How to use the May 2025 examples
This OECD collection was revised on 2 May 2025 to incorporate illustrative examples from administrative guidance approved before the end of January 2025. The recovered source has 112 pages and covers Articles in Chapters 2, 3, 4, 5, 6, 7, 9 and 10. Examples explain specific assumed facts; they are not themselves part of the Commentary and do not establish a country’s domestic commencement date. This article follows every substantive example group, retaining its numerical assumptions. This is an adaptation of an original work by the OECD. The opinions expressed and arguments employed in this adaptation should not be reported as representing the official views of the OECD or of its Member countries.
Article 2.1.3: top-down IIR and overlapping interests
If the UPE country has no qualified IIR, two qualifying intermediate parents each owning 50% of a low-taxed entity apply their respective 50% shares. In the second example, B1 owns 20% of B2, B1 directly owns 10% of C and B2 owns 90% of C. B1 does not control B2, so both apply IIR: B2 initially takes 90%, while B1’s direct and indirect shares total 28%. The 18% overlap charged by B2 is offset, leaving B1 with 10%. Holding an indirect interest alone does not switch off the lower parent’s IIR.
Article 2.1.5: wholly owned and partly owned POPE chains
With A owning 60% of B and outside investors 40%, B wholly owning C and C wholly owning low-taxed D, both B and C qualify as partially-owned parent entities. C is wholly owned by another POPE, so B applies IIR to 100% of D’s tax and A’s 60% share is fully offset. If outsiders instead directly own 10% of C and B owns 90%, C has 46% direct and indirect outside ownership and is not wholly owned by B. C then charges 100% of D’s tax; B and A remain subject to the applicable IIR rules, with overlapping amounts eliminated by offsets.
Articles 2.2.3 and 2.2.4: use GloBE income for inclusion ratios
C has accounting income 18,000, GloBE income 20,000 and top-up tax 1,000. B owns 20% of C, while A owns 70% directly and 70% of B. B’s share is 200. A’s 84% ratio gives 840 before a 140 overlap offset, leaving 700. A’s wholly owned D has GloBE income 35,000 despite zero consolidated income after eliminations; its 500 top-up tax belongs fully to A. In the reverse-hybrid example, first remove income belonging to outside owners’ 40% interest. All remaining income belongs to the 60% group parent, producing a 100% inclusion ratio on that remaining base, rather than reducing the same income twice.
Article 2.3.2: offsets follow the portion charged below
For top-up tax of EUR 10 million, a POPE wholly owning the low-taxed entity charges 10 million and the UPE’s indirect 60% share of 6 million is fully offset. If the UPE instead owns 50% directly and the POPE owns 50%, the POPE charges 5 million; the UPE’s 80% direct/indirect share is 8 million, reduced by the 3 million overlap to 5 million. In a non-implementing UPE structure, a lower intermediate parent owning all of the low-taxed entity charges 10 million, while an upper intermediate parent’s 40% indirect share of 4 million is offset to zero. The offset matches the relevant ownership portion, not every tax charged anywhere in the chain.
Articles 2.4.1 and 2.4.2: a deduction denial is not always immediate cash tax
A jurisdiction receives UTPR tax of 60 and has a 20% rate. Denying deductions of 300 turns a year-one loss of 100 into profit of 200, producing cash tax of 40. If losses would ordinarily carry forward, eliminating the 100 loss creates another 20 of cash tax against year-two profit of 100, completing collection without another adjustment. If local law never allows loss carry-forward, year-two tax of 20 would arise anyway and is not additional UTPR cash tax. An extra deduction denial of 100 in year two is then needed to collect the remaining 20.
Articles 2.5.3 and 2.6.4: residual UTPR and the all-zero exception
A UPE holds 95% of C overall, but only B’s 40% interest is subject to qualified IIR. C’s top-up tax of 100 is reduced by B’s 40, leaving UTPR tax of 60, including the portion associated with outside minority ownership. In the four-year collection example, B and D initially each receive 50 of UTPR tax 100. B’s failure to collect makes its next-year percentage zero, so D receives 100. If both then have uncollected tax, the all-zero exception restores their ordinary 50/50 allocation in year three. Once balances are collected, year four uses the normal allocation again.
