Excluded Equity Gain or Loss
- Applies
- FY2024 onwards
- Reviewed
- Rule
- P2-EEGL-2024.1
Are gains on shares excluded from GloBE Income?
Yes: fair value, equity method and disposal results on holdings are excluded, except holdings under 10%, unless an election keeps them in.
Per GloBE Model Rules (Pillar Two), December 2021, Article 3.2.1(c), Excluded Equity Gain or Loss
A Constituent Entity's Financial Accounting Net Income or Loss is adjusted for Excluded Equity Gain or Loss: the gain, profit or loss included in it arising from changes in the fair value of an Ownership Interest, except a Portfolio Shareholding; from profit or loss in respect of an Ownership Interest included under the equity method of accounting; and from the disposition of an Ownership Interest, except a Portfolio Shareholding. A Filing Constituent Entity may make an Equity Investment Inclusion Election for a jurisdiction, under which such items that are taxed in the owner's jurisdiction as the Commentary describes are included, together with the tax on them.
A gain on selling a subsidiary does not create top-up tax, and a loss on one does not shelter other income. The adjustment is the item reversed: a gain comes out, a loss goes back.
Three kinds of item, one size test, no time test
The three kinds
- (a) A change in the fair value of an Ownership Interest — unless a Portfolio Shareholding
- (b) Profit or loss under the equity method — whatever the size of the holding
- (c) A disposition of an Ownership Interest — unless a Portfolio Shareholding
The holding period is irrelevant
Unlike a dividend, a gain or loss on a Portfolio Shareholding stays in income however long the shares were held, and a gain or loss on a larger holding is excluded however briefly.
The equity method ignores local tax
Equity-method income or loss is removed even where the owner's jurisdiction taxes it — for example because it treats the investee as transparent.
Only what is in profit or loss
The definition reaches items included in Financial Accounting Net Income or Loss. A fair value movement recorded in Other Comprehensive Income is already outside it and needs no adjustment.
The Equity Investment Inclusion Election
A Five-Year Election by jurisdiction, covering all non-portfolio Ownership Interests held there. It keeps in: a fair value movement or impairment the owner is taxed on, or carries deferred tax on; equity-method profit or loss of a Tax Transparent Entity; and a disposition whose gain or loss is in domestic taxable income and not relieved by a participation exemption. The tax on those items then counts. It cannot be revoked for an interest on which a loss has been taken.
Order of testing
- 1
Inputs requiring your determination
Every input the computation reaches must be supplied; nil is entered, not left blank.
- 2
Portfolio Shareholding
For fair value and disposition items: the MNE Group's lowest right against the published share.
- 3
The equity method
No size test: equity-method profit or loss is excluded.
- 4
The Equity Investment Inclusion Election
In force for the jurisdiction, and the item taxed as the election describes.
Examples
Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.
Sale of a subsidiary at a gain
A EUR 50 million gain on selling a wholly owned subsidiary.
Computed
The gain of EUR 50,000,000 is an Excluded Equity Gain or Loss as computed and is taken out of Financial Accounting Net Income or Loss (Article 3.2.1(c)), an adjustment of (EUR 50,000,000): it arises from the disposition of the Ownership Interest (paragraph (c)), and the MNE Group's rights of 100% are not less than the portfolio share. Any Covered Taxes on it come out of Adjusted Covered Taxes under Article 4.1.3(a); related expenses are not disallowed. Based on the figures you supplied.
Workings
- Gain, profit or (loss) in Financial Accounting Net Income or LossArticle 3.2.1(c) — as supplied; the disposition of the Ownership Interest (paragraph (c))
- EUR 50,000,000
- MNE Group's lowest right in the EntityPortfolio Shareholding — less than 10% is a portfolio holding
- 100%
- Adjustment to Financial Accounting Net Income or LossArticle 3.2.1(c) — the item, reversed
- (EUR 50,000,000)
Decided by the portfolio shareholding
Share of an associate's profit
EUR 6 million of equity-method profit from a 30% associate.
Computed
The gain of EUR 6,000,000 is an Excluded Equity Gain or Loss as computed and is taken out of Financial Accounting Net Income or Loss (Article 3.2.1(c)), an adjustment of (EUR 6,000,000): it arises from profit or loss under the equity method (paragraph (b)), which is excluded whatever the size of the holding and whatever the owner's own tax law does with it. Any Covered Taxes on it come out of Adjusted Covered Taxes under Article 4.1.3(a); related expenses are not disallowed. Based on the figures you supplied.
