{
  "url": "https://openlegislation.uk/finance-act-2026/schedule-8/paragraph-39",
  "json_url": "https://openlegislation.uk/finance-act-2026/schedule-8/paragraph-39.json",
  "legislation": "ukpga/2026/11",
  "legislation_title": "Finance Act 2026",
  "legislation_url": "https://openlegislation.uk/finance-act-2026",
  "path": "schedule/8/paragraph/39",
  "kind": "paragraph",
  "number": "39",
  "heading": "Simplified calculations for non-material members",
  "text": "In Schedule 16A (safe harbours), at the end insert—\n“Part 3\nSimplified calculations for non-material members of group\nElection in respect of non-material members\n8 (1) The filing member of a multinational group may for an accounting period make an election under this paragraph in respect of one or more members of the group in a territory.\n(2) An election may be made only if for the accounting period in question—\n(a) the specified members are non-material members of the group,\n(b) the accounting conditions are met, and\n(c) any of the following is met—\n(i) the routine profits test;\n(ii) the de minimis test;\n(iii) the effective tax rate test.\n(3) Where an election is made, the total top-up amount for the accounting period for the territory is assumed to be nil for the purpose of determining the liability of any member of the group to multinational top-up tax.\n(4) Paragraph 2 of Schedule 15 (annual elections) applies to an election under this paragraph.\n“Non-material member”\n9 For the purposes of paragraph 8(2)(a), a member of a multinational group is a “non-material member” of the group for an accounting period if for the period in question—\n(a) the member’s assets, liabilities, income, expenses and cash flows are not included in the consolidated financial statements of the ultimate parent on a line-by-line basis,\n(b) their non-inclusion in those statements is solely on the grounds of size or materiality, and\n(c) an external auditor has agreed (without qualification) to their non-inclusion in those statements on those grounds,\nor if for the period in question the member is a permanent establishment of a member that meets the conditions in paragraphs (a) to (c).\nAccounting conditions\n10 (1) For the purposes of paragraph 8(2)(b), “the accounting conditions” for an accounting period are—\n(a) that consolidated financial statements falling within section 249(1)(a) or (c) have been prepared by the ultimate parent of the group,\n(b) that those consolidated financial statements have been externally audited, and\n(c) that financial statements have been prepared in accordance with an acceptable accounting standard or an authorised accounting standard in respect of any specified member whose revenue exceeds 50 million euros.\n(2) The reference in sub-paragraph (1)(c) to the revenue of a specified member is to its revenue as it would be determined under the country-by-country reporting rules.\nRoutine profits test\n11 (1) For the purposes of paragraph 8(2)(c), “the routine profits test” is met for an accounting period if, on the assumption in sub-paragraph (2), the result of Step 4 in section 194 would be nil or less for the period for the relevant territory.\n(2) The assumption is that for the period in question the adjusted profits of each specified member are equal to the revenue of that member as it would be determined under the country-by-country reporting rules.\nDe minimis test\n12 (1) For the purposes of paragraph 8(2)(c), “the de minimis test” is met for an accounting period if, on the assumption in sub-paragraph (2), an election under section 199 (de minimis exclusion) could be made for the period for the relevant territory.\n(2) The assumption is that for the period in question—\n(a) the revenue of each specified member, and\n(b) the adjusted profits of each specified member,\nis or are equal to the revenue of that member as it would be determined under the country-by-country reporting rules.\nEffective tax rate test\n13 (1) For the purposes of paragraph 8(2)(c), “the effective tax rate test” is met for an accounting period if, on the assumption in sub-paragraph (2), the effective tax rate of the standard members of the group in the relevant territory for the period would be 15% or more.\n(2) The assumption is that for the period in question—\n(a) the adjusted profits of each specified member are equal to the revenue of the member as it would be determined under the country-by-country reporting rules, and\n(b) the covered tax balance of each specified member is equal to the member’s income tax expense as it would be determined under the country-by-country reporting rules.\nInterpretation etc\n14 In this Part of this Schedule, in relation to an election under paragraph 8—\n“the country-by-country reporting rules” means—\n(a)where legislation implementing the OECD’s guidance on country-by-country reporting has effect in the relevant territory, that legislation;\n(b)otherwise, that guidance;\n“the relevant territory” means the territory in which the specified members are located;\n“the specified members” means the members of the group in respect of which the election is made.\n15 Nothing in this Part of this Schedule requires a country-by-country report actually to be filed in respect of a multinational group in order for an election under paragraph 8 to be made.”",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/ukpga/2026/11/schedule/8/paragraph/39",
    "retrieved_at": "2026-10-29T08:42:24.914774+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}