Step-by-step computation for Macro-step 1 - Revision history

Walid ELJAAFARI: /* Step 1.9. - Specific CE treatments */

2023-12-13T16:44:12Z

Step 1.9. - Specific CE treatments

← Older revision		Revision as of 16:44, 13 December 2023
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	=== Step 1.9. - Specific CE treatments ===		=== Step 1.9. - Specific CE treatments ===
	~~Investment entity identification~~



	==== Purpose ====		==== Purpose ====
	The purpose of this step is to complete the treatment of the GloBE perimeter for various entity types : Permanent establishments, Investment entities.		The purpose of this step is to complete the treatment of the GloBE perimeter for various entity types : Permanent establishments, Investment entities, MOMNEs within JVs.

	==== General Logic ====		==== General Logic ====
	This Step 1.2. will consist in .		This Step 1.9. will consist in the completion of the perimeter analysis to finalize the GloBE perimeter, the different Micro-steps will follow a mechanical order.

	==== Data Input ====		==== Data Input ====
	The Data input for Step 1.2. consists in :		The Data input for Step 1.2. consists in :

	* The ~~list of~~		* The input from the previous Steps
			* The data generated from the previous Steps

	The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].		The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].
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	The Data output for Step 1.2. consists in :		The Data output for Step 1.2. consists in :

	* The list of		* The update list of MOMNEs, MOCEs and their compositions
			* The list of Investment Entities and the sub-groups they form in each sub-group
			* The affectation of Permanent establishment to the sub-groups of their Parent Entity

	The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].		The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].
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	The list of Micro-Step is a follows :		The list of Micro-Step is a follows :

	* Micro-Step 1.2.1.		* Micro-Step 1.9.1. Identification of MOMNEs and MOCEs within JV sub-groups
			* Micro-Step 1.9.2. Affectation of the Permanent Establishment to the sub-groups of their Main Entities
			* Micro-Step 1.9.3. Isolation of Investment Entities within each subgroups

			===== Micro-Step 1.9.1. Identification of MOMNEs and MOCEs within JV sub-groups =====
			As they are supposed to be treated as separate MNE Groups for the purpose of most of the GloBE Rules, and as they are composed solely of entities consolidated on a line by line basis by their JV Heads, it is necessary to isolate the MOMNEs and MOCEs from the point of view of the JV Sub-Group.

			In order to achieve this purpose, the step launches the Micro-Step 1.8. on each JV Sub-Groups, and utilizes the JV Head and its Indirect Ownership Interests in the JV Subsidiaries to apply the criterion.

			===== Micro-Step 1.9.2. Affectation of the Permanent Establishment to the sub-groups of their Main Entities =====
			This stage is quite simple has it only requires to affect each Permanent establishment to the Sub-group of their Parent Entities.
			===== Micro-Step 1.9.3. Isolation of Investment Entities within each sub-groups =====

			====== Identification of investment entities ======
			The following entities are identified as Investment entities

	=~~==== Micro-~~Step 1.2.~~1. Unknown subsidiaries =====~~		* The Investment entities that match the activity criterion of the a) : "Investment Fund"; "Real Estate Investment Vehicle"
	~~This step .~~		* The Investment entities that match the activity criterion of the b) or c) and that are owned directly or indirectly through a chain of entities defined at the first bullet point at least at 95% or 85% respectively => the same algorithm as Step 1.6.2. for Excluding Entities, with the notable difference that the sets are treated completely separately

	===== ~~Micro~~-~~Step 1.2.2. Unknown parents~~ =====		====== Isolation in their respective sub-groups ======
	~~This~~ .		At this stage all investment entities have been affected to specific sub-groups or are still in the Main perimeter under the UPE.

	~~===== Micro~~-~~Step 1.2.3.~~ Entity ~~absent from the shareholding structure =====~~		The Investment Entities of each sub-group will then be grouped within their respective sub-groups to form isolated sub-groups identified with an Investment Entity marker.
	~~This~~ .

