1.  Where a constituent entity records an adjustment to its covered taxes in its financial accounts for a previous fiscal year, such adjustment shall be treated as an adjustment to covered taxes in the fiscal year in which the adjustment is made, unless the adjustment relates to a fiscal year in which there is a decrease in covered taxes for the jurisdiction.

Where there is a decrease in covered taxes that are included in the constituent entity’s adjusted covered taxes for a previous fiscal year, the effective tax rate and top-up tax for such fiscal year shall be recomputed in accordance with Article 28, Paragraph 1 by reducing adjusted covered taxes by the amount of the decrease in covered taxes. The qualifying income for the fiscal year and any relevant fiscal years shall be adjusted accordingly.

At the election of the filing constituent entity, a decrease in covered taxes which is immaterial may be treated as an adjustment to covered taxes in the fiscal year in which the adjustment is made. An immaterial decrease in covered taxes shall be a decrease of less than EUR 1 000 000 in the adjusted covered taxes determined for the jurisdiction for the fiscal year.

2.  Where the applicable domestic tax rate is reduced below the minimum tax rate and such reduction results in a deferred tax expense, the amount of that deferred tax expense shall be treated as an adjustment to the constituent entity’s liability for covered taxes that are taken into consideration pursuant to Articles 19 and 20 for a previous fiscal year.

3.  Where a deferred tax expense was taken into account at a rate lower than the minimum effective tax rate and the applicable tax rate is subsequently increased, the amount of deferred tax expense that results from such increase shall be treated upon payment as an adjustment to a constituent entity’s liability for covered taxes claimed for a previous fiscal year in accordance with Article 19 and 20.

The adjustment under the first subparagraph shall not exceed an amount equal to the deferred tax expense recast at the minimum rate.

4.  Where more than EUR 1 000 000 of the amount accrued by a constituent entity as tax expense and included in adjusted covered taxes for a fiscal year is not paid within three years after the end of that fiscal year, the effective tax rate and top-up tax for the fiscal year in which the unpaid amount was claimed as a covered tax shall be recomputed in accordance with Article 28(1) by excluding such unpaid amount from the adjusted covered taxes.

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