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Pillar One: Amount A Reliable Indicators

Pillar One: Amount A - Reliable Indicators

Contents

What are Reliable Indicators for Amount A?

The Amount A reliable indicators are the practical methods of allocating revenue to jurisdictions for the purposes of the Pillar One, Amount A revenue sourcing rules

The general revenue sourcing rules are in Article 4 of the Progress Report on Amount A of Pillar One. Schedule E of the Progress Report provides the detailed revenue sourcing rules which include the reliable indicators that can be used to source revenue. 

Once revenue is sourced, the profit reallocation calculation can then be undertaken to determine the amount of profits allocated to market jurisdictions. 

Whilst the general revenue sourcing rules provide the high-level rule for where revenue is determined as arising, the reliable indicators include the detail as to what multinationals can use to actually apply that rule.

For instance, the general sourcing rule may state that revenue is sourced where the place of use is. The reliable indicators may then state this can be the location of the customer based on their address or IP address. 

General Overview of Reliable Indicators

Schedule E of the Progress Report on Amount A of Pillar One includes a number of reliable indicators based on the type of revenue being sourced.

However, many of the revenue sourcing rules also provide for additional reliable indicators that a multinational group can use to source revenue. Therefore, they aren’t restricted to just the reliable indicators specifically stated. 

They list two types of additional reliable indicator that can be used. 

Firstly, an ‘another reliable indicator’. This is information that:

  • produces results that are consistent with the revenue sourcing rule for relevant source of income; and

  • the indicator is relied upon by the Multinational for commercial purposes or to fulfil legal, regulatory, or other obligations;

  • the indicator is verified by information provided to the Multinational by a third party that has collected the information for its own commercial, legal, regulatory or other obligations;

  • that indicator and one or more other indicators that are provided for in the relevant revenue sourcing rule identify the same jurisdiction; or

  • the indicator is verified in another manner that is functionally equivalent to the above.

The other additional type of reliable indicator is an “Alternative Reliable Indicator”. This is an indicator that isn’t specifically listed in Schedule E of the Progress Report and isn’t  ‘another reliable indicator’  but it:

  • produces results that are consistent with the revenue sourcing rule for the relevant category;

  • is approved by a Review Panel under an Advance Certainty Review.

Some of the revenue sourcing rules also provide for Allocation Keys. These are generally available where no reliable indicator can be identified. 

Reliable Indicators – Detailed Rules

General Rules

Reliable Indicators

Revenues from Finished Goods sold to a Final Customer directly by the Covered Group

Where the place of the delivery of the Finished Goods to a Final Customer is.

  • the delivery address of the Final Customer;

  • the place of the retail store selling to the Final Customer;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Revenues from Finished Goods sold to a Final Customer through an Independent Distributor

Where the place of the delivery of the Finished Goods to a Final Customer is.

  • the delivery address of the Final Customer;
  • the place of the retail store selling to the Final Customer;
  • the Location of the Independent Distributor provided it is contractually restricted to selling in that location or that it is otherwise reasonable to conclude that it is located in the same Jurisdiction as the place of the delivery of the Finished Goods to the Final Customer;
  • Another Reliable Indicator; or
  • an Alternative Reliable Indicator.
Revenue from Digital Content

Where the place of use of the service is.

For Smaller Customers:

  • the billing address;
  • Another Reliable Indicator; or
  • An Alternative Reliable Indicator.

 

For Large Customers:

  • information on the place of use of the service reported to the multinational by the Large Customer;
  • the place identified in the contract or any other commercial documentation as the place where the service will be used by the Large Customer;
  • Another Reliable Indicator; or
  • an Alternative Reliable Indicator.

A large customer is a person that is provided other services by the MNE Group and the revenue derived exceeds 20 million euros in the fiscal year and it is one of the 200 customers which the MNE Group derives the most revenue from other services or where the revenue from the provision of other services to that customer exceeds 100 million euros in the fiscal year.  A Smaller Customer is any other customer.

Components

Where the place of delivery to a Final Customer of the Finished Goods into which the Component is incorporated is located.