Walid ELJAAFARI: /* Step 1.9. - Specific CE treatments */

2023-12-13T16:08:27Z

Step 1.9. - Specific CE treatments

← Older revision		Revision as of 16:08, 13 December 2023
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	# Short-list the "in-group" parent entities of B in which the control rights of A in B is higher than the control rights of the UPE in B reduced by the share of the control rights of the UPE in B obtained through A,		# Short-list the "in-group" parent entities of B in which the control rights of A in B is higher than the control rights of the UPE in B reduced by the share of the control rights of the UPE in B obtained through A,
	# If the set is reduced to the UPE, only the UPE has a Controlling Interest in the Entity		# If the set is reduced to the UPE, only the UPE has a Controlling Interest in the Entity
	# Apply a simple majority rule for each possible ~~degree~~ of "~~parentality~~" in the graph, each entity being tested only once with its smallest degree (important when there are loops)		# Apply a simple majority rule for each possible [[Degree of "Parentality" in the graph]], each entity being tested only once with its smallest degree (important when there are loops)
	# In case of equality for a given degree, all the equal values receive the Controlling Interest		# In case of equality for a given degree, all the equal values receive the Controlling Interest

Walid ELJAAFARI: /* Step 1.9. - Specific CE treatments */

2023-12-13T16:07:12Z

Step 1.9. - Specific CE treatments

← Older revision		Revision as of 16:07, 13 December 2023
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	The error is returned to indicate an incoherence in the consolidation method.		The error is returned to indicate an incoherence in the consolidation method.

			Furthermore an error should be returned for each Entity that is reported as first consolidating entity if :

			* its consolidation method to UPE is not equity or;
			* it is not the UPE;

	===== Micro-Step 1.5.3. Identification or control of the MNE group's perimeter =====		===== Micro-Step 1.5.3. Identification or control of the MNE group's perimeter =====
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	===== Micro-Step 1.7.2. Identification of all JV Heads =====		===== Micro-Step 1.7.2. Identification of all JV Heads =====
	To identify the JV Heads, this steps selects all the entities identified at the step 1.7.1. that do not have any shareholders with a Controlling Interest (or Approximate) in them.		To identify the JV Heads, this steps selects all the entities identified at the step 1.7.1. that do not have any shareholders with a Controlling Interest (or Approximate) in them.

			If additional information on first consolidating entity is available only keep as JV Heads the entities that have the UPE as first consolidating entity.

	===== Micro-Step 1.7.3. Iterative identification of the JV subsidiaries to the JV Sub-group =====		===== Micro-Step 1.7.3. Iterative identification of the JV subsidiaries to the JV Sub-group =====
	The following iterative process is applied to the set defined at the step 1.7.1. reduced by the JV Heads identified at the step 1.7.2.		The following iterative process is applied to the set defined at the step 1.7.1. reduced by the JV Heads identified at the step 1.7.2.

			====== Case 1 : only the consolidation method by UPE is available ======
	* N= CARD(set defined at 1.7.1.)		* N= CARD(set defined at 1.7.1.)
	* SET = set defined at 1.7.3.		* SET = set defined at 1.7.3.
	* While (N>0 and card(SET))		* While (N>0 and card(SET)>0)
	** Affect each JV entity of the SET to the JV Sub-group where		** Affect each JV entity of the SET to the JV Sub-group where
	*** at least one entity has a Controlling interest in it;		*** at least one entity has a Controlling interest in it;
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	** i--		** i--
	* If at i = 0, the SET is not empty, all the remaining JV entities become independent JVs in their own JV sub-group		* If at i = 0, the SET is not empty, all the remaining JV entities become independent JVs in their own JV sub-group

			====== Case 2 : additional information is available for first consolidating entity ======
			* N= CARD(set defined at 1.7.1.)
			* SET = set defined at 1.7.3.
			* All entities in SET that have Consolidation method by first consolidating entity = "equity" are disregarded, from SET (that is subsequently updated)
			* While (N>0 and card(SET)>0)
			** Affect each JV entity of the SET to the JV Sub-group where the first consolidating entity is affected
			** Subtracts the affected JV entities from the SET
			** i--
			* If at i = 0, the SET is not empty (impossible), all the remaining entities are returned as ERRORS (as

	=== Step 1.8. - MOCE and MOMNE identification ===		=== Step 1.8. - MOCE and MOMNE identification ===
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	* N= CARD(set defined at 1.8.1.)		* N= CARD(set defined at 1.8.1.)
	* SET = set defined at 1.8.3.		* SET = set defined at 1.8.3.
	* While (N>0 and card(SET))		* While (N>0 and card(SET)>0)
	** Affect each MOCEs of the SET to the MOMNEs where		** Affect each MOCEs of the SET to the MOMNEs where
	*** at least one entity has a Controlling interest in it;		*** at least one entity has a Controlling interest in it;
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	==== Purpose ====		==== Purpose ====
	The purpose of the .		The purpose of this step is to complete the treatment of the GloBE perimeter for various entity types : Permanent establishments, Investment entities.

