Finance Act 2025
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Amendment of Part 4A of Principal Act (Implementation of Council Directive (EU) 2022/2523 of 15 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) | ||
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95. (1) Part 4A of the Principal Act is amended— | ||
(a) in section 111A(1)— | ||
(i) by the substitution of the following definition for the definition of “ultimate parent entity”: | ||
“ ‘ultimate parent entity’ means— | ||
(a) an entity that owns, directly or indirectly, a controlling interest in any other entity and that is not owned, directly or indirectly, by another entity with a controlling interest in it, or | ||
(b) the main entity of a group referred to in paragraph (b) of the definition in this subsection of ‘group’, | ||
but where an entity (hereinafter referred to as ‘the first-mentioned entity’) meets the conditions of paragraph (a) and is included in the consolidated financial statements of another entity that is a member of the MNE group or large-scale domestic group which meets the conditions of paragraph (a), then, the first-mentioned entity shall not be an ultimate parent entity;”, | ||
and | ||
(ii) by the insertion of the following definitions: | ||
“ ‘Directive on Administrative Cooperation’ means Council Directive 2011/16/EU of 15 February 201146 as amended by Council Directive 2014/107/EU of 9 December 201447 , Council Directive (EU) 2015/2376 of 8 December 201548 , Council Directive (EU) 2016/881 of 25 May 201649 , Council Directive (EU) 2016/2258 of 6 December 201650 , Council Directive (EU) 2018/822 of 25 May 201851 , Council Directive (EU) 2020/876 of 24 June 202052 , Council Directive (EU) 2021/514 of 22 March 202153 , Council Directive (EU) 2023/2226 of 17 October 202354 and Council Directive (EU) 2025/872 of 14 April 202555 ; | ||
‘OECD Pillar Two MCAA’ means the document entitled OECD (2025), Tax Challenges Arising from the Digitalisation of the Economy – Multilateral Competent Authority Agreement on the Exchange of GloBE Information, OECD/G20 Inclusive Framework on BEPS, OECD, Paris, published by the OECD on 15 January 2025;”, | ||
(b) in section 111B(1), in the definition of “OECD Pillar Two guidance”— | ||
(i) by the substitution of the following paragraph for paragraph (b): | ||
“(b) the document entitled OECD (2025), Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two) Examples, OECD, Paris, published by the OECD on 9 May 2025,”, | ||
and | ||
(ii) by the substitution of the following paragraph for paragraph (f): | ||
“(f) the document entitled OECD (2025), Tax Challenges Arising from the Digitalisation of the Economy – GloBE Information Return (January 2025): Inclusive Framework on BEPS, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, published by the OECD on 15 January 2025, and”, | ||
(c) in section 111N(1)— | ||
(i) in paragraph (a), by the substitution of “Subject to paragraph (c), the UTPR top-up tax amount arising pursuant” for “The UTPR top-up tax amount arising pursuant”, and | ||
(ii) by the insertion of the following paragraph after paragraph (b): | ||
“(c) Where all of the constituent entities of an MNE group located in the State (in this paragraph referred to as ‘the domestic constituent entities’) consent, the UTPR top-up tax amount of the MNE group arising pursuant to section 111L(1), 111M(1) or 111AZ(1), as the case may be, may be allocated to the domestic constituent entities for a fiscal year in a manner agreed between all of the domestic constituent entities, provided that the full amount of the UTPR top up tax amount of the MNE group arising pursuant to section 111L(1), 111M(1) or 111AZ(1), as the case may be— | ||
(i) is allocated to one or more of the domestic constituent entities for the fiscal year, and | ||
(ii) is paid to the Revenue Commissioners, by the domestic constituent entities to which such amounts have been allocated, on or before the specified return date in respect of the fiscal year.”, | ||
(d) in section 111O— | ||
(i) by the substitution of the following subsection for subsection (3): | ||
“(3) Where an ultimate parent entity does not prepare financial statements as referred to in paragraph (a), (b) or (c), as the case may be, of the definition of ‘consolidated financial statements’ in section 111A, for the purposes of determining the financial accounting net income or loss of an entity, the financial statements of the ultimate parent entity referred to in paragraph (d) of that definition shall be those that would have been prepared if the ultimate parent entity were required to prepare such consolidated financial statements in accordance with— | ||
