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Ireland: Proposed transfer pricing rule changes, possibly effective January 2020

Ireland: Proposed transfer pricing rule changes

The Irish government released a “feedback statement” following a public consultation regarding Ireland’s transfer pricing regime.


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The statement provides a summary of the proposed changes being considered, including draft wording for legislative purposes. The proposed changes to Ireland’s transfer pricing rules are expected to be introduced in Finance Bill 2019 and effective 1 January 2020.

The proposed changes are expected to have a significant impact on many businesses that have a related-party arrangement involving Ireland.

The following provides a summary of key provisions contained in the feedback statement:

  • Introduction into law of the 2017 OECD Transfer Pricing Guidelines (including OECD guidance on Hard-to-Value Intangibles and Application of the Transactional Profit Split Method published in June 2018).
  • Draft legislation to introduce the 2017 guidelines includes specific wording that essentially seeks to interpret certain OECD principles—which is a departure from the approach taken by most other countries.
  • Removal of the exemption from transfer pricing rules for pre-July 2010 (i.e., “grandfathered”) arrangements.
  • Non-trading transactions brought within the scope of transfer pricing rules. These rules do not apply when both parties to the transaction are within the charge to Irish tax (i.e., this effectively exempts domestic transactions) unless the transaction involves tax avoidance.
  • OECD transfer pricing documentation requirements (in accordance with Chapter V of the 2017 guidelines) introduced for large taxpayer groups—Master file revenue threshold of €250 million and Local file revenue threshold of €50 million.
  • Small and medium-size enterprises (SMEs) brought within the scope of transfer pricing rules. However, no formal documentation requirements for small enterprises (i.e., less than 50 employees together with annual turnover and/or balance sheet total of less than €10 million) and medium enterprises when one party to the transaction is not within the charge to Irish tax and the transaction consideration does not exceed €1 million.
  • Simplified documentation requirements (i.e., not the “full scope” OECD requirements) for medium enterprises not exempt, as noted above.
  • Application of transfer pricing rules to determine the market value of chargeable assets for capital gains tax purposes and to capital transactions (i.e., for capital allowance and balancing event purposes) when the transaction value/capital expenditure exceeds €25 million.
  • Application of OECD transfer pricing principles in connection with attribution of profits to branches has been deferred at this time.
  • All changes could apply for periods beginning on or after 1 January 2020.

Read a September 2019 report prepared by the KPMG member firm in Ireland

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