	==== General Logic ====		==== General Logic ====

Walid ELJAAFARI: /* Step 1.7. - Joint-Venture identification */

2023-12-13T15:31:07Z

Step 1.7. - Joint-Venture identification

@@ Line 733: / Line 733: @@
 * Micro-Step 1.7.1. Identification of all JV entities
 * Micro-Step 1.7.2. Identification of all JV Heads
-* Micro-Step 1.7.3. Iterative identification of the JV subsidiaries
+* Micro-Step 1.7.3. Iterative identification of the JV subsidiaries to the JV Sub-group
 ===== Micro-Step 1.7.1. Identification of all JV entities =====
 This step identifies the set of entities that qualify as JV entities:
 * consolidation method = "equity";
 * Indirect Ownership Interest by UPE >= 50%
@@ Line 744: / Line 745: @@
 To identify the JV Heads, this steps selects all the entities identified at the step 1.7.1. that do not have any shareholders with a Controlling Interest (or Approximate) in them.
-===== Micro-Step 1.7.3. Iterative identification of the JV subsidiaries =====
+===== Micro-Step 1.7.3. Iterative identification of the JV subsidiaries to the JV Sub-group =====
 The following iterative process is applied to the set defined at the step 1.7.1. reduced by the JV Heads identified at the step 1.7.2.
@@ Line 758: / Line 759: @@
 === Step 1.8. - MOCE and MOMNE identification ===
 === Step 1.9. - Specific CE treatments ===

Walid ELJAAFARI: /* Step 1.7. - Joint-Venture identification */

2023-12-13T15:22:35Z

Step 1.7. - Joint-Venture identification

← Older revision		Revision as of 15:22, 13 December 2023
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	The list of Micro-Step is a follows :		The list of Micro-Step is a follows :

	* Micro-Step 1.2.1.		* Micro-Step 1.6.1. Exclusion based on article 1.5.1.
			* Micro-Step 1.6.2. Exclusion based on article 1.5.2.
			* Micro-Step 1.6.3. Application of election from 1.5.3.

	===== Micro-Step 1.6.1. Exclusion based on article 1.5.1. =====		===== Micro-Step 1.6.1. Exclusion based on article 1.5.1. =====
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	==== Purpose ====		==== Purpose ====
	The purpose of the .		The purpose of the step 1.7. is to identify all the Joint Ventures and their JV Heads to carve them out from the general GloBE Perimeter.

	==== General Logic ====		==== General Logic ====
	This Step 1.2. will consist in .		This Step 1.7. will consist in the identification of the Entities matching with the criterion of the Joint Venture, before forming the different a JV Sub-group by grouping the JV subsidiaries under the JV Heads that have a Controlling Interests in them.

	==== Data Input ====		==== Data Input ====
	The Data input for Step 1.2. consists in :		The Data input for Step 1.7. consists in :

	* The list of		* The Indirect Ownership Interest Matrix;
			* The Controlling Interest Matrix;
			* The list of characteristics of the entities with the consolidation method;

	The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].		The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].

	==== Data Output ====		==== Data Output ====
	The Data output for Step 1.2. consists in :		The Data output for Step 1.7. consists in :

	* The list of		* The list of JV Sub-groups identified by the JV Heads;
			* The list of JV Subsidiaries in each JV Sub-groups;

	The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].		The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].
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	The list of Micro-Step is a follows :		The list of Micro-Step is a follows :

	* Micro-Step 1.2.1.		* Micro-Step 1.7.1. Identification of all JV entities
			* Micro-Step 1.7.2. Identification of all JV Heads
			* Micro-Step 1.7.3. Iterative identification of the JV subsidiaries

	===== Micro-Step 1.2.1. ~~Unknown subsidiaries~~ =====		===== Micro-Step 1.7.1. Identification of all JV entities =====
	This step .		This step identifies the set of entities that qualify as JV entities:

	===== Micro-Step 1.2.2. ~~Unknown parents~~ =====		* consolidation method = "equity";
	~~This~~ .		* Indirect Ownership Interest by UPE >= 50%

			===== Micro-Step 1.7.2. Identification of all JV Heads =====
			To identify the JV Heads, this steps selects all the entities identified at the step 1.7.1. that do not have any shareholders with a Controlling Interest (or Approximate) in them.

			===== Micro-Step 1.7.3. Iterative identification of the JV subsidiaries =====
			The following iterative process is applied to the set defined at the step 1.7.1. reduced by the JV Heads identified at the step 1.7.2.

