IRELAND Law and Practice Contributed by: Andrew Quinn, David Burke, William Fogarty and Lynn Cramer, Maples Group
7. Anti-Avoidance Provisions 7.1 Overarching Provisions
Whether a CFC charge is imposed on an Irish con - trolling company will depend on the extent to which the CFC is regarded as having “non-genuine arrange - ments” in place, which will be the case in the following circumstances: • where the CFC would not own the assets or would not have borne the risks that generate all, or part of, its undistributed income but for relevant Irish activities or SPF being undertaken in Ireland in relation to those assets and risks; and • where it would be reasonable to consider that the relevant Irish activities were instrumental in gener - ating that income. The concept of SPF is not defined in the Irish imple - menting legislation but must be construed in a man - ner consistent with the use of that term in the “2010 Report on the Attribution of Profits to Permanent Establishments”. If there is no SPF in Ireland to which the management of assets and business risks can be attributed, no tax will arise under the new CFC rules. The CFC charge applies to the undistributed profits that have been diverted to the low-taxed CFC pursu - ant to non-genuine arrangements. The rate of Irish tax chargeable will depend on the nature of the income. In Ireland, trading income is taxed at 12.5% and non- trading income is taxed at 25%. A credit is available for any foreign tax paid by the CFC on its undistrib - uted income. 6.6 The Substance of Non-Local Affiliates There are no applicable Irish rules relating to the sub - stance of non-local affiliates. 6.7 The Sale of Shares in Non-Local Affiliates Irish companies are subject to CGT on the sale of shares in directly held non-local affiliates under the normal CGT rules at a rate of 33%, unless the sub - stantial shareholder’s exemption or group reliefs apply (as described in detail under 2.7 Capital Gains ).
Ireland has a very broad general anti-avoidance rule (GAAR), which is intended to negate the effects of transactions that have little or no commercial reality but are primarily intended to avoid or reduce a tax charge, or to artificially create a tax deduction or tax refund. Irish Revenue may at any time deny or with - draw a tax advantage created through the use of a tax avoidance transaction by making or amending an assessment of that person. In determining whether a transaction is a tax-avoid - ance transaction, regard should be had to the form and substance of the transaction, the substance of any other transactions directly or indirectly related to the transaction, and the final outcome of the transac - tion and any related transactions. A person who enters into a tax-avoidance transaction shall be liable to pay a 30% surcharge of the amount of the tax advantage. However, no surcharge is pay - able by a person who has made a valid protective notification. A taxpayer can also avail themselves of a reduced surcharge amount if a “qualifying avoidance disclosure” is made to Irish Revenue. Article 6 of the EU ATAD also introduces a broad gen - eral anti-avoidance provision. However, the existing GAAR is regarded as being broader than that con - tained in Article 6, so no further amendment is envis - aged at this time.
8. Audit Cycles 8.1 Regular Routine Audit Cycle
Ireland does not have a defined audit cycle for tax purposes: companies are subject to audit by the Irish tax authorities at any time. The time limit for enquiry by Irish Revenue into a tax return is four years from the end of the accounting period in which that return was filed, unless fraud or neglect is alleged.
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