  • the delivery address of the Final Customer;

  • the place of the retail store selling to the Final Customer;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Services Connected to Tangible Property

The jurisdiction where the place of performance of the service is.

  • the place where the tangible property is situated when the service is performed;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Services Performed at the Location of the Customer

Where the place of performance of the service is.

  • the place where the customer or its agent is situated when the service is performed;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Online Advertising Services

Where the location of the viewer of the online advertisement is.

  • the user profile information of the viewer;

  • the geolocation of the device of the viewer on which the online advertisement is displayed;

  • the IP address of the device of the viewer on which the online advertisement is displayed;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Advertising Services other than Online Advertising Services

Where the place of display or reception of the advertisement is located.

  • for advertisements displayed on a billboard or at another fixed site, the location of the billboard or other fixed site where the advertisement is displayed;

  • for advertisements displayed in newspapers, magazines, journals or other publications, the place where the publication is circulated or expected to be circulated;

  • for advertisements displayed on television or broadcast on radio, the place where the television or radio programming is received or expected to be received;

  • the place identified in the contract or any other commercial documentation indicating where the advertisement will be displayed or received;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Online intermediation of Tangible Goods, Digital Content or Services (except Location- Specific Services)
  • Half of the revenues is where the location of the purchaser is.
  • Half of the revenues is where the location of the seller is.

Location of the Purchaser

  • the delivery address of the purchaser, if there is a purchase of tangible goods;

  • the billing address of the purchaser;

  • the user profile information of the purchaser;

  • the geolocation of the device of the purchaser through which the purchase is made;

  • the IP address of the device of the purchaser through which the purchase is made;

  • another Reliable Indicator; or

  • an Alternative Reliable Indicator

Location of the Seller

  • the billing address of the seller;

  • the user profile information of the seller;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Online intermediation of Location-Specific Services
  • Half of the revenue is treated as arising in the jurisdiction where the purchaser’s location is.
  • Half of the revenue is treated as arising where the location-specific service is performed.

Location of the Purchaser

  • the billing address of the purchaser;

  • the user profile information of the purchaser;

  • the geolocation of the device of the purchaser through which the purchase is made;

  • the IP address of the device of the purchaser through which the purchase is made;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Location where the Service is Performed

  • the place where the location-specific service is performed;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Customer Reward Programs

Treated as arising in a jurisdiction in proportion to the percentage share of the Active Members of a Customer Reward Program located in that jurisdiction.

  • the user profile information of the Active Member of a Customer Reward Program;

  • the billing address of the Active Member of a Customer Reward Program;

  • the place of the international dialling code associated with the telephone number of the Active Member of a Customer Reward Program;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Revenue from Other Services

Where the place of use of the service is.

Smaller Customers:

  • the Smaller Customer’s billing address;
  • Another Reliable Indicator; or
  • an Alternative Reliable Indicator.

Large Customers:

  • information on the place of use of the service reported to the multinational by the large customer;
  • the place identified in the contract or any other commercial documentation as the place where the service will be used by the large customer;
  • Another Reliable Indicator; or
  • an Alternative Reliable Indicator.
Revenue from Intangible Property
  • if the Intangible Property relates to finished goods or components –  the place of delivery of the finished goods to a final customer;

  • if the Intangible Property supports a service or digital content – the place of use of the service or digital content; or

  • in other cases – the place of use of the Intangible Property.

Intangible Property related to Finished Goods or Components

  • the place of delivery of the finished goods to a final customer reported to the multinational by the licensee, Purchaser or other transferees;

  • the place of the retail store selling the finished goods to a final customer;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator

Intangible Property that supports a Service or Digital Content

The general reliable indicators for services. 

Revenue from User Data

The Location of the User that is the subject of the data being transferred.

  • the user profile information of the user;

  • the geolocation of the device of the user through which the user data is transferred;

  • the IP address of the device of the user through which the user data is transferred;

  • Another Reliable Indicator; or

  • an Alternative Reliable Indicator.

Revenue from Real Property

The location of the real property.

  • the address of the real property;

  • the jurisdiction granting the right to exploit the real property;

  • Another Reliable Indicator ; or

  • an Alternative Reliable Indicator.

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