1. How often is tax law amended and what is the process?
In December each year an annual Finance Act is passed by the Irish Parliament enacting substantive changes to tax law. This follows a budget statement by the Minister for Finance in September / October and a number of weeks of parliamentary debate and amendments. Very rarely, there may be more than one Finance Act in a calendar year.
Implementing legislation for relevant EU Directives is usually passed as part of the annual Finance Act. Other implementing legislation (regulations or orders) may be issued at other times throughout the year where authorized under the primary Finance Act.
Substantive changes to tax law are typically preceded by a period of public consultation and draft legislation may be released in advance for public comment and debate.
Procedural or administrative changes to Irish Revenue Commissioners' practices issue regularly throughout the year.
2. What are the principal administrative obligations of a taxpayer, i.e. regarding the filing of tax returns and the maintenance of records?
Companies are obliged to file a corporation tax return annually, typically 8 months and 21 days after the company's financial year end. This can be 8 months and 23 days if the return is filed electronically. Individuals with employment income only typically have no personal income tax filing obligations as their tax obligations are fulfilled by their employer under a system of payroll withholding taxes. Individuals with other sources of income file a tax return annually on 31 October (extension available for online filing).
There are bimonthly and annual VAT filings and employers have monthly and annual payroll withholding tax filings.
Taxpayers are obliged to maintain adequate books and records to support a tax filing for a period of six years. This time period is extended where there is an ongoing inquiry or audit.
3. Who are the key tax authorities? How do they engage with taxpayers and how are tax issues resolved?
The Office of the Revenue Commissioners was established by Government Order in 1923 with responsibility for collecting taxes and duties and implementing customs controls. The Order provided for a Board of Commissioners comprising three Commissioners, one of whom is appointed Chairman. Irish Revenue's structure is designed around its customer base. Irish Revenue Regions are responsible for customers within their geographical area, except for those large corporates and high wealth individuals dealt with by the Large Cases Division. There are also Divisions with responsibility for policy, legislation and interpretation functions. In total, Irish Revenue comprises of 16 Divisions each of which is headed by an Assistant Secretary.
Standard queries are normally dealt with through an online portal. Depending on the nature of the query, response times can vary from 2 days to 6 weeks or even longer in complex matters. Complex matters may be dealt with face to face with the relevant technical division in Irish Revenue. Large taxpayers may be invited to join the Irish Revenue's Co-operative Compliance Framework ("CCF"). Taxpayers within the CCF have direct access to an Irish Revenue official and can expect matters to be dealt with more quickly. The CCF is entirely voluntary. However, taxpayers who do not participate in the CCF will not have a dedicated case manager and instead will be required to route queries or submissions to the Irish Revenue Commissioners through the general customer service team. This can result in increased delays with regard to queries being addressed or answered.
4. Are tax disputes heard by a court, tribunal or body independent of the tax authority? How long do such proceedings generally take?
The first instance independent tribunal for tax disputes is the Tax Appeals Commissioners ("TAC"). There is currently a significant waiting list of cases before the TAC and typical waiting time to hear an appeal can be more than one year. As of 31 December 2022, the TAC had 1,502 active appeals under its remit.
Appeals on points of law from the TAC may be made through the regular court system in the High Court, Court of Appeal and ultimately the Supreme Court (where the Supreme Court decides to exercise its appellate jurisdiction in circumstances specified by the Constitution). Appeals through the courts system can be expected to take more than 5 years.
5. What are the typical deadlines for the payment of taxes? Do special rules apply to disputed amounts of tax?
Individuals who have an income tax filing obligation must pay preliminary tax for a calendar year by 31 October of that year. To avoid possible interest charges the payment must be 90% of the current year liability or 100% of the prior year liability. Any balancing tax payment in respect of a calendar year must be paid by 31 October of the following calendar year.
Companies generally pay corporation tax in three instalments: (i) on the 21st day of the sixth month of the current financial year a payment equal to 45% of the current year tax liability (or 50% of the preceding year tax liability); (ii) on the 21st day of the eleventh month of the current financial year a payment to bring the total payments for the year to 90% of the current year tax liability; (iii) on the 21st day of the ninth month following the relevant financial year (along with the corporation tax filing) a balancing payment of the remaining 10% of the relevant financial year liability.
VAT and payroll withholding tax payments are made either bimonthly or monthly in arrears along with the relevant filing.
In order to lodge an appeal the taxpayer must pay the tax that the taxpayer believes is due. There is no requirement to pay the disputed amount. However, if there is an additional tax liability following the determination of an appeal the additional amount becomes due and payable from the original due date of the disputed amount.
6. Are tax authorities subject to a duty of confidentiality in respect of taxpayer data?
Section 851A Taxes Consolidation Act 1997 ("TCA") provides statutory protection in respect of the confidentiality of taxpayer information. The protection is not absolute and taxpayer information may be disclosed by Irish Revenue in certain limited circumstances prescribed within that section. Under separate legislation confidential taxpayer information may also be disclosed to the Office of the Director of Corporate Enforcement (ODCE) where an offence has been committed or to the Official Assignee or trustee in bankruptcy.
