Article 26 - Intra-group Financing Arrangements

The provisions of this Article apply when a low-tax CE located in the State incurs an expense resulting from a financing arrangement within the MNE Group obtained from another High-Tax Counterparty.

The computation of a low-tax Entity’s GloBE Income or Loss shall exclude any expense attributable to an Intragroup Financing Arrangement that can reasonably be anticipated, over the expected duration of the arrangement to increase the amount of expenses recognized in calculating the GloBE Income or Loss of that Entity, without resulting in a commensurate increase in the taxable income of the high-tax counterparty.

An Intragroup Financing Arrangement means any arrangement entered into between one or more members of the MNE Group whereby a High Tax Counterparty, directly or indirectly, provides financing, credit, or otherwise invests in a low-tax Entity.

A Low-Tax Jurisdiction means a jurisdiction in which the MNE Group has net GloBE income for a Tax Period and is subject to an ETR in that period lower than the minimum tax rate.

Definition of a Low-Tax CE is defined as a CE located in a low-tax jurisdiction or in a jurisdiction that would be considered a low-tax jurisdiction if the ETR in that jurisdiction were determined without considering any income or expenses owed by that Entity in relation to an intra-MNE Group financing arrangement.

Definition of the High-Tax Counterparty is defined as a CE located in a jurisdiction that is not a low-tax jurisdiction or located in a jurisdiction that would not be considered a low-tax jurisdiction if the ETR in that jurisdiction were determined without considering any income or expenses owed by that Entity in relation to an intra-MNE Group financing arrangement.