Article 3.1.2: five currency-conversion situations
Five examples distinguish transaction-level translation, monthly aggregate translation, subsidiaries outside a consolidation system, acquisition-system integration and hyperinflation. IFRS-compliant spot rates for income postings and closing rates for balance sheets are respected. Where granular adjustments are only available annually, annual averages can be acceptable if consistent with the accounting standard. Different compliant approaches can coexist for newly acquired entities, even in the same jurisdiction, during a three-year integration plan. That practical approach is not suitable for a hyperinflationary subsidiary using Argentine pesos: its translation must follow the accounting standard’s hyperinflation principles.
Article 3.2.1(b): portfolio-dividend holding periods
A owns fewer than 10% of B and receives 0.10 per share. It buys 200 shares in July of year one and 100 in March of year two. At December year two, the old shares produce excluded dividends of 20; the newer shares, held under 12 months, produce GloBE income of 10. Selling 40 shares in September year two is treated as selling the most recently acquired same-class shares, leaving excluded dividends 20 and included dividends 6. Selling 50 of the original shares before the later purchase instead leaves excluded dividends 15 and included dividends 10. Test each tranche and apply the specified latest-acquired disposal convention.
Article 3.2.1(c): a treasury hedge follows the investment holder
Treasury company TC borrows euros externally to hedge a subgroup investment held by another company. Consolidated hedge accounting records the currency movement in OCI; matching intra-group lending neutralises TC’s entity-level gain and loss. The investment holder instead has an untaxed FX expense of 100 and book profit 900, with tax 250. The elected excluded hedge loss is assigned to that investment holder, adding back 100 for GloBE. TC and the subgroup each end with GloBE income 1,000 and ETR 25%. The issuer of the external instrument does not necessarily retain the hedge adjustment.
Article 3.2.1(f): asymmetric FX adjustments can increase or reduce income
A euro tax currency and dollar accounting currency create three different outcomes. A dollar bond produces a tax-only euro loss of 200, translated to 250 dollars: book income 625 is reduced to 375, with tax 75 and ETR 20%. A euro interest liability produces a book-only dollar loss of 125: add it back to book income 1,125 to obtain 1,250 and ETR 20% on tax 250. For a sterling receivable, remove the book FX gain of 18 but add the euro-currency FX gain translated to 18 even though local law excludes that gain. The two adjustments cancel, leaving income 346 and tax 49, or approximately 14% ETR.
Article 3.2.1(i): pension expense follows contributions
Year one income is 100 with pension accrual 20 and no contribution. Add back the accrual, ignore its book DTA movement and use GloBE income 100 and covered tax 15. In year two a contribution of 15 is made without a new accrual: deduct 15, ignore the related DTA reversal, and use income 85 and tax 12.75. In year three plan earnings of 40 exceed new liabilities of 10, producing book pension income of 30. Remove that surplus and its deferred-tax effect, leaving income 100 and tax 15. The adjustment reverses accrued pension income or expense and recognises the actual fund contribution instead.
Article 3.2.3: three transfer-price mismatches
A books service expense 100 and B books income 100. If A’s high-tax return deducts 150, GloBE adjusts both to 150 so the extra 50 is exposed in B. If A’s unilateral pricing agreement permits only 80, reduce A’s expense and B’s income by 20 to prevent double taxation. If low-tax B instead reports taxable income 50 under its own unilateral agreement while both accounts and A’s return remain 100, reducing GloBE to 50 would create double non-taxation and is neither required nor permitted. These examples make adjustments contemporaneously with the tax returns, rather than as later Article 4.6.1 changes.
Articles 3.2.6 and 3.2.7: asset gains and financing expenses
An elected local tangible-asset gain of 200 in year five first offsets a year-three asset loss of 25. Spread the remaining 175 equally across the five-year look-back period: allocations are 35, 35, 60, 35 and 35, with earlier ETRs recalculated. For intra-group financing, a 30%-tax counterparty lends to a 10%-tax entity. Accounting interest that increases the borrower’s expense without a commensurate taxable-income increase for the lender is excluded from the borrower’s GloBE expense. This applies both to debt treated as tax equity and to debt where unused interest-deduction attributes shelter the lender while the borrower cannot deduct further interest.
