The FANIL of the CE that is considered a PE shall be calculated in accordance with clauses (1) to (3) of paragraph four of Article 2, based on the net income or loss reported in the separate financial accounts of the PE.
If the PE does not have separate financial accounts, the FANIL shall be calculated based on the amount that would have been reported in those accounts if they had been prepared separately, in accordance with the accounting standard used to prepare the Consolidated Financial Statements of the UPE.
The FANIL of this PE must be adjusted as follows:
For the PE referred to in clauses (1) and (2) of paragraph four of Article 2, the adjustment must include only the amounts and items of income and expenses attributable to that PE according to the applicable Tax Treaty or the local law of the jurisdiction where it is located, regardless of the amount of taxable income or the amount of deductible expenses for tax purposes in that jurisdiction.
For the PE referred to in clause (3) of paragraph four of Article 2, the adjustment must include only the amounts and items of income and expenses that could be attributed to that PE according to the provisions of the Article addressing "Business Profits" in the Model Tax Convention issued by the OECD.
If the CE is considered a PE according to clause (4) of paragraph four of Article 2, the income used in calculating the FANIL is the income exempt in the Jurisdiction where the Main Entity is located and attributable to operations conducted outside that Jurisdiction. The deductible expenses in calculating the FANIL are equal to the expenses that were not deducted for tax purposes in the jurisdiction where the Main Entity is located and attributable to those operations.
The FANIL of the PE shall not be considered when determining the GloBE income or loss for the Main Entity unless otherwise specified in paragraphs five and six of this Article.