Allocation of cross-border current taxes under Art. 4.3.2

Step 3 of 4-step process: “Allocable Covered Taxes”

Cross-crediting regime

Cross-Crediting Allocation Key

PE and Main Entity

Allocation of cross-border current taxes under Art. 4.3.2

Step 1 of 4-step process: determining “foreign source income”

Cross-crediting regime

Hybrid Entity

Treatment of: (1) disregarded income, and (2) domestic source income, for purposes of Art. 4.3.2 allocation

Does Art. 9.1.3 apply to an intra-entity “transfer” of assets from the head office to a branch (i.e., from the Main Entity to a PE)?

Transitional CbCR Safe Harbour: impact on start of “Transition Year” for purposes of Art. 9.1.3

Art. 6.3.2 (GloBE Reorganisation) does not apply before Transition Year

GloBE carrying value

Art. 6.2.1(c) applies, Art. 6.2.2 does not apply: share sale before Transition Year

Para. 46.1 of Comm to Art. 6.2

Banks / other financial entities

Revenue threshold test in Art. 1.1.1

Gross interest income vs. net interest income: which do you count, when both are shown in income statement?

Para. 10.5 of Comm to Art. 1.1.1

IF's Guidance on CbC Reporting

Sale of shares – Art. 6.2.2 does not apply

Example 6.2.1(e)-1 in IF’s Examples document

Art. 6.2.1(c)

Art. 6.2.1(e)

Carrying value for purposes of tangible asset carve-out in SBIE

GloBE carrying value

Allocation of cross-border current taxes under Art. 4.3.2

Step 2 of 4-step process: “Allocable Covered Taxes”

Cross-crediting regime

Hybrid Entity

Qualified Refundable Tax Credit: impact on deemed domestic source income

Disregarded payment: impact on deemed domestic source income

Allocation of cross-border current taxes: Art. 4.3.2

Foreign tax credits: cross-crediting

Paras. 52 to 54 of Comm to Art. 4.3.2

4-step process

Change of residence treated as “transfer of assets” for purposes of Art. 9.1.3: para. 10.3 of Comm to Art. 9.1.3

Transitional CbCR Safe Harbour: impact on start of “Transition Year”

GloBE carrying value

Deferred tax asset for GloBE purposes: paras. 10.8.1 & 10.8.2 of Comm to Art. 9.1.3

GloBE impact of tax residence change

GloBE location: Art. 10.3.1 and Art. 10.3.6

Art. 6.3.4 applicable

Impact on GloBE Income and GloBE carrying value if Art. 6.3.4 election is made

Art. 6.2.2: sale of shares, treated as sale of assets for tax purposes

Art. 6.3.1

Para. 72 of Comm to Art. 6.3.1: acquirer’s GloBE carrying value – meaning of “to the extent”

Divergence between GloBE and accounting carrying values

Impairment: impact on GloBE carrying value and tangible asset carve-out under Substance-based Income Exclusion

Para. 68.5 of Comm to Art. 4.4

Paras. 49 & 50.1 of Comm to Art. 5.3.5