Articles 3.3.1 and 3.5.4: shipping and outside flow-through owners
Shipping examples start with book income 200. Excluding shipping 100 and ancillary income 40 leaves GloBE income 60. If ancillary income is 60, only 50 is excluded under the 50% cap, leaving GloBE income 50. Shipping loss 100 and ancillary loss 60 are also removed: book income 200 becomes GloBE income 360. In the flow-through example, a transparent UPE owns 80% of a subsidiary and outside investors own 20%. The subsidiary’s profit 100 is reduced by the outside 20 before allocation; the UPE-chain exception applies only to the UPE-owned portion.
Articles 4.1.3 and 4.1.5: excluded tax and loss-year top-up
A taxable but GloBE-excluded dividend of 100 and operating income 100 produce domestic tax 40 at 20%. Remove the dividend’s 20 tax, leaving GloBE income 100 and tax 20. A separate loss example has GloBE loss 100 but domestic loss 120 because a gain of 20 is tax-exempt. The DTA creates negative covered tax 18, below expected negative tax 15, causing additional-current-top-up tax 3. When the loss is used against year-two income 120, the DTA reversal of 18 yields a 15% ETR despite zero current tax.
Article 4.1.5: jurisdictional blending and deferred negative tax
Adding a second entity with income 50 and tax 7.5 to the loss entity gives jurisdictional loss 50 and negative taxes 10.5, still causing top-up tax 3, allocated to the loss entity. If the second entity pays 12.5 at 25%, negative jurisdictional taxes are only 5.5, above expected negative 7.5, so no additional charge arises. Dividend-related expenses can remain deductible for GloBE after the dividend is excluded; the example’s loss 150 and DTA 22.5 match expected tax and cause no charge. Under the elected negative-tax procedure, a GloBE loss 100/domestic loss 300 creates carry-forward 30 instead of immediate tax. Year-two income 300 reverses DTA 45, reduced by that 30, giving tax 15, ETR 5% and top-up tax 30.
Article 4.3.2 examples 1–2: blended CFC allocation keys
Attributable CFC income is 100 in A, 50 in B and 25 in C, with GloBE ETRs 10%, 20% and 5%. The blended regime’s applicable rate is 13.125%. Positive keys are 3.125 for A and 2.031 for C; B receives none. Tax 20 is split 12.12 to A and 7.88 to C. If A’s attributable income is split between a non-constituent entity with 25 and a constituent entity with 75, the same formula assigns 3.03 outside the group, 9.09 to the constituent entity and 7.88 to C. The outside amount is excluded rather than redistributed to group entities.
Article 4.3.2 examples 3–4: worldwide cross-crediting
With domestic income 400, PE incomes 100 and 250, PE loss 50, subsidiary and outside dividends 200 each and royalty 100, the parent’s tax after credits is 150.5. Subtract hypothetical domestic tax 80 to obtain an allocable pool 70.5. Positive keys total 80.5; allocations are PE1 13.14, PE2 21.89, subsidiary 17.95 and outside dividend entity 17.52, while the loss PE and royalty receive zero. The outside amount leaves group covered taxes. If dividends are exempt domestically, parent tax is 110, allocable pool 30 and PE keys 15/25 give allocations 11.25 and 18.75. Domestic tax 80 remains in either case.
Article 4.3.2 examples 5–6: income baskets remain separate
In the branch/passive-basket example, parent tax is 121: domestic tax 80 stays, branch tax pool is zero and passive pool is 41. Equal keys split 20.5 to a group dividend entity and 20.5 outside the group. In the three-basket example, parent tax 175 less domestic 90 leaves 85. Allocate branch tax 5 to its PE, low-tax CFC tax 50 to C, and non-low-tax CFC tax 30 using keys 15, 10 and 5. The last 5 belongs to a 20%-owned non-constituent CFC and is excluded. Cross-crediting must reflect the actual basket design, not one artificially blended global pool.
Article 4.3.2 examples 7–9: expense allocation and gross-ups
Where domestic expenses 100 are assigned to a PE’s income 200 for taxable foreign income and credit limitation, hypothetical domestic income is 400 rather than net domestic 300; total tax 80 equals domestic tax 80, leaving no PE allocation. In the next example, expenses 200 are assigned only for credit limitation. Parent tax 105 less hypothetical domestic tax 100 leaves pool 5, split 1.67 and 3.33 using PE keys 15 and 30. The source labels 20 as allowable credit, but it is the credit ceiling; actual available credit is 15, consistent with its stated tax 105. A dividend 90 with indirect credit 10 is included at gross foreign income 100 for allocation.
