MTT45630 - Particular entities and adjustments: Shipping: Ancillary international shipping profits

The ancillary international shipping profits are calculated in the same way as the core profits, with the exception of the ancillary international shipping cap.

The ancillary international shipping profits of a member of a group consists of:

  • its ancillary international shipping revenue, less
  • its ancillary international shipping costs, less
  • its ancillary international shipping cap adjustment (see MTT45635).

The member's underlying profits are adjusted to exclude this figure.

This is set out in section 158 of Finance (No.2) Act 2023.

Ancillary international shipping revenue

The member’s ancillary international shipping revenue consists of all revenue earned by the member in consideration for its performance of ancillary international shipping activities.

Ancillary international shipping costs

The member’s ancillary international shipping costs consist of:

  • all costs incurred by the member that are directly attributable to the performance of ancillary international shipping activities, and
  • a proportion of costs indirectly attributable to the performance of those activities.

That proportion is given by multiplying the total amount of those indirectly attributable costs by:

  • the ancillary international shipping revenue of the member for the period,

divided by

  • the total revenue of the member for the period.

Ancillary international shipping activities

Ancillary international shipping activities consist of the following (insofar as they are performed primarily in connection with international shipping):

  • leasing out (other than to a member of the multinational group) a ship to be used for international shipping, where the ship is not fully equipped, crewed and supplied, and the lease does not exceed three years
  • selling tickets for a domestic leg of an international voyage carried out by a third party
  • leasing out a container of a kind that is used for international shipping
  • storing such a container for a short period, or leasing out a space to be used for such storage
  • engineering, maintenance, cargo handling, catering, and customer relations services
  • holding assets necessary for the member to carry out a core activity
  • the disposal of emissions allowances that is necessary for the member to hold to carry out international shipping

When determining whether a lease exceeds three years, it is necessary to consider any other relevant arrangements. This ensures that leases of longer than three years will not be treated as ancillary activity as the result of, for example, being split up into separate contracts.