7. Is this jurisdiction a signatory (or does it propose to become a signatory) to the Common Reporting Standard? Does it maintain (or intend to maintain) a public register of beneficial ownership?
Ireland is a signatory to the CRS. The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (the "2019 Regulations") came into force on 22 March 2019 and required that a Central Register of Beneficial Ownership of Companies and Industrial & Provident Societies be established (the "Central Register").
The Central Register went live on 22 June 2019 and companies can file relevant details with the Central Register from that date. There was a five-month grace period given to companies who were already in existence to file necessary data without being in breach of their statutory duty to file. Qualifying companies that are newly incorporated must file within five months from the date of incorporation.
8. What are the tests for determining residence of business entities (including transparent entities)?
Companies incorporated in Ireland are considered tax resident in Ireland unless they are resident in another jurisdiction in accordance with the terms of the relevant double taxation agreement ("DTA"). Companies incorporated outside Ireland may be Irish resident where they are centrally managed and controlled in Ireland (subject to application of a DTA).
Individuals are resident in Ireland where they are present in Ireland for 183 days in any calendar year or for 280 days over two calendar years (and at least 30 days in each year).
Partnerships are transparent for Irish tax purposes so one must consider the tax residence of the individual partners.
9. Do tax authorities in this jurisdiction target cross border transactions within an international group? If so, how?
For many years Ireland has been an important location for international groups. Therefore cross border transactions have long since been the focus of tax authorities' attention. The key areas of attention in cross border situations typically involve (a) assessing the substance and activity in Ireland to determine applicability of the 12.5% tax rate on trading income; (b) reviewing base-eroding interest payments out of Ireland; (c) consideration of deductibility and arm's length nature of royalty and other payments to foreign jurisdictions, particularly non-DTA partner jurisdictions.
Irish Revenue have also played a significant role over the years in defending the Irish tax base from permanent establishment and transfer pricing assessments by foreign taxing authorities.
10. Is there a controlled foreign corporation (CFC) regime or equivalent?
Under the Finance Act 2018, Ireland has introduced EU Anti-Tax Avoidance Directive ("ATAD") compliant CFC rules with effect from 1 January 2019. A CFC charge may arise under the legislation in respect of a foreign subsidiary if and to the extent the foreign subsidiary relies on significant people functions carried on in Ireland to generate its profits. However, if those functions are remunerated on arm's length terms, no CFC charge should apply. The CFC charge is applied at the Irish corporation tax rates (12.5% to the extent the profits of the CFC are generated by trading activities and 25% in all other cases). The CFC charge will be reduced and credit will be given for foreign tax paid by the CFC on its income and other CFC charges imposed by other countries by reference to the profits of the CFC. Irish Revenue have published guidance on the application of the CFC rules.
The rules have been amended with effect from 1 January 2021 to provide more stringent criteria in respect of subsidiary companies resident in jurisdictions included in the EU list of non – cooperative tax jurisdictions.
11. Is there a transfer pricing regime? Is there a "thin capitalization" regime? Is there a "safe harbour" or is it possible to obtain an advance pricing agreement?
Ireland has had transfer pricing rules since 2010. Under Finance Act 2019 the transfer pricing rules have been extensively modernised for accounting periods commencing on or after 1 January 2020. The transfer pricing rules must be interpreted in a manner consistent with the 2017 edition of the OECD transfer pricing guidelines. Furthermore the Irish transfer pricing rules now apply to trading and non-trading arrangements as well as capital transactions. Pre 1 July 2010 arrangements are no longer grandfathered and there is a requirement to prepare a Master File and Local File where certain thresholds are met. There is explicit legislation requiring the substance of a transaction to be considered and replace arrangements with arrangements that deliver a commercially rational result. There is a limited exemption to the transfer pricing rules for Ireland to Ireland transactions.
Ireland has introduced ATAD compliant interest limitation rules which commenced on 1 January 2022. The interest limitation rules apply to all corporate taxpayers but with certain exemptions and reliefs as provided for in ATAD.
Ireland has a formal advance pricing agreement ("APA") program. Only bilateral or multilateral APAs are possible. It is not possible to agree a unilateral APA with Irish Revenue.
12. Is there a general anti-avoidance rule (GAAR) and, if so, how is it enforced by tax authorities (e.g. in negotiations, litigation)?
Ireland has had a GAAR in domestic tax legislation since 1988. Broadly it can apply where a transaction gives rise to a tax advantage and was not undertaken or arranged primarily for purposes other than to give rise to a tax advantage. This is a matter that is threatened and litigated by the Irish Revenue.
13. Is there a digital services tax? If so, is there an intention to withdraw or amend it once a multilateral solution is in place?
Ireland has not introduced a digital services tax. Irish Revenue has published guidance confirming the circumstances in which digital services taxes incurred by an Irish resident taxpayer may be treated as a deductible expense.
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