Article 4.3.2 examples 10–12: credit carry-forward and PE losses
Netting a PE loss 40 against another PE profit 40 removes year-one foreign income; credit 4 is carried forward, and no PE loss is allocated to the main entity. In year two, credit 8 including that carry-forward reduces the tax pool to 8; current-year keys 8 and 4 allocate 5.33 and 2.67, producing PE ETRs 13.3% and 16.7%. Separate PE credit limits instead allow year-one allocation 4 to the profitable PE and shift the loss to the main entity under Article 3.4.5. Later PE income 40 is then recaptured as main-entity income. Where the loss generates a 15%-rate GloBE DTA 6, its reversal plus domestic tax 20 yields main-entity covered tax 26 on income 140, approximately 18.6%; the source rounds this to 18.5%.
Article 4.3.2 example 13: current-tax timing differences
Immediate expensing of a PE machine and delayed deductibility of another PE’s bad debt cause taxable inclusions different from book profit. Year-one parent tax 160.75 produces pool 80.75. Allocation before the passive-CFC cap is PE1 26.73, CFC 11.45, PE2 11.45, subsidiary 23.48 and retained royalty 7.64; the CFC receives only 10, leaving 1.45 with the parent. In year two, equipment has no further tax depreciation and bad debt becomes deductible: parent tax 200.75, pool 120.75, and allocations are PE1 81.32, CFC 10 after its cap, PE2 zero and subsidiary 21.75. Retain royalty and excess-cap amounts in the parent.
Article 4.3.2 example 13: deferred-tax reversals complete the calculation
The machine creates parent DTL 40, recast to 30 and allocated to PE1; bad debt creates DTA 20, recast to 15 and allocated as a benefit to PE2. With local taxes and withholding, year-one jurisdictional covered taxes are 99.09, 96.73, 21.45 and 52.73 against incomes 500, 600, 100 and 300, producing ETRs 19.82%, 16.12%, 21.45% and 17.58%. In year two those deferred items reverse, giving taxes 97.68, 91.32, 40 and 51 and ETRs 19.54%, 15.22%, 40% and 17%. Current and deferred allocations must both be reflected, rather than reading only the current-tax pool.
Article 4.3.2 examples 14–15: CFC tax follows transparent income
A’s CFC tax 15 on C’s profit 100 is first allocated to C, then onward to B because C is transparent from its nearest non-flow-through owner B and its profit is allocated there. With B owning 30%, D owning 30% and outside investors 40%, B treats C as transparent but D treats it as opaque. A’s CFC tax is 9 on the group’s 60% share. Allocate 4.5 to B and leave 4.5 in C, matching the income allocation; none goes to the outside investor. The document’s second example has an erroneous cross-reference to example 3, so the substantive stated ownership and transparency facts control this explanation.
Article 4.3.3: the passive-income cap leaves excess with the owner
B earns income 100, half passive, and pays local tax 5 at 5%. A’s 25% CFC regime imposes net CFC tax 10 on the passive 50. The allocation ceiling is the pre-pushdown top-up percentage 10% times passive income 50, or 5. Allocate only 5 to B and retain 5 with A. B then has covered tax 10, ETR 10% and remaining top-up tax 5 on its total income. The cap raises the taxed passive portion to the minimum rate; it does not automatically bring every part of B’s income to 15%.
Article 4.4.1: generating a tax credit does not create GloBE deferred tax
At a 25% domestic rate with a 17% minimum payment, credit 15 can be used only to the extent of 8 in year one, leaving 7 to carry forward. The entity pays 17 on income 100, and then 18 on year-two income 100 after using the remaining 7. Article 4.4.1(e) excludes deferred-tax expense from both credit generation and use. Therefore neither the carried credit’s creation reduces first-year covered taxes nor its use increases second-year covered taxes. ETRs are 17% and 18%, with no top-up tax under the stated facts.
Article 4.4.1(e) examples 1–2: substitute loss carry-forward
A domestic loss 100 is consumed by foreign CFC income 100, preventing a local loss carry-forward. Where unused foreign credits can later offset domestic income, a substitute DTA of 15 preserves the GloBE loss attribute; its later reversal provides covered tax 15 on domestic income 100. An equivalent system can recharacterise future domestic income as foreign instead of carrying credits forward. In that example, year-two tax 52.5 is offset by ordinary foreign credits 35 and additional recharacterisation credits 17.5. Only credits actually enabled by the recharacterisation support the substitute-DTA reversal; without additional permitted credits there is no addition. The source table prints total 52.2, but its narrative and 35 + 17.5 both give 52.5.