(a) an acceptable financial accounting standard, or | ||
(b) an authorised financial accounting standard, provided that such consolidated financial statements are adjusted to prevent any material competitive distortion.”, | ||
and | ||
(ii) in subsection (4), by the substitution of “referred to in subsection (3)(b) or paragraph (c) of the definition, in section 111A, of ‘consolidated financial statements’, as the case may be” for “referred to in subsection (3)”, | ||
(e) in section 111P(1), by the substitution of the following definition for the definition of “excluded equity gain or loss”: | ||
“ ‘excluded equity gain or loss’ means a gain, profit or loss, included in the financial accounting net income or loss of the constituent entity, arising from any of the following: | ||
(a) gains and losses arising from changes in the fair value of an ownership interest, other than a portfolio shareholding; | ||
(b) profits or losses in respect of an ownership interest that is included under the equity method of accounting; | ||
(c) gains and losses from the disposal of an ownership interest, other than the disposal of a portfolio shareholding;”, | ||
(f) in section 111X(8)— | ||
(i) in paragraph (b), by the substitution of “Except where the tax law or practice of a jurisdiction provides otherwise in respect of the order of offset of losses against a covered tax, for the purposes”, for “For the purposes”, and | ||
(ii) by the insertion of the following paragraph after paragraph (b): | ||
“(c) For the purposes of determining the total deferred tax adjustment amount for a fiscal year, where a loss deferred tax asset arising in a fiscal year (in this paragraph referred to as the ‘originating fiscal year’) is attributable to both a qualifying loss and a loss that is not a qualifying loss, then, the reversal of that loss deferred tax asset shall be attributable to a qualifying loss in the same proportion as the qualifying loss bears to the sum of the qualifying loss and the loss that is not a qualifying loss in the originating fiscal year.”, | ||
(g) in section 111AH(1), in the definition of “minority-owned constituent entity”, by the insertion of “, including where the ultimate parent entity has no direct or indirect ownership interest in the constituent entity,” after “the total ownership interests of the constituent entity”, | ||
(h) in section 111AI— | ||
(i) in subsection (2), by the substitution of “and subject to subsections (3) to (7)” for “and subject to subsections (3) to (6)”, | ||
(ii) by the substitution of the following subsection for subsection (7): | ||
“(7) The QDTT Safe Harbour for a jurisdiction shall not apply where the central, state or local government, or their administration or agencies that carry out government functions, of that jurisdiction provides the tax attributes that result in the deferred tax assets and liabilities described in section 111AW(5) and the jurisdiction does not exclude those tax attributes from the computations in determining the total deferred tax adjustment amount or the simplified covered taxes (within the meaning of section 111AJ) under the transitional CbCR safe harbour (within the said meaning) implemented under the laws of that jurisdiction, when calculating the domestic top-up tax implemented under the laws of that jurisdiction.”, | ||
and | ||
(iii) by the insertion of the following subsection after subsection (7): | ||
“(8) All relevant information concerning the application of the QDTT Safe Harbour shall be included in the top-up tax information return for the fiscal year in accordance with section 111AAI.”, | ||
(i) in section 111AJ, by the substitution of the following definition for the definition of “simplified covered taxes”: | ||
“ ‘simplified covered taxes’ means the aggregate income tax expense of all constituent entities, or joint venture and joint venture affiliates, as the case may be, of an MNE group in a jurisdiction for a fiscal year, as reported in the MNE group’s qualified financial statements, excluding— | ||
(a) any tax that is not a covered tax in accordance with section 111T, | ||
(b) uncertain tax positions reported in the MNE group’s qualified financial statements, and | ||
(c) deferred tax expense attributable to a deferred tax asset or deferred tax liability set out in subsection (5) of section 111AW, or the reversal thereof, in excess of the maximum amount allowed under subsections (7) to (10) of section 111AW.”, | ||
(j) in section 111AO— | ||
(i) in subsection (1)— | ||
(I) in the definition of “joint venture”— | ||
(A) by the substitution of “an ultimate parent entity” for “its ultimate parent entity”, and | ||
(B) by the substitution of “that ultimate parent entity” for “the ultimate parent entity”, | ||
