INTM489610 - Diverted Profits Tax: application of Diverted Profits Tax: legislation – Finance Act 2015 – core provisions: section 80 exceptions – small or medium sized enterprises (SMEs)

Any provision between the two parties C and P is exempted if both C and P meet the definition for SMEs at section 172 TIOPA 2010. This definition contains some important modifications to the EU definition (2003/361/EC) of SMEs. For example, the EU definition allows a period of grace for a SME, meaning that if it falls within a definition of large enterprise for a single accounting period, it maintains its SME status for that accounting period. This period of grace does not apply for the purposes of the DPT SME exclusion. Instead, section 172 TIOPA 2010 applies, with the result that if a company falls within the definition of a large enterprise for a single accounting period it is treated as a large enterprise for that accounting period.