Article 4.4.1(e) example 3: deferred CFC tax is recast gross
B’s year-one income 200 includes passive 100, with local tax 14. A will tax the passive income a year later at 25%, recording gross DTL 25 and expected credit DTA 5. Recast gross DTL to 15, leave the credit at 5 and obtain allocable deferred tax 10, rather than recasting net 20. The passive cap permits 8 to B and leaves 2 with A, giving B taxes 22 and ETR 11%. In year two, reverse the previous allocation first, allocate current CFC tax 20 next, then apply the cap to the new deferred expense. Using the source’s rounded ceiling 17.34, new deferred tax allocated is 5.34 and retained is 14.66, giving B covered tax 36.34 and ETR 12.11%.
Article 4.4.1(e) example 4: three-year branch depreciation
A PE machine costs 900, is depreciated for book purposes over three years and locally for tax over two years. Its own deferred-tax movements are 15, 15 and −30. The main jurisdiction immediately deducts 900, producing gross DTL movements 120, −60 and −60 at 20%, recast to 90, −45 and −45. Expected-credit movements remain unrecast. Net allocations from the main entity to the PE are 75, −60 and −15. Combined PE deferred tax is therefore 90, −45 and −45, while the main entity retains no deferred expense from that foreign timing difference.
Article 4.4.4 examples 1–3: ledger, FIFO and LIFO tracking
Receivables with tax basis 1,000 and IFRS value 1,700 create DTL 105 at 15%; tracking can use the four ledger accounts or their balance-sheet aggregate. FIFO requires demonstrably similar reversal trends. Its 16-year example has year-six outstanding balance 510, maximum justified 500 and recapture 10. Further recaptures are 120, 50, 120 and 120 in years seven, eight, nine and eleven; decreasing unjustified balances give adjustments 80, 310, 10, 10 and 10 in years ten and twelve to fifteen. Without proof of similar trends, the LIFO example yields year-six recapture 10 and year-seven recapture 210, then restores amounts as its unjustified balance falls through year sixteen.
Article 4.4.4 examples 4–5: protect pre-transition balances
Pre-transition DTL 150 must not be treated as a reversal of post-transition accruals. Under FIFO, assign first net decreases of 20 in year seven, 80 in year eight and 50 of year-ten decrease to that opening balance. Adjusted recapture movements exclude them: year-ten decrease becomes 40 rather than 90. Under LIFO, post-transition accruals reverse first. A year-twelve decrease 140 exceeds remaining post-transition balance 30, so 110 belongs to the pre-transition DTL; subsequent decreases of 10 in years thirteen to sixteen complete the opening 150. Only the 30 post-transition reversal remains in the year-twelve recapture balance.
Article 4.4.7: unclaimed elections still need reversal records
A five-year unclaimed election for an aggregate category excludes its new accruals and related reversals from covered taxes, but opening pre-transition DTL reversals remain included and are identified first using FIFO. The examples use opening balances of 100 and 150; the latter is depleted by 20, 80 and 50 in years seven, eight and ten. An annual election not to claim year-one accrual 100 does not remove the need to determine when it reverses. Year-two accrual may be claimed separately, and the tracking balance excludes the unclaimed accrual but follows reversals to make the corresponding Article 4.4.2(a) tax adjustment.
Article 5.2.1: negative tax cannot inflate the top-up percentage
Year-one GloBE income 200 coincides with domestic loss 100 and negative tax expense 15. The required negative-tax procedure removes that expense, gives covered tax zero and top-up tax 30, and creates excess-negative-tax carry-forward 15. In year two, domestic loss offsets income 100 and the DTA reversal would provide covered tax 15. Apply the excess-negative carry-forward to reduce that tax back to zero, causing top-up tax 15. The procedure avoids both a top-up percentage above 15% in the first year and an unwarranted benefit when the same tax attribute reverses.
