Taxes Consolidation Act 1997 section 111O

Determination of qualifying income or loss

Section 111O defines "qualifying income or loss" for the purposes of the Pillar Two global minimum tax rules, and sets out how this figure is determined from a constituent entity's financial accounts, including where alternative accounting standards may be used.

• Qualifying income or loss is the financial accounting net income or loss (FANIL) of a constituent entity for a fiscal year — defined as the net income or loss determined in preparing consolidated financial statements of the UPE, before any consolidation adjustments eliminating intra-group transactions — and is the starting point for calculating top-up tax.
• Where it is not reasonably practicable to use the accounting standard of the UPE's consolidated financial statements, an alternative acceptable or authorised standard may be used, provided the entity's accounts are maintained under that standard, the information is reliable, and permanent differences exceeding €1,000,000 are adjusted to conform to the parent's standard.
• Where the UPE does not prepare consolidated financial statements under an acceptable financial accounting standard, those statements must be adjusted to prevent any material competitive distortion — defined as an aggregate variation of income or expense of more than €75,000,000 in a fiscal year compared to the amount that would have been determined under IFRS.
• Where a specific accounting principle or procedure causes a material competitive distortion, the accounting treatment of affected items or transactions must be adjusted to conform to IFRS.

---