Minority-Owned Constituent Entities
- Applies
- FY2024 onwards
- Reviewed
- Rule
- P2-MOCE-2024.1
What is a Minority-Owned Constituent Entity?
A Constituent Entity in which the UPE has an ownership interest of 30% or less, directly or indirectly.
Per GloBE Model Rules (Pillar Two), December 2021, Article 10.1, definitions of Minority-Owned Constituent Entity, Parent Entity, Subsidiary and Subgroup
A Minority-Owned Constituent Entity is a Constituent Entity in which the Ultimate Parent Entity has a direct or indirect Ownership Interest of the published share or less. A Minority-Owned Parent Entity is one that holds, directly or indirectly, the Controlling Interests of another Minority-Owned Constituent Entity, unless its own Controlling Interests are held by another Minority-Owned Constituent Entity. A Minority-Owned Subsidiary is one whose Controlling Interests are held by a Minority-Owned Parent Entity. A Minority-Owned Subgroup is a Minority-Owned Parent Entity and its Minority-Owned Subsidiaries.
A minority-owned entity is in the Group because the parent controls it, not because it owns much of it, which is why it is treated apart.
What the result turns on
'Or less'
Exactly the published share is minority-owned. The share is the Ultimate Parent Entity's own interest, not its control.
A Constituent Entity through control alone
An Entity the UPE controls through consolidation while owning little or none of it is in the Group and, with an interest at or below the share, is minority-owned.
The chain
- Parent: holds the Controlling Interests of another Minority-Owned entity and is not itself held by one
- Subsidiary: its Controlling Interests are held by a Minority-Owned Parent Entity
- Neither: stands alone
Why the label matters — Article 5.6
- A Minority-Owned Subgroup is computed as if it were a separate MNE Group: its own Effective Tax Rate and Top-up Tax for the jurisdiction
- A Minority-Owned Constituent Entity outside any subgroup is computed on its own, entity by entity
- Either way its Adjusted Covered Taxes and GloBE Income or Loss are left out of the rest of the group's figures for the jurisdiction
- So a low-taxed minority-owned entity is not sheltered by high-taxed sister companies in the same country, and does not shelter them
- An Investment Entity is dealt with under its own rules instead
Points the Commentary settles
- An entity controlled through a Minority-Owned Parent Entity is in the subgroup only if it is itself minority-owned: one in which the UPE's own interest is 60% is an ordinary Constituent Entity
- Where several entities in a chain are minority-owned, only the highest is the Minority-Owned Parent Entity
- The separate computation is unaffected by the UPE holding part of the subsidiaries directly, alongside the subgroup
- A Permanent Establishment can be minority-owned where its Main Entity is
- The de minimis exclusion is still tested on the whole jurisdiction, minority-owned entities included
- The charging rules run as usual: the Minority-Owned Parent Entity is not a UPE, the group's UPE still applies the Income Inclusion Rule to the subgroup, and a Partially-Owned Parent Entity among them applies it too
Order of testing
- 1
The Ultimate Parent Entity's Ownership Interest
At or below the published share.
- 2
The minority-owned chain
Parent, subsidiary or stand-alone.
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.
A listed subsidiary the group controls with a quarter of the shares
The Ultimate Parent Entity consolidates a listed company line by line through board control while owning 25% of it. It is a Constituent Entity, and with an interest at or below the published share it is minority-owned: its rate is computed apart from the group's other entities in the same jurisdiction.
Computed
The Constituent Entity is a Minority-Owned Constituent Entity as computed: the Ultimate Parent Entity's Ownership Interest of 25% is at or below 30%. It neither holds the Controlling Interests of another Minority-Owned Constituent Entity nor has its own held by one, so it stands alone and is neither a Minority-Owned Parent Entity nor a Subsidiary. Based on the figures you supplied.
Workings
- Ultimate Parent Entity's Ownership InterestArticle 10.1 — as supplied
- 25%
- Ceiling for a Minority-Owned Constituent EntityArticle 10.1 — published value. The interest is at or below it
- 30%
Decided by the minority-owned chain
Over the line
The UPE owns 60% of the Entity.
Computed
The Constituent Entity is not a Minority-Owned Constituent Entity as computed: the Ultimate Parent Entity's Ownership Interest of 60% is above the 30% at or below which an Entity is minority-owned. Based on the figures you supplied.
Workings
- Ultimate Parent Entity's Ownership InterestArticle 10.1 — as supplied
- 60%
- Ceiling for a Minority-Owned Constituent EntityArticle 10.1 — published value. The interest is above it
- 30%
Decided by the ultimate parent entity's ownership interest
The top of a chain
The UPE owns 20% of an Entity that controls another minority-owned Entity and is not itself controlled by one.
Computed
The Constituent Entity is a Minority-Owned Constituent Entity as computed: the Ultimate Parent Entity's Ownership Interest of 20% is at or below 30%. It is also a Minority-Owned Parent Entity: it holds the Controlling Interests of another Minority-Owned Constituent Entity and its own are not held by one, so it is the top of that chain and forms a Minority-Owned Subgroup with its Minority-Owned Subsidiaries. Based on the figures you supplied.
Workings
- Ultimate Parent Entity's Ownership InterestArticle 10.1 — as supplied
- 20%
- Ceiling for a Minority-Owned Constituent EntityArticle 10.1 — published value. The interest is at or below it
- 30%
Decided by the minority-owned chain
A subsidiary in the chain
The UPE owns 6% of an Entity whose Controlling Interests are held by a Minority-Owned Parent Entity.
Computed
The Constituent Entity is a Minority-Owned Constituent Entity as computed: the Ultimate Parent Entity's Ownership Interest of 6% is at or below 30%. Its Controlling Interests are held by another Minority-Owned Constituent Entity, so it is a Minority-Owned Subsidiary within a Minority-Owned Subgroup. Based on the figures you supplied.
Workings
- Ultimate Parent Entity's Ownership InterestArticle 10.1 — as supplied
- 6%
- Ceiling for a Minority-Owned Constituent EntityArticle 10.1 — published value. The interest is at or below it
- 30%
Decided by the minority-owned chain
Controlled through a minority-owned parent, but mostly owned by the UPE
The Commentary's B Co: its Controlling Interests are held through a Minority-Owned Parent Entity, but the UPE's own interest in it is 60%. It is not minority-owned and does not join the subgroup.
Computed
The Constituent Entity is not a Minority-Owned Constituent Entity as computed: the Ultimate Parent Entity's Ownership Interest of 60% is above the 30% at or below which an Entity is minority-owned. Based on the figures you supplied.
Workings
- Ultimate Parent Entity's Ownership InterestArticle 10.1 — as supplied
- 60%
- Ceiling for a Minority-Owned Constituent EntityArticle 10.1 — published value. The interest is above it
- 30%
Decided by the ultimate parent entity's ownership interest
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
1 input still need your determination:
- What Ownership Interest does the Ultimate Parent Entity hold in the Constituent Entity, directly or indirectly, as a percentage? Enter 0 if none — an Entity can be a Constituent Entity through control alone.
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.minority_owned_ownership_ceiling
- 30% · 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 10.1, definitions of Minority-Owned Constituent Entity, Parent Entity, Subsidiary and Subgroup
The definitions 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 5.6, Minority-Owned Constituent Entities
The separate computation the classification leads to
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 5.6, paragraphs 97 to 107
Why minority-owned entities are computed apart, who is in a subgroup, and what the separate computation does not change
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