and | ||
(II) by the insertion of the following definition: | ||
“ ‘joint venture group top-up tax’ means the ultimate parent entity’s allocable share of the top-up tax of the joint venture group;”, | ||
and | ||
(ii) by the substitution of the following subsection for subsection (5): | ||
“(5) The joint venture group top-up tax for a fiscal year shall be reduced by each parent entity’s allocable share of the top-up tax of each member of the joint venture group that is brought into charge under a qualified IIR for the fiscal year and any remaining amount of top-up tax shall be added to the total UTPR top-up tax amount pursuant to section 111N(3).”, | ||
(k) in section 111AW— | ||
(i) by the substitution of the following subsection for subsection (1): | ||
“(1) In this section— | ||
‘governmental arrangement’ means any agreement, ruling, decree, grant or similar arrangement, including any amendment or modification thereof, with the central, state or local government, or their administration or agencies that carry out government functions, of a jurisdiction which provides an entitlement to a tax credit or other tax relief where a critical aspect of the credit or relief, such as the eligibility thereto or the amount thereof, relies on discretion exercised by that government or their administration or agencies that carry out government functions; | ||
‘grace period’ means— | ||
(a) for deferred tax expense attributable to the reversal of a deferred tax asset described in paragraph (a) or (b) of subsection (5), all fiscal years beginning on or after 1 January 2024 and before 1 January 2026 but not including a fiscal year that ends after 30 June 2027, and | ||
(b) for deferred tax expense attributable to the reversal of a deferred tax asset described in paragraph (c) of subsection (5), all fiscal years beginning on or after 1 January 2025 and before 1 January 2027 but not including a fiscal year that ends after 30 June 2028; | ||
‘grace period limitation amount’ means the deferred tax expense attributable to the reversal of deferred tax assets described in subsection (5) that does not exceed the aggregate of 20 percent of the amount of each such deferred tax asset originally recorded and taken into account for the purposes of subsection (2) at the lower of the minimum tax rate or the applicable domestic tax rate; | ||
‘transition year’, for a jurisdiction, means the first fiscal year in which an MNE group or large-scale domestic group falls within the scope of a qualified IIR, qualified UTPR or qualified domestic top-up tax, in respect of that jurisdiction.”, | ||
(ii) in subsection (2)(a), by the substitution of “Subject to subsections (5) to (10), when determining the effective tax rate” for “When determining the effective tax rate”, | ||
(iii) in subsection (2)(e), by the substitution of “Except where the tax law or practice of a jurisdiction provides otherwise in respect of the order of offset of losses against a covered tax, for the purposes” for “For the purposes”, | ||
(iv) in subsection (2), by the insertion of the following paragraph after paragraph (e): | ||
“(f) For the purposes of determining the total deferred tax adjustment amount, as set out in section 111X, where a loss deferred tax asset arising in a fiscal year (in this paragraph referred to as the ‘originating fiscal year’) is attributable to both a qualifying loss and a loss that is not a qualifying loss, then, the reversal of that loss deferred tax asset, as set out in section 111X, shall be attributable to a qualifying loss in the same proportion as the qualifying loss bears to the sum of the qualifying loss and the loss that is not a qualifying loss in the originating fiscal year.”, | ||
and | ||
(v) by the insertion of the following subsections after subsection (4): | ||
“(5) For the purposes of subsection (2) and subject to subsection (7), no account shall be taken of the following deferred tax assets or deferred tax liabilities: | ||
(a) a deferred tax asset that is attributable to a governmental arrangement concluded or amended after 30 November 2021; | ||
(b) a deferred tax asset that is attributable to an election or choice exercised or changed by a constituent entity, joint venture or joint venture affiliate after 30 November 2021 that retroactively changes the treatment of a transaction in determining its taxable income in a jurisdiction, in a taxable period for which an assessment by the tax authority of the jurisdiction was already made or a tax return was already filed; | ||
