S.L. 123.212 Art. 8Tax treatment of deferred tax assets, deferred tax liabilities and transferred assets upon transition. 23

(1) For the purposes of this regulation, a "transition year for a jurisdiction" shall mean the first fiscal year in which an

MNE group or a large-scale domestic group falls within the scope of the European Union Global Minimum Tax Directive in respect of that jurisdiction.

(2) (a) When determining the effective tax rate for a jurisdiction in a transition year, and for each subsequent fiscal year, the MNE group or a large-scale domestic group shall take into account all the deferred tax assets and deferred tax liabilities reflected or disclosed in the financial accounts of all the constituent entities in a jurisdiction for the transition year.

(b) Deferred tax assets and deferred tax liabilities shall be taken into account at the lower of the minimum tax rate and the applicable domestic tax rate. However, a deferred tax asset that has been recorded at a tax rate lower than the minimum tax rate may be taken into account at the minimum tax rate if the taxpayer is able to demonstrate that the deferred tax asset is attributable to a qualifying loss.

(c) The impact of any valuation adjustment or accounting recognition adjustment with respect to a deferred tax asset shall be disregarded.

(3) Deferred tax assets arising from items excluded from the computation of qualifying income or loss in accordance with Chapter III of the European Union Global Minimum Tax Directive shall be excluded from the computation referred to in sub-regulation (2) when such deferred tax assets are generated in a transaction that takes place th after 30 November 2021.

(4) In the case of a transfer of assets between constituent th entities after 30 November 2021 and before the commencement of a transition year, the basis in the acquired assets, other than inventory, shall be based upon the disposing constituent entity’s carrying value of the transferred assets upon disposal with deferred tax assets and liabilities determined on that basis.