MNE groups with an overseas UPE that does not apply the IIR and a UK entity is the most senior entity in the group that applies the IIR
1
Non-UK
non-IIR Co
i.e.US Inc
US Holdco
UK Holdco
30%
70%
Subs
US Subs
MNE groups with an overseas UPE that does not apply the IIR and a UK entity is the most senior entity in the group that applies the IIR
1
In this example, a multinational group is parented by a company resident in a country that does not apply the IIR, such as the US. The parent company has a 100% subsidiary based in the UK. The UK Hold Co has a 100% subsidiary based in a low tax territory (LTT) as well as minority holdings in US Subs.
UK Hold Co will be the responsible member for its own foreign subsidiaries as well as the US subsidiaries it has an ownership interest in.
UK Hold Co may also need to account for the undertaxed profit rules (UTPR), which brings in low taxed income that is not picked up by the IIR. This could be relevant here as UK Holdco can’t apply the IIR to entities that it does not have an ownership interest in i.e. non IIR Top Co, US Holdco or 70% of US Subs.
Unless a QDMTT is payable in the LTT on the LTT company’s profits, the UK intermediate company will be subject to an additional tax to bridge the gap between 15% and the LTT company’s effective tax rate as calculated under the GloBE rules. This is in addition to the necessary registration, filing, and reporting requirements mentioned in the previous example.
Here the UK entity will need to perform the UK MTT/GloBE IIR calculations and make the necessary elections, such as the safe harbour elections. Additionally, it will be required to prepare a UK DTT (QDMTT) calculation for the UK entities within the group. These calculations must be completed by the same deadlines as the return filing dates.
The UK will also have an obligation to:
- Register with HMRC
- Submit the Information and Self-assessment Returns
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MNE groups with a UK UPE
2
UK Co
UK Holdco
Overseas Holdco
Subs
Subs
MNE groups with a UK UPE
2
If an in-scope UK-headed group has a subsidiary in a low tax territory (LTT), and no QDMTT is payable in the LTT on the subsidiary's profits, the UK parent company will be liable for an additional tax to bridge the gap between 15% and the LTT subsidiary's effective tax rate as calculated under the GloBE rules. This is in addition to the necessary registration, filing, and reporting requirements.
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MNE groups with a non-UK UPE (or parent of the UK entities) that applies the IIR
3
Non-UK
IIR Co
Overseas Holdco
UK Co
Subs
Here the overseas entity will apply and carry out the GloBE IIR calculations.
The UK will still have an obligation to:
- Register with HMRC
- Submit the Information and Self-assessment Returns (set out above) – Deadline 15 months of the end of the accounting period (or 18 months if the first period).