domestic groups

Summary

This section provides a transitional exclusion from the IIR, in certain circumstances, and UTPR for MNE Groups that are in the initial phase of their international activity or large-scale domestic groups in their first five years in scope of this Part for the first time.

Details

Application

(1) The IIR top-up tax due by an ultimate parent entity or an intermediate parent entity (when the ultimate parent entity is an excluded entity) located in the State in respect of itself, and any other constituent entities located in the State, shall be reduced to zero where the ultimate parent entity or the intermediate parent entity are either

  • a member of an MNE Group in the first 5 years of the initial phase of the international activity of the MNE group, or
  • 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 UTPR 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.

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

  1. it has constituent entities in no more than 6 jurisdictions, and
  2. 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.

(3)(b) For the purpose of paragraph (a)(ii), the ‘reference jurisdiction’ is 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 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) The period of 5 years as it relates to MNE groups, shall start from the beginning of the fiscal year in which the MNE group first comes within the scope of this Part.

(4)(b) For MNE groups that are within the scope of this Part when it comes into operation, the 5-year period as it relates to IIR top-up tax shall start on 31 December 2023.

(4)(c) For MNE groups that are within the scope of this Part when it comes into operation, the 5-year period as it relates to UTPR top-up tax shall start on 31 December 2024.

(4)(d) For large-scale domestic groups that are within the scope of this Part when it comes into operation, the 5-year period as it relates to IIR top-up tax shall start on 31 December 2023.

(5) Where subsections (1) or (2) apply 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.

Relevant Date: Finance Act 2024