(c) a deferred tax asset or a deferred tax liability arising from a difference in the tax basis and carrying value of an asset or liability if the tax basis or carrying value was established pursuant to a tax chargeable on profits or gains under the law of a jurisdiction that is similar to corporation tax, that was enacted by a jurisdiction, that did not previously impose such a tax, after 30 November 2021 and before the transition year. | ||
(6) For the purposes of subsection (2), no account shall be taken of a deferred tax asset to the extent that it is attributable to a loss that arose more than 5 fiscal years preceding the effective date of introduction of a new tax chargeable on profits or gains under the law of a jurisdiction that is similar to corporation tax, that was enacted by a jurisdiction that did not previously impose such a tax. | ||
(7) Subject to subsections (8) and (9), the deferred tax expense attributable to the reversal of a deferred tax asset described in subsection (5) may be taken into account during the grace period but shall not exceed the grace period limitation amount. | ||
(8) Subsection (7) shall not apply to a deferred tax expense attributable to the reversal of a deferred tax asset, or portion thereof, to the extent that such deferred tax asset, or portion thereof, results from— | ||
(a) a governmental arrangement concluded or amended after 18 November 2024, | ||
(b) an election or choice described in paragraph (b) of subsection (5) exercised or changed by a constituent entity, joint venture or joint venture affiliate after 18 November 2024, or | ||
(c) a difference in the tax basis and carrying value of an asset or liability established pursuant to a tax chargeable on profits or gains under the law of a jurisdiction that is similar to corporation tax that was enacted after 18 November 2024. | ||
(9) For the purposes of subsection (7), where, after 18 November 2024, there is a change in— | ||
(a) a governmental arrangement, or | ||
(b) the law, an election or choice, or accounting methodology, | ||
that results in an increase in the amount of a deferred tax asset described in subsection (5) that reverses during the grace period, the additional amount that reverses compared to the amount that would have reversed absent such change shall not be taken into account during the grace period. | ||
(10) The sum of the total amount of deferred tax expense that is attributable to the reversal of deferred tax assets described in subsection (5) that a constituent entity, joint venture or joint venture affiliate may include when determining the effective tax rate for a jurisdiction in accordance with section 111AC and the calculation of simplified covered taxes under section 111AJ shall not exceed the maximum amount allowable under subsections (7) to (9) during the grace period.”, | ||
(l) in section 111AAC(4), by the insertion of the following paragraph after paragraph (b): | ||
“(c) Where paragraph (a) applies and the securitisation entity is a minority-owned constituent entity, within the meaning of section 111AH, then in determining the domestic top-up tax of all the other qualifying entities, excluding securitisation entities, of the MNE group or large-scale domestic group for the fiscal year, the top-up tax of the securitisation entity calculated in accordance with section 111AH for the fiscal year shall be allocated to the other qualifying entities, excluding securitisation entities, in accordance with the formula in section 111AD(5) where ‘JTUT’ is the top-up tax of the securitisation entity calculated in accordance with section 111AH.”, | ||
(m) in section 111AAD(2), by the substitution of the following paragraph for paragraph (e): | ||
“(e) there were inserted in section 111O the following subsections after subsection (3): | ||
‘(3A) (a) Notwithstanding subsections (2) and (3) and subject to subsection (3B), the financial accounting net income or loss of a qualifying entity for the fiscal year shall be determined in accordance with a local accounting standard where— | ||
(i) the qualifying entity is an entity within the meaning of section 111AAB(1)(c), or | ||
(ii) subject to paragraph (b), all of the qualifying entities of the MNE group, large-scale domestic group or joint venture group, as the case may be, located in the State have financial accounts prepared in accordance with a local accounting standard and the accounting period of all such accounts is the same as the fiscal year of the consolidated financial statements of the MNE group, large-scale domestic group or joint venture group as the case may be, and— | ||
(I) all such constituent entities are required to prepare or use such accounts for the purposes of determining their liability to tax in the State or to comply with any other law of the State, or | ||
(II) such financial accounts are subject to an external financial audit. | ||
