Taxes Consolidation Act 1997 section 111A

Interpretation (Part 4A)

Section 111A is the main interpretation section for Part 4A of the TCA 1997. It defines the key terms used throughout the Pillar Two rules, which ensure that large multinational enterprise (MNE) groups and large-scale domestic groups pay a minimum effective tax rate of 15 per cent.

• The section defines over 80 terms used throughout Part 4A, including "constituent entity", "MNE group", "large-scale domestic group", "ultimate parent entity", "fiscal year", "minimum tax rate" (set at 15 per cent), and the three main charging mechanisms: the Income Inclusion Rule (IIR), the Undertaxed Profit Rule (UTPR), and the Qualified Domestic Top-up Tax (QDTT).
• A group falls within scope where its consolidated revenue reaches or exceeds €750 million in a 12-month fiscal year (adjusted proportionately for shorter or longer periods). An MNE group is one with at least one entity or permanent establishment outside the jurisdiction of the ultimate parent entity; a large-scale domestic group is one where all constituent entities are in the same Member State.
• The section sets out the rules for determining fiscal transparency, flow-through entities, hybrid entities, and tax transparent structures, as well as the meaning of "controlling interest", "connected persons", and "permanent establishment" for Pillar Two purposes.
• Definitions are also provided for excluded categories such as governmental entities, international organisations, non-profit organisations, pension funds, and investment entities, together with specialised concepts including securitisation entities, qualified refundable tax credits, qualified imputation taxes, and the substance-based income exclusion.
• Further guidance on the meaning of these definitions is contained in the OECD Pillar Two Model Rules Commentary to Article 10.1. Cross references for these definitions to the Directive and Model Rules (and/or Commentary and Administrative Guidance where required) are provided in Appendix 1 of Revenue's guidance.

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