What is the de minimis test
The de minimis test is one of the 3 tests that can be used to determine if the transitional country-by-country (CBC) reporting safe harbour applies to a jurisdiction for a fiscal year.
The de minimis test uses revenue and profit amounts from qualified CBC reports to determine whether the multinational enterprise group's (MNE group) financial activity in a jurisdiction is below prescribed thresholds.
The test is set out in Subdivision B of Division 2 of Part 8-2 of the Taxation (Multinational–Global and Domestic Minimum Tax) Rules 2024 (Australian Minimum Tax Rules).
Conditions to meet the de minimis test
To satisfy the de minimis test, the MNE group must meet both of the following conditions for the tested jurisdiction for the fiscal year:
- Its total revenue for the jurisdiction is less than 10 million euros.
- Its profit (loss) before income tax for the jurisdiction is less than 1 million euros.
These revenue and profit figures must be taken from the qualified CBC report and may be subject to special rules or exclusions.
However, an MNE group will not satisfy the de minimis test for a jurisdiction if the combined total of the following exceeds 10 million euros for a fiscal year:
- total revenue for the jurisdiction as reported in the group's qualified CBC report, and
- total revenue of each constituent entity of the MNE group that is located in that jurisdiction and that is excluded from the ultimate parent entity’s consolidated financial statements solely on the grounds that the constituent entity is held for sale.