MTT21190 | Calculating the effective tax rate: Adjusted profits: Fines and penalties

Expenses accrued by a member for fines or penalties of 50,000 euros or more are to be excluded when calculating the adjusted profits.

Fines and penalties accrued that are in respect of the same conduct, or for continuing conduct, should be aggregated when assessing this threshold. This does not aggregate fines in respect of the same type of conduct.

For example, if a daily fine is issued in respect of a single parking violation, these daily fines are to be aggregated. However, if separate fines are issued for the same type of conduct on separate occasions, such as a number of separate parking violations, these should not be aggregated.

This adjustment is set out in section 145 of Finance (No.2) Act 2023.