IRELAND Law and Practice Contributed by: Philip Tully, Emma Doherty, Geraldine Carr, Simon Shinkwin and Carlo Salizzo, Matheson LLP
earnings before interest, taxes, depreciation and amortisation (EBITDA) in certain circumstances. In addition, Ireland has introduced defensive measures in respect of certain outbound pay - ments made after 1 April 2024. These measures operate to remove exemptions from withholding taxes on certain outbound payments of inter - est, royalties and distributions to an associated entity who is resident in a “zero-tax” or ”no-tax” jurisdiction or in a jurisdiction listed on the EU Blacklist. There are a number of exceptions to these defensive measures where the outbound payment is subject to a CFC tax, a qualifying Pil - lar Two tax or is paid out of income that has been subject to tax in certain circumstances. 5.6 Transfer Pricing Irish transfer pricing rules apply the arm’s length principle to trading transactions between asso - ciated enterprises. In this context, “arm’s length” is to be construed in accordance with OECD guidelines. The Irish transfer pricing rules were significantly amended from 1 January 2020 to align with the 2017 OECD guidelines, including enhanced documentation requirements. Ire - land’s transfer pricing rules are currently to be construed in accordance with the 2022 version of the OECD guidelines. Broadly, Ireland’s transfer pricing rules require that if the actual consideration payable or receiv - able by a trader in a transaction with an asso - ciated enterprise is other than at arm’s length, then any understatement in the trader’s profit will be reversed so that the full arm’s length profit of the trader will be taxed. Since 1 January 2020, Ireland’s transfer pricing rules have also been extended to non-trading transactions (save for certain non-trading trans - actions between two Irish residents). The Irish
transfer pricing rules can now also apply to capi - tal transactions where the market value of the asset exceeds EUR25 million. 5.7 Anti-Evasion Rules Ireland has strict anti-evasion rules that impose criminal sanctions on those who fraudulently evade tax and anyone who facilitates such eva - sion. Anyone found guilty of an offence may be fined and/or imprisoned. Anti-Avoidance Rule Ireland also has a general anti-avoidance rule that applies in respect of tax-avoidance transac - tions. Broadly, a tax avoidance transaction in this context is a transaction which gives rise to a tax advantage and is undertaken primarily to claim a tax advantage and not for bona fide commercial reasons. In such cases, Revenue may deny or withdraw the relevant tax advantage. In deter - mining whether a transaction is a tax avoidance transaction, regard will be given to: • the form of the transaction; • the substance of the transaction and any oth - er transaction(s) directly or indirectly related to or connected with that transaction; and • the final outcome of the transaction and any related transaction. As such, genuine commercial arrangements undertaken with a view to making a profit should generally not be subject to the general anti- avoidance rule. Exit Charge Ireland introduced an ATAD-compliant exit tax in October 2018. The exit tax is charged at a rate of 12.5% and applies to unrealised capital gains inherent in assets where:
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