Section 229G | Number of employees ^F1

(1)For the purposes of this Chapter, the number of employees of a qualifying member of a multinational group in an accounting period is the full-time equivalent employee number for that member for that period.^F1

(2)To determine the full-time equivalent employee number for a member of a multinational group for an accounting period take the following steps—^F1

Step 1Determine the number of full-time employees of that member that were full-time employees for the whole of that period.

Step 2Determine, for each employee of that member for that period who is not a full-time employee for the whole of that period (whether they were part-time employees or were not employed for the whole of the period), such fraction as is just and reasonable.

Step 3Add together the number determined under Step 1 and the fractions determined under Step 2.If the member was a member of the group throughout the whole of the period, the result of this Step is the full-time equivalent employee number.

Step 4Where the member was not a member of the group for the whole period, make such adjustments to the result of Step 3 as is just and reasonable to arrive at a full-time equivalent employee number that reflects the number of employees of the member in the period for which it was a member of the group.For the purpose of this Step, ignore section 208(2) (members joining or leaving group in an accounting period treated as members for the whole of the period).

(3)For the purposes of this section “employee”, in relation to a member of a multinational group, means a person whose employment costs are met by that member (whether or not the person’s activities are carried on in the territory of the member) as recorded in appropriate financial statements of the member and who—^F1

(a)is regarded as an employee under the law of the territory in which the member is located, or^F1

(b)participates in the ordinary operating activities of the member of the group (including on a part-time basis).^F1

(4)For the purposes of subsection (3) financial statements are “appropriate” only if the basis on which they are prepared is consistent for all members of the group (wherever located).^F1

(5)For the purposes of section 229D (but not for the purposes of section 229E), where a member of a multinational group is a flow-through entity, employees of the entity—^F1

(a)are to be treated as employees of members of the group that are not flow-through entities that are located in the territory in which the flow-through entity was created, or^F1

(b)where there are no such members in that territory, are ignored for the purposes of this Chapter.^F1

(6)Subsection (5) does not apply to employees of a flow-through entity that are regarded for the purposes of this section as employees of a permanent establishment of the entity.^F1

(7)Where a permanent establishment does not prepare separate financial accounts, the reference in subsection (3) to employment costs recorded in financial statements is to the employment costs that would have been so recorded had such statements been prepared (and those costs are to be excluded from the financial statements of the main entity for the purposes of applying this section).^F1