Legislation – Finance (No. 2) Act 2023

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Part 3Multinational top-up tax

F1Chapter 9AUntaxed amounts

Allocation of untaxed amounts

229CAllocation of untaxed amount to members

(1)

An untaxed amount of a member of a multinational group is to be allocated to qualifying members of the group located in the United Kingdom by—

(a)

first, determining the amount (“the UK proportion”) of the untaxed amount to be allocated to the group in the United Kingdom in accordance with section 229D, and

(b)

then, allocating an amount of the UK proportion to each qualifying member located in the United Kingdom in accordance with section 229E.

(2)

But no allocation is to be made under subsection (1) if in section 229D(1) the results of both Step 2 and Step 5 are nil.

(3)

For the purposes of this Chapter, a member of a multinational group is qualifying unless it is—

(a)

an investment entity, or

(b)

a member of a joint venture group.

229DAmount allocated to the United Kingdom

(1)

Take the following steps to determine the UK proportion of an untaxed amount of a member of a multinational group—

Step 1

Determine the number of employees of qualifying members of the group located in the United Kingdom for the accounting period to which the untaxed amount relates (“the relevant period”).
Step 2

Determine the total number of employees in the relevant period of qualifying members of the group located in territories (including the United Kingdom) in which a qualifying undertaxed profits tax applies to the untaxed amount.
Step 3

Divide the result of Step 1 by the result of Step 2.
Step 4

Determine the value of tangible fixed assets of the qualifying members of the group located in the United Kingdom for the relevant period.
Step 5

Determine the value of tangible fixed assets of the qualifying members of the group located in territories (including the United Kingdom) in which a qualifying undertaxed profits tax applies to the untaxed amount.
Step 6

Divide the result of Step 4 by the result of Step 5.
Step 7

Add together the results of Step 3 and Step 6 and divide that sum by 2.
Step 8

The UK proportion of the untaxed amount is—
1. (a)
  if the nil asset value condition is met, the untaxed amount multiplied by the result of Step 3;
2. (b)
  if the nil employee condition is met, the untaxed amount multiplied by the result of Step 6;
3. (c)
  in any other case, the untaxed amount multiplied by the result of Step 7.

(2)

For the purposes of subsection (1)—

(a)

the “nil asset value condition” is met if—

(i)

the result of Step 5 is nil, but

(ii)

the result of Step 2 is not nil;

(b)

the “nil employee condition” is met if—

(i)

the result of Step 2 is nil, but

(ii)

the result of Step 5 is not nil.

(3)

A qualifying undertaxed profits tax applies in a territory in relation to an untaxed amount if—

(a)

a qualifying undertaxed profits tax is in force in that territory for the relevant period, and

(b)

the provisions of that tax result in a proportion of the untaxed amount (however described for the purposes of that tax) that is greater than nil being allocated to the territory.

(4)

See sections 229G and 229H for how to determine the number of employees and the value of tangible fixed assets of a qualifying member of a multinational group.

229EAllocation to qualifying members

(1)

Take the following steps to determine how much of an untaxed amount is to be allocated to each qualifying member located in the United Kingdom—

Step 1

Determine the number of employees of the member in the accounting period (“the relevant period”) to which the untaxed amount relates.
Step 2

Determine the total number of employees for the relevant period of qualifying members of the group located in the United Kingdom.
Step 3

Divide the result of Step 1 by the result of Step 2.
Step 4

Determine the value of tangible fixed assets of the member for the relevant period.
Step 5

Determine the value of tangible fixed assets for the relevant period of the qualifying members of the group located in the United Kingdom.
Step 6

Divide the result of Step 4 by the result of Step 5.
Step 7

Add together the results of Step 3 and Step 6 and divide that sum by 2.
Step 8

The untaxed amount to be allocated to the member is—
1. (a)
  if the nil asset value condition is met, the UK proportion multiplied by the result of Step 3;
2. (b)
  if the nil employee condition is met, the UK proportion multiplied by the result of Step 6;
3. (c)
  in any other case, the UK proportion multiplied by the result of Step 7.

(2)

For the purposes of subsection (1)—

(a)

the “nil asset value condition” is met if—

(i)

the result of Step 5 is nil, but

(ii)

the result of Step 2 is not nil;

(b)

the “nil employee condition” is met if—

(i)

the result of Step 2 is nil, but

(ii)

the result of Step 5 is not nil.

(3)

This section is subject to section 229F.

229FElection to make one member of a group liable for untaxed amounts

(1)

The filing member of the group may elect for an accounting period that—

(a)

section 229E does not apply, and

(b)

instead, a member of the group specified in the election is to be allocated the whole of the UK proportion of each untaxed amount that would be otherwise be allocated between the qualifying members of the group located in the United Kingdom.

(2)

A member of the group may only be specified in the election if—

(a)

the member is located in the United Kingdom, and

(b)

the member has consented to the election.

(3)

Paragraph 2 of Schedule 15 (annual elections) applies to an election under this section, and has effect for that purpose as if references to an information return or overseas return notification were to a self-assessment return or below-threshold notification.