Article 5.3.4: three operating-lease carve-out situations
A machine costing EUR 1.2 million is leased for three years at annual payments 100,000 and a 5% discount rate. In different MNE groups but the same jurisdiction, the lessee’s average right-of-use values are 226,912.5, 136,137.5 and 45,387.5. The lessor’s eligible residual values, after the specified lease-payment adjustment, are 910,000, 930,000 and 950,000. If the lessor is in a different jurisdiction from the machine, it receives no eligible-asset carve-out for that machine. If both parties belong to the same MNE in the same jurisdiction, eliminate the intra-group lease and use underlying average values 1,160,000, 1,080,000 and 1,000,000.
Articles 5.3.7(a) and 5.5.2: flow-through substance and short years
A flow-through entity earns 1,000, with payroll 200 and assets 400. Outside owners’ 5% profit 50 is removed; the UPE’s PE receives profit 500, payroll 100 and assets 200. A local group owner receives profit 450, payroll 90 and assets 180. Remaining payroll 10 and assets 20 are excluded. For de minimis averages, a six-month first year’s revenue 1 million and income 50,000 are annualised to 2 million and 100,000. Combined with later revenue 1 million/3 million and income 100,000/−200,000, three-year averages are revenue 2 million and income zero, allowing the elected year-three exclusion under the stated thresholds.
Article 6.2.1(e): acquisition-year substance uses membership periods
C is sold on 30 September. Seller consolidated asset value is 100 at the beginning of the year and 20 at the end for the relevant records; average 60 times nine-twelfths gives seller eligible value 45. The buyer’s beginning value is zero and year-end consolidated value 200; average 100 times three-twelfths gives buyer value 25. The example uses consolidated carrying values and period-of-membership adjustments for the tangible-asset carve-out, rather than assigning the entire acquisition price or an entire year’s substance to both groups.
Article 7.1.1(a): owner taxes can qualify despite timing or other losses
A transparent UPE ends its year on 31 January and earns 140,000; each of two individuals owns half. Their tax periods end on 31 December within 12 months. Both shares are taxed at a nominal 20%, so each 70,000 can be excluded, even though one owner offsets a separate business loss 50,000 and payment is due later. The test concerns the full income’s tax treatment and qualifying period, not its net personal tax after unrelated losses or a requirement to pay within 12 months. Covered taxes are reduced proportionately.
Articles 7.1.1(a) and 7.1.4: combined tax, credits and PEs
A transparent UPE taxed at 5% earns 200,000. Its 50% owner taxed at 11% on after-tax income 95,000 pays 10,450; adding UPE tax 5,000 gives 15,450 on attributable GloBE income 100,000, meeting the 15% aggregate test. If instead the owner is taxed on before-tax 100,000 and credits the UPE’s 5,000, owner tax is 6,000 and aggregate 11,000, so the exclusion fails. A transparent UPE PE with income 100 and two owners each taxed 7.5 at 15% can exclude the PE’s 100 under Article 7.1.4.
Article 7.3.4: distribution-tax losses reduce recapture accounts
With an elected 15% eligible distribution-tax regime, year-one income 100 creates deemed-tax account 15 despite no distribution. Year-two loss 120 supplies reduction 18: it clears the account 15 and creates loss carry-forward 3. Year-three income 100 creates a new account 15, reduced by that carried 3 to 12. No actual or deemed distributions occur in those years. This demonstrates the account mechanics and why a GloBE loss affects the tracked tax balance even without a cash distribution payment.
Article 9.1.1: opening credit attributes differ from newly generated credits
Before a stated 2023 transition year, the entity records foreign-credit DTA 10 and investment-credit DTA 10 at a 20% domestic rate. Each opening attribute is recast to 7.5 using 10 ÷ 20% × 15%. This transition treatment differs from excluding newly generated credit deferred taxes under Article 4.4.1(e). If the pre-transition non-qualified investment credit was instead recorded as income, settlement of credit 10 against cash tax in the example’s 2027 year does not reduce adjusted covered taxes again. The dates illustrate that assumed transition and credit history, rather than a universal commencement date.
Article 9.1.2: the grace-period limit is cumulative
A disallowed DTA 1,000 created in 2023 reverses 100 annually. In the example, the grace period is 2024–2025 and the limit is 20% of the original amount, or 200. Including 100 each year produces simplified ETRs 15% and 16%; in 2026 exclude the next 100, leaving tax 240 on profit 2,000, or 12%, so the transitional CbCR ETR test fails. If the entire 200 allowance is used in 2024, no further 100 can be included in 2025, even though that year is still inside the period. Its ETR falls to 5%, and the limit applies across simplified and full GloBE calculations without being renewed on transition.