(b) For the purposes of paragraph (a)(ii), where a qualifying entity of an MNE group, large-scale domestic group or joint venture group, as the case may be, located in the State has financial accounts prepared in accordance with a local accounting standard, but the accounting period of such financial accounts is not the same as the fiscal year of the consolidated financial statements of the MNE group, large scale domestic group or joint venture group, as the case may be, as a result of— | ||
(i) the qualifying entity being formed or created, or in the case of a permanent establishment being established, during the fiscal year, | ||
(ii) the qualifying entity being liquidated, dissolved or otherwise ceasing to exist during the fiscal year, | ||
(iii) a merger or division, within the meaning, respectively, of section 638A(1), in relation to the qualifying entity during the fiscal year, | ||
(iv) a cross-border merger or cross-border division, both within the meaning, respectively, of the European Union (Cross Border Conversions, Mergers and Divisions) Regulations 2023 ( S.I. No. 233 of 2023 ), or a merger resulting in the formation of a Societas Europaea in accordance with the SE Regulation, in relation to the qualifying entity during the fiscal year, or | ||
(v) the qualifying entity being acquired by the MNE group, large-scale domestic group or joint venture group, as the case may be, during the fiscal year, | ||
then, for the purposes of paragraph (a)(ii), the accounting period of the financial accounts of the qualifying entity shall be deemed to be the same as the fiscal year of the consolidated financial statements of the MNE group, large-scale domestic group or joint venture group, as the case may be, for that fiscal year and, where subparagraph (v) applies, for the fiscal year following the fiscal year in which the qualifying entity is acquired (referred to in this paragraph as ‘the subsequent fiscal year’), the accounting period of the financial accounts of the qualifying entity shall also be deemed to be the same as the fiscal year of the consolidated financial statements of the MNE group, large-scale domestic group or joint venture group, as the case may be, for the subsequent fiscal year. | ||
(c) In this subsection, ‘SE Regulation’ means Council Regulation (EC) No. 2157/2001 of 8 October 200156 on the Statute for a European company (SE), as amended by Council Regulation (EC) No. 885/2004 of 26 April 200457 , Council Regulation (EC) No. 1791/2006 of 20 November 200658 and Council Regulation (EC) No. 517/2013 of 13 May 201359 . | ||
(3B) (a) Subject to paragraph (b), where any of the qualifying entities of an MNE group, large-scale domestic group or joint venture group, as the case may be, located in the State prepare financial accounts under more than one local accounting standard then, for the purposes of subsection (3A), the financial accounting net income or loss of a constituent entity for the fiscal year shall be determined in accordance with— | ||
(i) the local accounting standard used for the purposes of determining the profits, losses or gains of the qualifying entity for the purposes of Case I or II of Schedule D, or | ||
(ii) where no such profits, losses or gains exist, the local accounting standard used for the preparation of the financial accounts that are annexed to the annual return to be filed with the Registrar in accordance with the Companies Act 2014 , for the accounting period which corresponds to the fiscal year. | ||
(b) Where a qualifying entity does not prepare financial accounts— | ||
(i) for the purposes of determining the profits, losses or gains of the qualifying entity for the purposes of Case I or II of Schedule D, or | ||
(ii) that are annexed to the annual return to be filed with the Registrar in accordance with the Companies Act 2014 , for the accounting period which corresponds to the fiscal year, | ||
the financial accounting net income or loss of a constituent entity for the fiscal year shall be determined in accordance with subsections (2) and (3).’,”, | ||
(n) in section 111AAI— | ||
(i) in subsection (1), by the substitution of the following paragraph for paragraph (a): | ||
“(a) is in accordance with the standard template set out in Section IV of Annex VII of the Directive on Administrative Cooperation, and”, | ||
(ii) in subsection (2), by the insertion of the following paragraph after paragraph (c): | ||
“(d) For the purposes of paragraph (b), a top-up tax information return— | ||
(i) shall be prepared in accordance with— | ||
(I) the standard template set out in Section IV of Annex VII of the Directive on Administrative Cooperation, where the ultimate parent entity or designated filing entity, as the case may be, which files the return is located in a Member State, or | ||
