SolvedMTT11010 | Scope: Revenue threshold test: Overview
From HM Revenue & Customs · Multinational Top-up Tax and Domestic Top-up Tax
A group will be a qualifying group for a period if it has a member located in the UK and meets the revenue threshold test.
The revenue threshold is €750 million for an accounting period of 365 days. This threshold must be exceeded in two of the four periods immediately prior to the tested period (but not including the tested period).
The revenue of the group members is taken from the consolidated financial statements of the ultimate parent for the period. The revenue of all members of the group is therefore counted for the test, including excluded entities.
This is set out in section 129 of Finance (No.2) Act 2023.
Domestic Top-up Tax
There are differences in the application of the revenue threshold test for Domestic Top-up Tax purposes. See MTT11030 for further guidance.
Period lasting other than 365 days
Where a period is of a length other than 365 days, the threshold will be €750 million multiplied by the number of days in the period and divided by 365.
Mergers and demergers
Special rules apply if there has been a merger (including acquisitions) or demerger in the tested period or the prior 4 periods. See MTT11020 for further guidance.
Example
Group AB consists of two entities: A Ltd, the ultimate parent, which is located in the UK, and its subsidiary, B Ltd, which is an excluded entity located in another territory.
The group’s consolidated accounts run to 31 December.
To determine whether the group is qualifying for the period ending 31 December 2034, the previous four accounting periods are relevant:
| Period | Revenue of A Ltd (€) | Revenue of B Ltd (€) | Total revenue in consolidated statements (€) |
|---|---|---|---|
| 2030 | 500m | 200m | 700m |
| 2031 | 600m | 200m | 800m |
| 2032 | 550m | 200m | 750m |
| 2033 | 700m | 200m | 900m |
The 2032 period lasted for 366 days so the threshold for this period will be (€750m*366/365) = €752,054,794.52.
The other periods all cover 365 days so the threshold is €750m for each of these.
Despite being an excluded entity, the revenue of B Ltd is included in the test.
The group exceeds its threshold for two of the four previous years (2031 and 2033) and it is therefore a qualifying group for the 2034 period because:
it has a member located in the UK, and
it has exceeded the revenue threshold in two of the four periods immediately preceding the tested period.