Workings
- Gain, profit or (loss) in Financial Accounting Net Income or LossArticle 3.2.1(c) — as supplied; profit or loss under the equity method (paragraph (b))
- EUR 6,000,000
- Adjustment to Financial Accounting Net Income or LossArticle 3.2.1(c) — the item, reversed
- (EUR 6,000,000)
Decided by the equity method
A loss on a listed portfolio holding
A EUR 3 million fair value loss on a 2% holding: it stays in income.
Computed
The loss of (EUR 3,000,000) is not an Excluded Equity Gain or Loss as computed and stays in GloBE Income or Loss: it arises from a change in the fair value of the Ownership Interest (paragraph (a)), and the MNE Group's rights of 2% are less than 10%, so the holding is a Portfolio Shareholding. The period it was held is irrelevant here, unlike for dividends. Based on the figures you supplied.
Workings
- Gain, profit or (loss) in Financial Accounting Net Income or LossArticle 3.2.1(c) — as supplied; a change in the fair value of the Ownership Interest (paragraph (a))
- (EUR 3,000,000)
- MNE Group's lowest right in the EntityPortfolio Shareholding — less than 10% is a portfolio holding
- 2%
- Adjustment to Financial Accounting Net Income or LossNil — a Portfolio Shareholding is outside paragraphs (a) and (c) of the definition
- EUR 0
Decided by the portfolio shareholding
A taxed loss under the election
A EUR 20 million loss on disposal that is deductible locally, with the Equity Investment Inclusion Election in force.
Computed
The loss of (EUR 20,000,000) stays in GloBE Income or Loss as computed: it would be an Excluded Equity Gain or Loss, arising from the disposition of the Ownership Interest (paragraph (c)), but an Equity Investment Inclusion Election is in force for the jurisdiction and you have indicated the item is taxed in the way the election describes. The current and deferred tax on it is then included in Adjusted Covered Taxes, notwithstanding Articles 4.1.3(a) and 4.4.1(a). A Qualified Ownership Interest is treated differently and is not modelled here. Based on what you supplied.
Workings
- Gain, profit or (loss) in Financial Accounting Net Income or LossArticle 3.2.1(c) — as supplied; the disposition of the Ownership Interest (paragraph (c))
- (EUR 20,000,000)
- MNE Group's lowest right in the EntityPortfolio Shareholding — less than 10% is a portfolio holding
- 60%
- Adjustment to Financial Accounting Net Income or LossNil — included under the Equity Investment Inclusion Election (Commentary to Article 3.2.1, paragraph 57.5)
- EUR 0
Decided by the equity investment inclusion election
Try it
Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.
Not computed yet
2 inputs still need your determination:
- Does the item arise from a change in the fair value of an Ownership Interest, from the equity method, or from a disposition of an Ownership Interest?
- What gain, profit or loss is included in Financial Accounting Net Income or Loss for the item? Enter a loss as a negative.
Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.
Thresholds
- pillar_two.portfolio_shareholding_share
- 10% · reviewed 2026-10-04 · source
Threshold values are published separately from the rule and carried with a citation. Where none has been published for the period being computed, the rule reports that rather than applying a default.
Sources
GloBE Model Rules (Pillar Two), December 2021 — Article 3.2.1(c), Excluded Equity Gain or Loss
The adjustment this rule encodes
https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/12/tax-challenges-arising-from-digitalisation-of-the-economy-global-anti-base-erosion-model-rules-pillar-two_eed81a23/782bac33-en.pdfGloBE Model Rules (Pillar Two), December 2021 — Article 10.1, definitions of Excluded Equity Gain or Loss and Portfolio Shareholding
The three kinds of item and the size test
https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/12/tax-challenges-arising-from-digitalisation-of-the-economy-global-anti-base-erosion-model-rules-pillar-two_eed81a23/782bac33-en.pdfConsolidated Commentary to the GloBE Model Rules (May 2026) — Commentary to Article 3.2.1, paragraph (c)
Paragraphs 47 to 57.5: the table in 55, the holding period in 56, and the Equity Investment Inclusion Election in 57.4 and 57.5
https://www.oecd.org/content/dam/oecd/en/publications/reports/2026/05/tax-challenges-arising-from-the-digitalisation-of-the-economy-consolidated-commentary-to-the-global-anti-base-erosion-model-rules-2026_24289ddf/4377e89f-en.pdf