IRELAND Trends and Developments Contributed by: Amelia O’Beirne and Trevor Glavey, A&L Goodbody
Domestic Tax Developments Changes to Ireland’s interest regime
European Commission and EU member states will continue their efforts in the area of tax simplification, with the aim of enhancing competitiveness in Europe. Failure to deliver on this agenda would constitute a missed opportunity and only serve to leave the EU further behind its international peers. The liberation day tariff announcements have caused multinationals to more closely analyse their transfer pricing policies in a higher tariff environment. This has meant considering not only manufacturing foot - prints but also whether services and intellectual prop - erty should be separately dealt with. In this respect, transfer pricing models are evolving to become more granular and specific so as to ensure that customs prices are not capturing amounts relating to, for exam - ple, intangibles. This enhanced focus on the interac - tion between tariffs and transfer pricing is expected to continue, with more scrutiny being placed on the inter - action by both taxpayers and tax authorities going forward. More generally in the area of transfer pricing, a development that taxpayers can look forward to in 2026 is a new consultation on future guidance in rela - tion to high-value intra-group services, with the OECD aiming to publish a discussion document regarding updates to Chapter VII in the coming months. In the area of international tax controversy, it is expected that the trends of recent years will continue, with the focus of tax administrations continuing to be on transfer pricing. In this respect, it is expected that areas such as valuations, licensing arrangements and financial transactions will continue to be at the fore - front of audit activity for multinationals. With respect to valuations, it is expected that tax authorities will continue to closely scrutinise the question of whether valuations are arm’s length and the reasonableness of the inputs – eg, projections, growth rates, and useful life in respect of intellectual property. When it comes to licensing, again tax authorities are expected to maintain their focus on the functional characterisa - tion of parties, the appropriateness of transfer pric - ing methods, profit level indicators and the quality of comparables. There is no sign that audit activity in this area will slow down, and, given the significant sums involved, it is advisable that taxpayers take practical steps to prepare for audits in this area (eg, by prepar - ing defence files).
The Irish Department of Finance is currently consult - ing on proposals to reform Ireland’s tax regime as it relates to interest. Ireland’s rules relating to the taxa - tion of interest have developed over many years in a piecemeal fashion, leading to a multitude of meas - ures that are complex and overlap. The EU-mandated BEPS-related measures, and more recently Pillar 2, have brought into focus aspects of the Irish Tax Code as it relates to interest that are out of step with best practice in other developed economies and the EU. As part of its consultation process on the matter, the Department of Finance issued a Feedback Statement in November 2025 that contained a strawman outline of proposed changes to the regime. Some of the nota - ble proposals include: • the introduction of a “profit motive” test for interest deductibility; • the extension of transfer pricing rules to medium- sized entities; • amendments to Ireland’s interest limitation rule; and • amendments to how passive interest income is taxed. The response by stakeholders to the proposals has been mixed, and developments in this area should be monitored by interested stakeholders throughout 2026. Further consultation is expected in April 2026 with rule changes to follow, taking account of stake - holder feedback. Proposed Changes to Ireland’s Tax Appeals Commission The issue of taxpayer rights and the rules of procedure governing how taxpayers can challenge determina - tions or assessments of tax authorities is central to how certainty is provided to taxpayers. In this respect, proposals by Ireland’s Department of Finance under the Revised General Scheme of the Finance (Tax Appeals and Fiscal Responsibility) Bill, regarding how the Irish Tax Appeals Commission (TAC, which is the first appellate body in Ireland from an assessment or determination by the Irish Revenue Commissioners) will operate, are noteworthy.
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