			* N= CARD(set defined at 1.7.1.)
			* SET = set defined at 1.7.3.
			* While (N>0 and card(SET))
			** Affect each JV entity of the SET to the JV Sub-group where
			*** at least one entity has a Controlling interest in it;
			*** the direct shareholder with the highest Indirect Control right is located, if multiple JV sub-group match the first point;
			** Subtracts the affected JV entities from the SET
			** i--
			* If at i = 0, the SET is not empty, all the remaining JV entities become independent JVs in their own JV sub-group

	~~===== Micro-Step 1.2.3. Entity absent from the shareholding structure =====~~
	~~This .~~
	=== Step 1.8. - MOCE and MOMNE identification ===		=== Step 1.8. - MOCE and MOMNE identification ===

Walid ELJAAFARI: /* Micro-Step 1.6.2. Exclusion based on article 1.5.2. */

2023-12-13T14:44:30Z

Micro-Step 1.6.2. Exclusion based on article 1.5.2.

← Older revision		Revision as of 14:44, 13 December 2023
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	At the beginning 1.5.2.a) and b) are treated separately		At the beginning 1.5.2.a) and b) are treated separately

	* Test for the 1.5.2.a)		* Identify all the entities that match the different criterion on the characteristics are activities of the entity listed for the 1.5.2. a) and b)
	** Identify all the entities that match the different criterion on the characteristics are activities of the entity listed for the 1.5.2. a)		* Test to identify the candidates for the 1.5.2.a)
	** Build a new version of the Ownership Interest Matrix that only maps the shareholding structure for the entities also identified in the previous bullet point.		** Build a new version of the Ownership Interest Matrix that only maps the shareholding structure for the entities also identified in the previous bullet point.
	** Create a generic Excluded Entity to which are attributed all the Ownership interests of any Excluded Entity according to article 1.5.1.		** Create a generic Excluded Entity to which are attributed all the Ownership interests of any Excluded Entity according to article 1.5.1.
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	** Define the set of entity that remain for the "chain test" by excluding the entities that do not respect the test of article 1.5.2.a) : 95% Indirect Ownership Interest by the Generic excluded entity AND the criterion of the 1.5.2.a).i or ii.		** Define the set of entity that remain for the "chain test" by excluding the entities that do not respect the test of article 1.5.2.a) : 95% Indirect Ownership Interest by the Generic excluded entity AND the criterion of the 1.5.2.a).i or ii.
	** These form the 1.5.2.a) candidates		** These form the 1.5.2.a) candidates
	* Test ~~for the 1.5.2.b)~~		* Test to identify the candidates for the 1.5.2.b)
	** Identify all the entities that match the different criterion on the characteristics are activities of the ~~entity listed~~ for the 1.5.2. b)		** Build a new version of the Ownership Interest Matrix that only maps the shareholding structure for the entities also identified in the first bullet point.
	** Build a new version of the Ownership Interest Matrix that only maps the shareholding structure for the entities also identified in the ~~previous~~ bullet point.
	** Create a generic Excluded Entity - Excluding Pension Services Entities to which are attributed all the Ownership interests of any Excluded Entity according to article 1.5.1., but for those corresponding to "Pension Services Entity"		** Create a generic Excluded Entity - Excluding Pension Services Entities to which are attributed all the Ownership interests of any Excluded Entity according to article 1.5.1., but for those corresponding to "Pension Services Entity"
	** To maintain the integrity a generic not excluded entity is created to which are allocated all the Ownership Interests necessary to sum to 100%		** To maintain the integrity a generic not excluded entity is created to which are allocated all the Ownership Interests necessary to sum to 100%
	** Apply the [[Indirect ownership computation using Baldone ownership]] to this specific matrix		** Apply the [[Indirect ownership computation using Baldone ownership]] to this specific matrix
	** Define the set of entity that remain for the "chain test" by excluding the entities that do not respect the test of article 1.5.2.a) : 85% Indirect Ownership Interest by the generic Excluded Entity - Excluding Pension Services Entities AND the criterion of the 1.5.2.b)		** Define the set of entity that remain for the "chain test" by excluding the entities that do not respect the test of article 1.5.2.b) : 85% Indirect Ownership Interest by the generic Excluded Entity - Excluding Pension Services Entities AND the criterion of the 1.5.2.b)
	** These form the 1.5.2.b)		** These form the 1.5.2.b) candidates
	* For the set of all candidates, run the following [[Recursive Algorithm]]		* For the set of all candidates, run the following [[Recursive Algorithm]]
	** i=0		** i=0
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	*** If Test(direct Parent) returns not Excluded => Test next parent, i++		*** If Test(direct Parent) returns not Excluded => Test next parent, i++
	** Return not Excluded		** Return not Excluded
			** This algorithm needs to be managed to ensure convergence in case of loops

	===== Micro-Step 1.6.3. Application of election from 1.5.3. =====		===== Micro-Step 1.6.3. Application of election from 1.5.3. =====

Walid ELJAAFARI: /* Step 1.7. - Joint-Venture identification */

2023-12-13T12:03:21Z

Step 1.7. - Joint-Venture identification

← Older revision		Revision as of 12:03, 13 December 2023
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	=== Step 1.7. - Joint-Venture identification ===		=== Step 1.7. - Joint-Venture identification ===

			==== Purpose ====
			The purpose of the .

