According to Art. 12 (2) IFR the conditions set out in points (a), (b), (h) and (i) of paragraph 1 shall apply on a combined basis for all investment firms that are part of a group.

Art. 4 (25) of the IFR states that “‘investment firm group’ means a group of undertakings which consists of a parent undertaking and its subsidiaries or of undertakings which meet the conditions set out in Article 22 of Directive 2013/34/EU of the European Parliament and of the Council (20), of which at least one is an investment firm and which does not include a credit institution”. Finally, Art. 22 of Directive 2013/34/EU, at par. 6 states “Without prejudice to Article 23 (9), a parent undertaking and all of its subsidiary undertakings shall be undertakings to be consolidated regardless of where the registered offices of such subsidiary undertakings are situated.”.

In light of that, it could be understood, that also third country investment firms must be included for the purposes of Art. 12 (2) IFR.

However, it’s not clear whether this was the original intention of the legislator because the purpose of the regulation is “to prevent arbitrage and reduce the incentive for firms to structure themselves in such a way as to avoid falling into Class 2”. (See Recital 18 of IFR and also the Annex to the EBA Opinion, EBA-OP-2017-11 – 29.09.2017, paragraph 47). The Discussion Paper of 03.06.2024, paragraphs 39 and 40 ask – at least for Art. 12 (1) (a) and (b) of the IFR - for clarification whether the criteria should only refer to investment firms within the European Union when applying Article 12 (2) of the IFR.