Article 9.1.3 examples 1–4: transferred basis and tax-paid DTA
An intangible with book basis EUR 10 million is transferred intra-group for 110 million on 5 December 2021. GloBE retains seller basis 10 million, adjusted later for relevant expenditure and amortisation. If the seller has no CIT, no transferred-gain DTA is allowed. If tax 20 million is paid on gain 100 million, DTA is capped at 15 million. If the seller also has existing DTL 2 million from zero tax basis, preserve and recast it to 1.5 million and recognise transaction DTA 16.5 million, leaving net DTA 15 million; without paid transfer tax, only the old DTL survives. A seller capital-gains rate of 10% instead limits the transaction DTA to paid tax 10 million.
Article 9.1.3 examples 5–7: consumed losses and fair-value accounts
At a 10% rate, transfer gain 100 million offsets expenses 20 million, giving paid tax 8 million; the lost DTA that would otherwise exist is 2 million, so permitted DTA is 10 million. A later third-party sale with gain 100 million and no current tax reverses that DTA and yields ETR 10%. Eligible pre-existing loss carry-forward 100 million at 20%, consumed by transfer gain, can instead support DTA 15 million even without cash transfer tax. Where book and tax basis are 110 million but GloBE basis is 10 million, ten-year amortisation requires annual income add-back 10 million and DTA reversal 1.5 million. After two years, a sale for 100 million gives GloBE gain 92 million, book gain 12 million and residual DTA 12 million; the source also permits financial carrying value where the allowed DTA fully equals 15% of the relevant gain.
Article 10.1: four deemed-consolidation cases
A private non-investment company cannot avoid controlling-interest and deemed-consolidation tests merely by not preparing statements: IFRS line-by-line consolidation would include its subsidiaries. An IFRS investment entity, however, may consolidate its service subsidiary while carrying operating investments at fair value, so those investments are outside its consolidation perimeter. The same hypothetical IFRS distinction applies if that investment entity prepares no statements. A non-investment operating headquarters that prepares no statements is tested on its own would-be consolidation of operating subsidiaries. Where another authorised standard genuinely does not require consolidation after necessary competitive-distortion adjustments, it can be relied on under the stated facts; deemed consolidation does not automatically force IFRS in every such case.
Article 10.2 examples 1–3: find the closest reference entity
The reference owner is the closest constituent owner that is not itself flow-through. In a Hold–A–B–C chain, A is locally opaque while B and C are transparent: A determines C’s transparency and receives C’s profit, even if B’s own jurisdiction regards C as opaque. Hold-level hybrid tax then follows that income to A. If the nearest non-flow-through A regards B as transparent but C as opaque, B’s profit 100 goes to A while C’s profit 200 remains in reverse-hybrid C. Where B is in a no-CIT jurisdiction and does not qualify as transparent under Article 10.2.4, B becomes the reference owner and C remains reverse hybrid even though upper A taxes C transparently.
Article 10.2 examples 4–6: indirect hybrid owners and no-CIT entities
A wholly owns B and indirectly C; A taxes C transparently while B does not. Hybrid treatment and allocation of A’s tax can extend to that indirect ownership. A no-CIT entity with a business location in its creation jurisdiction may fail Article 10.2.4 transparency but still be hybrid because its owner taxes its profit transparently. In the final example, B remains the nearest non-flow-through reference owner and regards C as opaque, making C reverse hybrid; A’s tax on C’s profit 200 is nevertheless allocated to C under Article 4.3.2(d). Distinguish the income-location classification from the separate allocation of an owner’s covered tax.
Check the original assumptions and source inconsistencies
The examples demonstrate mechanisms under specified rates, ownership, timing and election assumptions; a real computation must retain those distinctions and use the applicable rules. The PDF contains a few inconsistent labels or totals, including the foreign-credit ceiling labelled as an allowable amount, substitute-credit total 52.2 rather than 52.5 and a first substitute-loss table’s foreign-income entry inconsistent with its narrative. This article follows the internally coherent narrative and arithmetic and identifies material discrepancies. Keep the original PDF available for diagrams, complete multi-year schedules and the numbered examples when reviewing the calculation trail.
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