As discussed in our recent article, Ireland's transfer pricing rules were amended and the scope of their application was significantly expanded with effect for 2020 onwards. The amendments have had a particular impact on financial transactions, bringing many more financial transactions within the ambit of transfer pricing rules, including documentation requirements. This change has also coincided with the publication by the OECD of their guidance on the transfer pricing of financial transactions (the Guidance), resulting in enhanced focus on the pricing and documentation of these transactions more generally.
The Guidance is significant because it is the first time that the OECD has provided specific commentary on the application of the arm's length principle to financial transactions. Businesses with significant treasury operations will find the latest commentary particularly relevant. Although the Guidance has not yet been formally incorporated into Ireland's transfer pricing legislation1, the Irish Revenue Commissioners have recently advised that they would consider it "best practice"2 for taxpayers and practitioners to have regard to it when reviewing their intra-group financial transactions.
In this article, we provide a high level overview of key aspects of the Guidance and its application to particular types of financial transactions.
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Footnotes
1. Ireland's existing transfer pricing legislation requires that the arm's length principle be interpreted (by reference) in accordance with the OECD's 2017 Guidelines for Multinational Enterprises and Tax Administrations, as supplemented by their additional guidance on Hard-to-Value Intangibles (2018) and on the Transactional Profit Split Method (2018).
2. Revenue TDM Part 35A-01-01 (February 2021) at paragraph 4.4.2.
Originally published 14/06/2021
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