			==== General Logic ====
			This Step 1.2. will consist in .

			==== Data Input ====
			The Data input for Step 1.2. consists in :

			* The list of

			The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].

			==== Data Output ====
			The Data output for Step 1.2. consists in :

			* The list of

			The detailed matrix is available in the relevant section of the [[Pillar 2 Data Structure]].

			==== Detailed computations ====
			The list of Micro-Step is a follows :

			* Micro-Step 1.2.1.

			===== Micro-Step 1.2.1. Unknown subsidiaries =====
			This step .

			===== Micro-Step 1.2.2. Unknown parents =====
			This .

			===== Micro-Step 1.2.3. Entity absent from the shareholding structure =====
			This .
	=== Step 1.8. - MOCE and MOMNE identification ===		=== Step 1.8. - MOCE and MOMNE identification ===

Walid ELJAAFARI: /* Micro-Step 1.2.3. Application of election from 1.5.3. */

2023-12-13T12:02:49Z

Micro-Step 1.2.3. Application of election from 1.5.3.

← Older revision		Revision as of 12:02, 13 December 2023
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	** Return not Excluded		** Return not Excluded

	===== Micro-Step 1.2.3. Application of election from 1.5.3. =====		===== Micro-Step 1.6.3. Application of election from 1.5.3. =====
	This is a lot simple than the previous one : it sets a specific status to the elected entities so that they are not treated as excluded.		This is a lot simple than the previous one : it sets a specific status to the elected entities so that they are not treated as excluded.

Walid ELJAAFARI: /* Micro-Step 1.2.3. Application of election from 1.5.3. */

2023-12-13T12:02:20Z

Micro-Step 1.2.3. Application of election from 1.5.3.

← Older revision		Revision as of 12:02, 13 December 2023
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	** Define the set of entity that remain for the "chain test" by excluding the entities that do not respect the test of article 1.5.2.a) : 85% Indirect Ownership Interest by the generic Excluded Entity - Excluding Pension Services Entities AND the criterion of the 1.5.2.b)		** Define the set of entity that remain for the "chain test" by excluding the entities that do not respect the test of article 1.5.2.a) : 85% Indirect Ownership Interest by the generic Excluded Entity - Excluding Pension Services Entities AND the criterion of the 1.5.2.b)
	** These form the 1.5.2.b)		** These form the 1.5.2.b)
	* For the set of all candidates, run the following ~~recursive algorithm~~		* For the set of all candidates, run the following [[Recursive Algorithm]]
	** i=0		** i=0
	** Count the number of Direct Parents		** Count the number of Direct Parents

Walid ELJAAFARI: /* Micro-Step 1.2.3. Application of election from 1.5.3. */

2023-12-13T11:48:15Z

Micro-Step 1.2.3. Application of election from 1.5.3.

← Older revision		Revision as of 11:48, 13 December 2023
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	This step utilizes the methodology for [[Indirect ownership computation using Baldone ownership]]. It run as follows:		This step utilizes the methodology for [[Indirect ownership computation using Baldone ownership]]. It run as follows:

	At the beginning 1.5.2.a) and b) are treated ~~seperately~~		At the beginning 1.5.2.a) and b) are treated separately

	* Test for the 1.5.2.a)		* Test for the 1.5.2.a)
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	===== Micro-Step 1.2.3. Application of election from 1.5.3. =====		===== Micro-Step 1.2.3. Application of election from 1.5.3. =====
	This .		This is a lot simple than the previous one : it sets a specific status to the elected entities so that they are not treated as excluded.

			Here we make the strong hypothesis that the election does not break the chain that resulted from the step 1.2.2. analysis by disqualifying an entity as excluded with the election. If it is shown to be incorrect, we will need to add the election at the identification steps of the step 1.2.2..
	=== Step 1.7. - Joint-Venture identification ===		=== Step 1.7. - Joint-Venture identification ===