IRELAND Law and Practice Contributed by: Andrew Quinn, David Burke, William Fogarty and Lynn Cramer, Maples Group
9. BEPS 9.1 Adoption of BEPS Recommendations In response to the BEPS recommended changes, Ireland has introduced country-by-country reporting, updated its transfer pricing legislation and implement - ed the CFC, anti-hybrid and interest limitation rules under ATAD, among other measures. Other recent Irish reforms include the EU Directive on minimum taxation, which introduced top-up taxes to achieve a minimum tax rate of 15% for groups with an Irish presence and an annual revenue in excess of EUR750 million (see 9.2 Government Policy and Objectives Approach ). 9.2 Government Policy and Objectives Approach Ireland has insisted that transparency and substance are key components of the Irish tax regime, and is keen to ensure that Irish tax policy is continually in step with all OECD BEPS proposals. In that regard, Ireland has implemented the Directive that puts the Global Anti-Base Erosion (GloBE) rules on minimum taxation into effect across the EU, with effect for accounting periods beginning from 31 December 2023. Pillar Two The GloBE rules primarily operate through three new “top-up” taxes. • The income inclusion rule (IIR) is a top-up tax levied on parent entities in respect of their own low-taxed income or the low-taxed income of their subsidiaries. This is effective from 31 December 2023. • The undertaxed profits rule (UTPR) imposes tax on affiliate companies if the parent is not subject to an IIR in another jurisdiction. In most cases, this applies from 31 December 2024. • The qualified domestic top-up tax (QDTT) raises the effective rate of tax for the constituent entities in a group to at least 15%. This allows a jurisdic - tion to collect tax in respect of constituent entities in their own territory that another jurisdiction might have otherwise collected under the IIR. The QDTT applies from 31 December 2023.
To determine whether an entity or group is within the scope of the rules, the GloBE rules require an analysis as to what entities are or would be included in consoli - dated financial statements. Therefore, the accounting position is of primary significance. A group that is below the EUR750 million revenue threshold will be outside the scope of the rules and there will be no change in the tax paid on its Irish profits. Ireland’s long-standing 12.5% trading tax rate will remain applicable. Pillar One Ireland has fully supported the Pillar One proposals, in recognition of the fact that the way in which business is conducted has evolved and that the taxation system must evolve with it. It is recognised that there will be a cost to Ireland for this in terms of reduced corporation tax receipts, but overall it is considered that Pillar One will bring stability and certainty to the international tax framework and will help underpin economic growth, from which all can benefit. Pillar One was initially planned to apply generally from 1 January 2023, but this has now been pushed back given the difficulties in reaching international agree - ment. The OECD remains committed to the implemen - tation of Pillar One and discussions remain ongoing. 9.3 International Tax In January 2026, consensus was reached at an OECD level on a new safe harbour to recognise the US inter - national tax system as forming a side-by-side (SbS) system operating alongside Pillar Two. The safe har - bour relieves a group from the IIR and UTPR if its ultimate parent entity is located in a country that has a “Qualified SbS Regime” based on certain criteria (which currently only the US is deemed to satisfy). QDTTs may still apply in jurisdictions outside the US in which such a group operates. Ireland has welcomed this development, with the Minister for Finance saying that it will “preserve the gains” achieved so far by Pillar Two. Ireland at pre - sent remains committed to the global minimum tax system. The SbS safe harbour provides that a “stock - take” exercise will be undertaken in 2029 to assess
243 CHAMBERS.COM
Powered by FlippingBook