(II) the standardised GloBE Information Return set out in the document referred to in paragraph (f) of the definition, in section 111B, of ‘OECD Pillar Two guidance’, where the ultimate parent entity or designated filing entity, as the case may be, which files the return is not located in a Member State, | ||
and | ||
(ii) is not required to contain the information referred to in paragraphs (da) and (e) of subsection (3).”, | ||
(iii) in subsection (3), by the insertion of the following paragraph after paragraph (d): | ||
“(da) where the filing constituent entity is an ultimate parent entity or a designated filing entity, as the case may be— | ||
(i) confirmation that it is such an entity, and | ||
(ii) the identification of the— | ||
(I) relevant sections of the top-up tax information return, and | ||
(II) jurisdictions that the information shall be distributed to, | ||
pursuant to the dissemination approach set out in— | ||
(A) Article 8ae(2) of the Directive on Administrative Cooperation, with respect to information to be exchanged in accordance with that Directive with a jurisdiction that is a Member State, and | ||
(B) the definition of ‘dissemination approach’ in the OECD Pillar Two MCAA, with respect to information to be exchanged in accordance with the OECD Pillar Two MCAA with a jurisdiction that is not a Member State;”, | ||
and | ||
(iv) by the insertion of the following subsection after subsection (8): | ||
“(9) Notwithstanding section 851A, the Revenue Commissioners are authorised to communicate to the competent authority of a state, other than the State, information which is contained in a top-up tax information return, received pursuant to a filing made in accordance with section 111AAI, provided that there is a qualifying competent authority agreement in place that provides for the exchange of such information.”, | ||
(o) in section 111AAM, by the insertion of the following subsection after subsection (3): | ||
“(4) A notice in writing shall not be served under subsection (3) on a relevant UTPR member that is a securitisation entity where there is at least one other relevant UTPR member of the UTPR group that is not a UTPR group filer and is not a securitisation entity.”, | ||
(p) in section 111AAP, by the insertion of the following subsection after subsection (3): | ||
“(4) A notice in writing shall not be served under subsection (3) on a relevant QDTT member that is a securitisation entity where there is at least one other relevant QDTT member of the QDTT group that is not a QDTT group filer and is not a securitisation entity.”, | ||
and | ||
(q) in section 111AAZ— | ||
(i) by the substitution of the following subsection for subsection (1): | ||
“(1) An entity shall retain, or cause to be retained on behalf of the entity, such records as are required to enable— | ||
(a) a full and true GloBE return, and | ||
(b) a correct and complete top-up tax information return, | ||
to be made for the purposes of this Part.”, | ||
(ii) in subsection (2), by the substitution of “GloBE return, top-up tax information return” for “GloBE return”, | ||
(iii) in subsection (6), by the substitution of “GloBE return, top-up tax information return” for “GloBE return”, and | ||
(iv) by the insertion of the following subsection after subsection (6): | ||
“(7) Sections 900 and 901 shall apply, with any necessary modifications— | ||
(i) to records referred to in subsection (1) as if they were books, records or other documents within the meaning of section 900, and | ||
(ii) to information, explanations and particulars that the authorised officer, within the meaning of those sections, may reasonably require, being information, explanations and particulars which are related to, or in connection with, a GloBE return or top-up tax information return referred to in subsection (1).”. | ||
(2) Subject to subsection (3), subsection (1) shall apply in respect of a fiscal year (within the meaning of section 111A of the Principal Act) or an accounting period, as the case may be, commencing on or after 31 December 2025. | ||
(3) Paragraphs (a), (b)(ii), (c), (d), (e), (g), (h), (i), (j), (k)(i), (k)(ii), (k)(v), (l), (m), (n), (o), (p) and (q) of subsection (1) shall apply in respect of a fiscal year (within the meaning of section 111A of the Principal Act) or an accounting period, as the case may be, commencing on or after 31 December 2023. | ||
47 OJ No. L359, 16.12.2014, p.1 48 OJ No. L332, 18.12.2015, p.1 50 OJ No. L342, 16.12.2016, p.1 52 OJ No. L204, 26.6.2020, p.46 53 OJ No. L104, 25.3.2021, p.1 54 OJ L, 2023/2226, 24.10.2023 56 OJ No. L294, 10.11.2001, p.1 |