Regulation 63

a specified constituent entity of that MNE group that is an investment entity or insurance investment entity (A) (whether or not a flow‑through entity) is treated as a flow‑through entity;

a specified constituent entity of that MNE group (B) with interests in a share of the profits of A is treated as having direct ownership interests in A; and

A is deemed not to be a reverse hybrid entity in the jurisdiction where B is located.

B’s share of the direct ownership interests in A for that financial year is treated as corresponding to B’s share of A’s profits for that financial year;

a proportion of the FANIL, qualifying current tax expense and qualifying deferred tax expense that would otherwise be allocated to A for that financial year, corresponding to B’s share of the direct ownership interests in A for that financial year, must be allocated to B;

if B uses a fair value method to determine its income or loss for that financial year arising from changes in the fair value of its direct ownership interests in A, that income or loss, to the extent that it is included in B’s FANIL, must be excluded from the computation of B’s GloBE income or loss for that financial year; and

the same proportion in sub-paragraph (b) of the eligible payroll costs or carrying value of the eligible tangible assets of A for that financial year must also be allocated to B, if the eligible employees or eligible tangible assets of A (as the case may be) are located in the same jurisdiction as B.

no election in regulation 64 is made in relation to A and B; and

either of the following conditions is met:

B is subject to tax in the jurisdiction where it is located on increases in the fair value of its ownership interests in A, and the rate of tax applicable is at least 15%;

B is regulated or authorised to carry on business as an insurer, and is wholly owned by persons who have entered into insurance contracts with B.

for the first financial year for which the election no longer applies, any gain or loss from the disposition of an asset or liability by A is determined by reference to the fair value of that asset or liability on the first day of that financial year; and

for any subsequent financial year (and if no further election is made in paragraph (1)), any gain or loss from the disposition of an asset or liability by A is determined by reference to —

if A accounts for its assets and liabilities on a realisation basis — the fair value of that asset or liability on the first day of the financial year mentioned in sub‑paragraph (a); and

if A accounts for its assets and liabilities on a fair value basis — the fair value of that asset or liability on the last day of the previous financial year.