S.L. 123.212 Art. 2Applicability. 2 [S.L.

(1) As a result of the election taken in terms of Article 50(1) of Council Directive (EU) 2022/2523 of 14 December 2022, for a maximum period of six (6) consecutive fiscal years beginning from 31st December 2023, these regulations shall be limited to the provisions contained in Chapters I, VIII, IX and X, which have been established as the minimum measures which are of relevance to ensure the proper functioning of the system of global minimum level of taxation for multinational enterprise groups and large-scale domestic groups, as laid down in the said Directive.

(2) These regulations shall apply to constituent entities located in Malta that are members of an multinational enterprise group or of a large-scale domestic group as defined in regulation 3 which has an annual revenue of seven hundred and fifty million euro (€750,000,000) or more, including the revenue of the excluded entities referred to in sub-regulation (4), in its ultimate parent entity’s consolidated financial statements in at least two (2) of the four (4) fiscal years immediately preceding the tested fiscal year.

(3) Where one (1) or more of the four (4) fiscal years referred to in sub-regulation (2) is longer or shorter than twelve (12) TAXATION FOR MULTINATIONAL ENTERPRISE GROUPS 123.212 AND LARGE-SCALE DOMESTIC GROUPS

months, the revenue threshold referred to in that sub-regulation shall be adjusted proportionately for each of those fiscal years.

(4) These regulations shall not apply to the following excluded entities:

(a) a government entity, an international organisation, a non-profit organisation, a pension fund, an investment fund that is an ultimate parent entity or a real estate investment vehicle that is an ultimate parent entity;

(b) an entity where at least ninety-five percent (95%) of the value of the entity is owned by one (1) or more entities referred to in paragraph (a), directly or through one (1) or several excluded entities, except pension services entities, and that:

(i) operates exclusively, or almost exclusively, to hold assets or invest funds for the benefit of the entity or entities referred to in paragraph (a); or

(ii) exclusively carries out activities ancillary to those performed by the entity or entities referred to in paragraph (a);

(c) an entity where at least eighty-five percent (85%) of the value of the entity is owned, directly or through one (1) or several excluded entities, by one (1) or more entities referred to in paragraph (a), except pension services entities, provided that substantially all of its income is derived from dividends, equity gains or equity losses that are excluded from the computation of the qualifying income or loss in accordance with Article 16(2)(b) and (c) of Council Directive (EU) 2022/ 2523 of 14 December 2022 laying down rules on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union.

(5) Notwithstanding the provisions of sub-regulation (4), the filing constituent entity may make an election, in accordance with regulation 6(1), not to treat an entity referred to in sub-regulation (4)(b) and (c) as an excluded entity.