INTM489715 - Diverted Profits Tax: application of Diverted Profits Tax: legislation – Finance Act 2015 – core provisions: consequences of section 86 applying - section 91 - mismatch condition is met - calculation by reference to the relevant alternative provision

Section 91 applies where the mismatch condition is met but the actual provision condition is not met. That is, either the relevant alternative provision would not have resulted in expenses of the same type and for the same purpose or the actual provision condition would have applied but for the fact that the relevant alternative provision resulted in relevant taxable income.

Where section 91 applies the taxable diverted profits are to be determined as if the relevant alternative provision had been made or imposed.

However, if the only reason the actual provision condition is not met is that the relevant alternative provision would have resulted in relevant taxable income, then the taxable diverted profits that arise to the foreign company will be the sum of the notional PE profits and an amount equal to the relevant taxable income.

Otherwise, the taxable diverted profits will be the sum of the following amounts:

• relevant taxable income (if any) and
• what would have been the notional PE profits of the foreign company had the relevant alternative provision been made instead of the material provision.