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

(1) The top-up tax due by—

(a) an ultimate parent entity located in the State in accordance with—

(i) section 111E(1), in respect of constituent entities located in the State, or

(ii) section 111E(2),

or

(b) an intermediate parent entity located in the State in accordance with—

(i) section 111F(1), in respect of constituent entities located in the State, or

(ii) section 111F(2),

when the ultimate parent entity is an excluded entity,

shall be reduced to zero where—

(I) the ultimate parent entity or the intermediate parent entity are a member of an MNE group, in the first 5 years of the initial phase of the international activity of the MNE group, notwithstanding the requirements laid down in Chapter 5, or

(II) the ultimate parent entity or the intermediate parent entity 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 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, notwithstanding the requirements laid down in Chapter 5.

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

(i) it has constituent entities in no more than 6 jurisdictions, and

(ii) 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.

(b) For the purpose of paragraph (a)(ii)—

(i) ‘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 Part, and

(ii) 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) Subject to paragraph (b), (c) and (d), the period of 5 years referred to in subsections (1)(I) and (2), shall start from the beginning of the fiscal year in which the MNE group first comes within the scope of this Part.

(b) For MNE groups that are within the scope of this Part when it comes into operation, the period of 5 years referred to in subsection (1)(I) shall start on 31 December 2023.

(c) For MNE groups that are within the scope of this Part when it comes into operation, the period of 5 years referred to in subsection (2) shall start on 31 December 2024.

(d) For large-scale domestic groups that are within the scope of this Part when it comes into operation, the period of 5 years referred to in subsection (1)(II) shall start on 31 December 2023.

(5) Where subsection (1) or (2) applies 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.