IRELAND Law and Practice Contributed by: Amelia O’Beirne and Trevor Glavey, A&L Goodbody
sionaire (as the case may be) are charged to tax in that covered jurisdiction. An arrangement qualifying under Ireland’s implement - ing legislation in respect of Amount B is an arrange - ment that is: • a buy-sell marketing and distribution arrangement where the distributor under the arrangement pur - chases goods from one or more than one associ - ated company for wholesale distribution to inde - pendent parties; or • a sales agency or commissionaire arrangement where the sales agent or commissionaire under the arrangement contributes to one or more than one associated company’s wholesale distribution of goods to independent parties and where those goods are sold by the associated company with - out either it, or the sales agent or commissionaire, engaging other associated parties as intermediar - ies between it and the independent party custom - ers. For the arrangement to qualify, the legislation provides that the arrangement must also exhibit economically relevant characteristics that mean it can be reliably priced using a one-sided transfer pricing method where the distributor, sales agent or commissionaire (as the case may be) is the tested party. An arrangement will not constitute a qualifying arrangement under Ireland’s implementing legislation where: • the arrangement involves the distribution of non- tangible goods, services or the marketing, trading or distribution of commodities; • the tested party carries out non-distribution activi - ties and the arrangement cannot be adequately evaluated and reliably priced separate from those activities; or • the tested party has incurred annual operating expenses which are lower than 3% or greater than 30% of its annual net revenues. As noted previously, Ireland’s implementing legisla - tion also requires specific compliance requirements to be satisfied. These include, for example, including
Amount B-specific information in the transfer pricing local file and notifying Revenue that the taxpayer is applying Amount B. Amount B will not apply unless the qualifying arrange - ment is entered into for bona fide commercial reasons and not as part of an arrangement the main purpose, or one of the main purposes, of which is the avoid - ance of tax. 4.2 Pillar One – Amount A In October 2021, the Irish Department of Finance indi - cated its support for the two-pillar solution to address the tax challenges arising from the digitalisation of the economy (including Amount A). At the time, the Irish government noted that, while Pillar One represented a net cost to Ireland in the form of reduced corpora - tion tax receipts, overall Pillar One should help bring about stability and certainty in the international tax framework, which in turn should help drive economic growth from which all (including Ireland) can benefit. As part of its commitment to the two-pillar solution, the Irish government has indicated its willingness to sign the Multilateral Convention to Implement Amount A of Pillar One if it opens for signature. Given recent pronouncements from the US Treasury in respect of Amount A, it remains to be seen whether Amount A will proceed in its current form. 4.3 Pillar Two In 2021, the OECD published draft Global Anti-Base Erosion Rules aimed at ensuring that multinational enterprises will be subject to a global minimum 15% tax rate. On 15 December 2022, the Council of the European Union formally adopted the Minimum Taxa - tion Directive (2022/2523) (the “Pillar Two Directive”), which establishes a minimum effective tax rate of 15% for large corporate groups in the EU, and essential - ly requires the implementation within the EU of the OECD’s Pillar Two proposal. EU member states were required to implement the Pillar Two Directive by 31 December 2023. Ireland implemented the Pillar Two Directive and the OECD’s proposals into Irish law pursuant to the Finance Act (No 2) 2023, with the effect that the 15% minimum effective corporation tax rate applies to large
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