Section 198ZA | Eligible payroll costs: flow-through entities ^F1

(1)A member of a multinational group that is a flow-through entity has a flow-through payroll amount for a territory for an accounting period if the member has costs that would be eligible payroll costs if the member were located in that territory and were not a flow-through entity and—^F1

(a)there is at least one other member of the group—^F1

(i)that is not a flow-through entity,^F1

(ii)that is located in that territory, and^F1

(iii)to whom a proportion of the underlying profits of the flow-through entity for the accounting period are allocated under section 168 (underlying profits of transparent entities) or, where the underlying profits of the entity are nil or less, would be so allocated if the flow-through entity had underlying profits of 100 euros, or^F1

(b)the entity—^F1

(i)is a flow-through entity to some extent for that period as a result of section 169 (certain non tax resident entities to be treated as flow-through entities),^F1

(ii)is not a flow-through entity to some extent for that period, and^F1

(iii)was created in that territory.^F1

(2)Section 196 applies for the purposes of determining a flow-through payroll amount of a flow-through entity for a territory as it applies for the purposes of determining eligible payroll costs but as if—^F1

(a)any reference in that section to the territory of the member were to the territory to which the flow-through payroll amount relates, and^F1

(b)subsection (7) of that section were omitted.^F1

(3)Where a member of a multinational group that is a flow-through entity has a flow-through payroll amount for a territory for an accounting period, the eligible payroll costs of each member of the group falling within subsection (1)(a) for that period (which may be nil) are to be increased by the amount given by multiplying the flow-through payroll amount by the relevant proportion in relation to that member for that period.^F1

(4)The relevant proportion in relation to a member for an accounting period is the proportion of the underlying profits of the flow-through entity for that period—^F1

(a)in a case where the flow-through entity has underlying profits that exceed nil for that period, that is allocated to that member under section 168, or^F1

(b)in a case where the underlying profits of the flow-through entity for that period are nil or less, that would be allocated to that member if the flow-through entity had underlying profits of 100 euros.^F1

(5)Where a flow-through entity—^F1

(a)is a flow-through entity to some extent for an accounting period as a result of section 169,^F1

(b)is not a flow-through entity to some extent for that period, and^F1

(c)was created in a territory for which it has a flow-through payroll amount for that period,^F1

the eligible payroll costs of that entity for that period (which may be nil) are to be increased by the amount given by multiplying that flow-through payroll amount by the relevant proportion in relation to that entity for that period.

(6)The relevant proportion in relation to that entity for an accounting period is the proportion of the underlying profits of the entity for that period—^F1

(a)in a case where the entity has underlying profits that exceed nil for that period, that are not allocated to any other entity under section 168, or^F1

(b)in a case where the underlying profits of the entity for that period are nil or less, that would not be allocated to any other entity under that section if the entity had profits of 100 euros.^F1

(7)For the purposes of applying this section in relation to a multinational group whose ultimate parent is a flow-through entity, the ultimate parent is to be treated as not being a flow-through entity.^F1